The House passed the FY18 budget resolution (H. Con. Res. 71) that provides the path forward for tax reform. The House agreed to the version that was passed by the Senate last week.

The FY18 budget resolution allows for an additional $1.5T in annual deficits over the next decade to make way for tax cuts. The resolution includes reconciliation instructions that would allow Republicans to pass future tax reform legislation without the risk of a Democratic filibuster in the Senate. The measure also could allow Republicans to push through plans to open part of Alaska’s Arctic National Wildlife Refuge to oil and gas drilling. And budget reconciliation instruction calls for the Senate Energy and Natural Resources Committee to reduce deficits by at least $1 billion over 10 years, which could be raised through sales of federal leases to oil drilling companies and royalties from any oil or gas produced.

The FY18 budget resolution has no requirement to cut entitlements to pay for the tax cuts, which is something House conservatives had wanted in the budget. In return for their support and vote on the budget, members of the Republican Study Committee were assured by House Speaker Paul D. Ryan (R-WI) that there would be a vote on the House floor next spring on a constitutional amendment requiring a balanced budget, along with deficit-reduction legislation that includes cuts to entitlement programs. House Budget Committee Chairwoman Diane Black (R-TN) said this week that she expects the FY19 budget resolution could propose up to $500B in mandatory spending reductions.

The vote in the House was 216-212 with 20 Republicans voting against the budget. Some Republicans from New York and New Jersey voted against the budget this time as they wanted assurances that the state and local tax (SALT) deduction would not be eliminated as part of a tax code overhaul. Getting rid of the deduction would bring in an additional $1.3T in new tax revenue over the next 10 years.

The House first passed the FY18 budget resolution on October 5 by a vote of 219-206 with 18 Republicans voting against the budget. Ten Republicans voted no both times, so there are combined 28 Republican members who at one point voted no on the FY18 budget resolution. Republicans can only afford to lose 22 votes on tax reform, so this is going to be a difficult balancing act by House Republican leadership to bring some of their members back on board.

Below are the members who voted against the FY18 budget resolution in the House during either the first round or second round of consideration:

Amash (MI)

Blum (IA)

Buck (CO)

Comstock (VA)

Costello (PA)

Dent (PA)

Donovan (NY)

Duncan (TN)

Faso (NY)

Fitzpatrick (PA)

Gaetz (FL)

Jenkins (KS) – member of the House Ways and Means Committee

Jones (NC)

Katko (NY)

King (NY)

Lance (NJ)

LoBiondo (NJ)

MacArthur (NJ)

Massie (KY)

Mast (FL)

McKinley (WV)

Meehan (PA)

Ros-Lehtinen (FL)

Sanford (SC)

Smith (NJ)

Stefanik (NY)

Tenney (NY)

Zeldin (NY)

Bold – the 10 Republicans who voted no both times

House Ways and Means Committee Chairman Kevin Brady (R-TX) announced that the tax overhaul bill will be released on November 1 and that the committee will begin marking up the measure on November 6. The markup is expected to last several days. Speaker Ryan wants to pass a tax overhaul before Thanksgiving.

Chairman Brady expects to have a static score from the Joint Committee on Taxation (JCT) when they begin to mark up the bill. A dynamic score from the JCT isn’t expected until after the markup. The dynamic score is important as Republicans say tax cuts will spur enough new economic growth to create additional revenue that traditional budget scoring rules don’t recognize.

Finally…speaking of taxes, National Economic Council Director Gary Cohn said this week that Congress will have an opportunity to vote on a federal gasoline tax increase as part of an infrastructure bill early next year.

Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) announced a deal to stabilize the individual health insurance markets. In addition to Alexander and Murray, the bill was cosponsored by Republican Senators Mike Rounds (R-SD), Lindsey Graham (R-SC), John McCain (R-AZ), Bill Cassidy (R-LA), Susan Collins (R-ME), Joni Ernst (R-IA), Lisa Murkowski (R-AK), Charles Grassley (R-IA), Johnny Isakson (R-GA), Richard Burr (R-NC), and Bob Corker (R-TN), and Democratic Senators Angus King (I-ME), Jeanne Shaheen (D-NH), Joe Donnelly (D-IN), Amy Klobuchar (D-MN), Heidi Heitkamp (D-ND), Al Franken (D-MN), Joe Manchin (D-WV), Tom Carper (D-DE), Tammy Baldwin (D-WE), Claire McCaskill (D-MO), and Maggie Hassan (D-NH).

While the bill had 12 Republican and 12 Democrat sponsors/cosponsors, it appeared to have collapsed soon after it was announced. President Trump was initially onboard with the deal, but soon backpedaled his support after House Speaker Paul D. Ryan (R-WI) came out against it and the Republican Study Committee panned it as a bailout for health insurance companies. But the President was back on board after learning of the Republican cosponsors. Senate Majority Leader Mitch McConnell (R-KY) has not taken a position on the bill.

The Congressional Budget Office projects health care premiums will rise 20-25% without congressional action. This deal would extend ObamaCare insurance stabilization payments in exchange for giving states more flexibility to waive federal regulations. The bill also allows all individuals to purchase a lower-premium “copper” plan on the individual market regardless of age or hardship status; requires HHS to report on consumer outreach, education, and assistance activities; and requires HHS to promulgate regulations for the implementation of Health Care Choice Compacts, which would allow plans to be sold across state lines in the individual or small group market.

Alexander made an impassioned speech on the Senate floor this week and remains optimistic on the deal he reached with Murray. One likely scenario is that it is included in a year-end “grand deal” package that includes some perks and concessions for both Republicans and Democrats on FY18 appropriations, funding for a border wall, and a legislative fix for the Deferred Action for Childhood Arrivals Program.

Bill Text

https://www.help.senate.gov/imo/media/doc/THE%20BIPARTISAN%20HEALTH%20CARE%20STABILIZATION%20ACT%20OF%202017-%20TEXT.pdf

Section-by-Section Summary

https://www.help.senate.gov/imo/media/doc/THE%20BIPARTISAN%20HEALTH%20CARE%20STABILIZATION%20ACT%20OF%202017-%20SECTION%20BY%20SECTION.pdf

House Passes FY18 Emergency Supplemental Appropriations Bill

The House passed a $36.5B FY18 emergency supplemental appropriations bill (H.Res. 569) on Thursday by a vote of 353 to 69. All 69 no votes were from Republicans. Hardline conservatives complained that the cost of the package should be offset with cuts to other programs. Others were concerned about continuing to fund the National Flood Insurance Program without reforms to what they consider is an unsustainable program.

The legislation provides $18.7B for the Federal Emergency Management Agency’s (FEMA) Disaster Relief Fund (DRF), $576.5M for wildfire-fighting efforts, and $16B for debt relief for the National Flood Insurance Program (NFIP), which now needs additional funds to make necessary insurance claims payments to individuals. In addition, it includes $1.27B for the Disaster Nutrition Assistance Program (DNAP) that enables low-income residents in Puerto Rico to receive the same emergency nutrition assistance that other hurricane-affected states already receive. Earlier this month, OMB Director Mick Mulvaney sent a request to congress for an additional $12.77B for FEMA’s Disaster Relief Fund, $576.5M for wildfire efforts, and $16B for debt relief for the National Flood Insurance Program plus reforms to the program.

The Senate is expected to take up the measure when they return next week, but exact timing isn’t clear. The Senate may work on their FY18 budget resolution first, but Senate Majority Leader Mitch McConnell (R-KY) could schedule the supplemental vote early in the week.

OMB Letter to Congress:

https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/Letters/Letter%20regarding%20additional%20funding%20and%20reforms%20to%20address%20impacts%20of%20recent%20natural%20disasters.pdf

House FY18 Emergency Supplemental Appropriations Bill Text:

http://docs.house.gov/billsthisweek/20171009/HR____SUPP.pdf

Senate Schedules Homeland Security and Interior Appropriations Markups

The Senate has scheduled two subcommittee markups (Interior Appropriations and Homeland Security Appropriations) for Tuesday, October 17 and a full committee markup for the two bills on Thursday, October 19.

Status of FY18 Appropriations Spending Bills

The House and Senate both moved forward this week with their FY2018 budget resolutions. The House adopted its plan by a vote of 219 to 206. All Democrats and 18 Republicans voted against the measure. The Senate Budget Committee approved its FY18 budget resolution on a party-line vote of 12 to 11. The Senate is expected to take up the measure on the Senate floor the week of October 16 where its prospects in the full Senate aren’t certain. Senate Republicans can only lose two votes in order for it to pass the full Senate.

Both budget resolutions included reconciliation instructions for their respective tax writing committees to produce tax overhaul legislation. Republican leaders hope to conference their two budget resolutions quickly as House leaders want to unveil their tax reform legislation before the end of the month.

While budget resolutions typically are considered in the month of April preceding the beginning of the new fiscal year, Congress couldn’t move forward with an FY18 budget resolution until they had completed the FY17 budget resolution process. The FY17 budget resolution included reconciliation instructions for repealing and replacing the Affordable Care Act (“Obamacare”). The FY17 reconciliation instructions expired on September 30.

Senate

The Senate Budget Committee’s FY18 budget resolution provides $549B in defense spending, $516B in nondefense spending, and $77B in Overseas Contingency Operations spending for FY18. The Senate budget resolution complies with the spending caps imposed by the Budget Control Act of 2011. The defense level of spending increases to $684B in FY2027 while nondefense grows at a much slower rate to $537B in FY2027.

The budget resolution also includes two reconciliation instructions to Senate committees. The first would allow the Finance Committee to pass tax cuts that would reduce revenues and change outlays and increase the deficit by not more than $1.5 trillion over the next 10 years. The second instructs the Energy and Natural Resources Committee to save at least $1 billion over the next 10 years.

During committee markup, Sens. Tim Kaine (D-VA) and Kamala Harris (D-CA) offered an amendment to retain a rule to require there to be a Congressional Budget Office (CBO) score on committee-reported legislation 28 hours before it is voted on. The Senate budget resolution proposes repealing the rule, which is enforced by a point of order that can be waived with 60 votes. The amendment was not agreed to.

Sen. John Kennedy (R-LA) offered an amendment to establish a deficit neutral reserve fund to implement work requirements for certain recipients of welfare programs not including Social Security, Medicare, unemployment insurance, and workers’ compensation. The amendment was approved.

FY18 Senate Budget Resolution

https://www.budget.senate.gov/imo/media/doc/FY2018.FINAL%20TEXT%20OF%20MARK.pdf

FY18 Senate Budget Resolution Tables

https://www.budget.senate.gov/imo/media/doc/FY18%20Budget%20Tables.pdf

FY18 Senate Budget Resolution Summary

https://www.budget.senate.gov/imo/media/doc/FY18%20Budget%20Res%20-%20Title%20By%20Title%20Summary.pdf

House

The House FY18 budget resolution provides $622B in defense spending, $511B in nondefense spending, and $87B in Overseas Contingency Operations spending for FY18. The defense level of spending increases to $740B in FY2027 while nondefense decreases to $424B in FY2027.

The defense spending level in the House budget resolution is $73B over the FY18 spending caps set by the Budget Control Act of 2011. There is widespread recognition that a new bipartisan budget deal will be required to avoid sequestration in FY2018. Democrat support will be needed for any new budget deal.

FY18 House Budget Resolution

https://www.congress.gov/115/bills/hconres71/BILLS-115hconres71rh.pdf

FY18 House Budget Resolution Report

https://www.gpo.gov/fdsys/pkg/CRPT-115hrpt240/pdf/CRPT-115hrpt240.pdf

FY18 House Budget Resolution Tables

https://budget.house.gov/wp-content/uploads/2017/07/Summary-Tables-1.pdf

FY18 House Budget Resolution Summary

https://budget.house.gov/wp-content/uploads/2017/07/Summary-PDF-for-web.pdf

While fiscal year 2018 officially begins on Sunday October 1, 2018, the House and Senate are just beginning action on passing their FY18 budget resolutions. The House and Senate budget resolutions include reconciliation instructions that will pave the way for a future tax reform measure. Reconciliation instructions allow the legislation to pass with a simple 51-vote majority in the Senate rather than usual 50-vote supermajority. In addition, Senate debate on a reconciliation bill is limited to 20 hours (10 hours on conference reports), and amendments must be germane.

The House may consider their FY18 budget resolution (H. Con. Res. 71) on the floor next week. The House Rules Committee announced that amendments are due to the committee by 3:00 PM on Monday, October 2. The House budget resolution requires the House Ways and Means Committee to submit reconciliation legislation by October 6. The budget resolution has been stalled since it was passed out of committee in July but was recently endorsed by the conservative House Freedom Caucus.

House FY18 Budget Resolution Bill Text:

https://www.gpo.gov/fdsys/pkg/BILLS-115hconres71rh/pdf/BILLS-115hconres71rh.pdf

House FY18 Budget Resolution Report Language:

https://www.gpo.gov/fdsys/pkg/CRPT-115hrpt240/pdf/CRPT-115hrpt240.pdf

The Senate Budget Committee released their FY18 budget resolution today, which also includes reconciliation instructions. The committee will mark up the resolution next Wednesday and Thursday. The Senate budget resolution balances the budget in 10 years, but assumes an average economic growth rate of 2.6%. The Senate Finance Committee has until November 13 to draft a tax reform measure that costs no more than $1.5T over the next 10 years. The Senate budget resolution also directs the Senate Energy and Natural Resources Committee to identify at least $1B over 10 years in deficit savings. The committee’s chairman Sen. Lisa Murkowski (R-AK) may opt to open the Arctic National Wildlife Refuge to oil and gas drilling to come up with this $1B.

Senate FY18 Budget Resolution:

https://www.budget.senate.gov/imo/media/doc/FY2018.FINAL%20TEXT%20OF%20MARK.pdf

Senate FY18 Budget Resolution Tables:

https://www.budget.senate.gov/imo/media/doc/FY18%20Budget%20Tables.pdf

Senate FY18 Budget Resolution Summary:

https://www.budget.senate.gov/imo/media/doc/FY18%20Budget%20Res%20-%20Title%20By%20Title%20Summary.pdf

Senate Budget Committee Justification for Tax Reform:

https://www.budget.senate.gov/imo/media/doc/FINAL.Tax%20Reform%20Resolution.9.27.17.pdf

The House passed a $1.23T spending bill (H.R. 3354) that funds the government for FY18, which begins on October 1. The bill was passed by a vote of 211 to 198 with one Democrat (Rep. Peterson – MN) voting in favor of passage and 14 Republicans voting against passage (Reps. Amash – MI, Biggs – AZ, Brooks – AL, Buck – CO, DeSantis – FL, Duncan – TN, Jones – NC, Katko – NY, LoBiondo – NJ, Massie – KY, Messer – IN, Rokita – IN, Sanford – SC, and Sensenbrenner – WI). The bill doesn’t stand a chance in the Senate as Democrats are expected oppose it if it came to the floor as it violates the statutory cap on defense spending by $72B. If it were to become law it would trigger across-the-board sequestration cuts to defense programs of about 13 percent. The measure also includes some “poison pills” that Democrats object to, including funding for the President’s wall on the Southwest border.

The Senate Appropriations Committee has marked up and reported out eight of their 12 annual spending bills, but none have been considered on the Senate floor. The committee will not consider any bills next week because of the shortened work week.

Congress passed a short-term continuing resolution (CR) funding the government for FY18 from October 1 through December 8 and the President signed it into law. Congress now needs to come up with a final FY18 spending deal by December 8. Treasury Secretary Steven Mnuchin said that the President will demand an increase in defense spending when he and Congress negotiate the end-of-the-year budget deal. Democrats are likely to require an equal raise in non-defense spending in order for their votes on any deal.

Status of FY18 Appropriations Spending Bills

Hurricane Harvey Funding, FY18 Continuing Resolution, and Debt Ceiling Bill

The House passed the $7.85B Hurricane Harvey emergency funding bill (HR 601) earlier in the week by a vote of 419 to 3. Reps. Justin Amash (R-MI), Andy Biggs (R-AZ), and Thomas Massie (R-KY) were the no votes. President Trump, Senate Minority Leader Chuck Schumer (D-NY), and House Minority Leader Nancy Pelosi (D-CA) then worked out an agreement to include an FY18 continuing resolution (CR) funding the government through December 8 as well as lifting the debt ceiling until December 8 on the emergency funding bill. Both provisions were attached to HR 601 when the Senate took up the measure. Senate Majority Leader Mitch McConnell (R-KY) was clear that the agreement to add the CR and the debt extension was between President Trump and Democratic leaders. Republicans had tried to get an 18-month debt ceiling extension.

The Senate amended the House-passed bill so that it included $7.4B for the Federal Emergency Management Agency, $450M for the Small Business Administration Disaster Loan Program (of which up to $225M may be used for administrative expenses to carry out the program), and $7.4B in Community Development Block Grant (CDBG) funding through the Department of Housing and Urban Development for areas most affected by 2017 disasters. The Senate bill also included an FY18 CR funding the federal government at current levels through December 8, and an extension of the debt ceiling through December 8. The CR also included a limited number of “anomalies,” which are programmatic or funding changes. The Senate passed the bill by a vote 80 of 17 (all no votes were from Republicans). The House then took up the bill and passed it by a vote of 316 to 90 (all no votes were from Republicans). The bill now goes to the President for his signature.

The bill temporarily suspends the debt limit through December 8 at which time it will be reset to a higher level that will include the debt issued while the debt limit was not in effect. This will also allow the Treasury Department to reset its extraordinary measures. The new amount of time granted by the extraordinary measures will depend on a number of factors, including Treasury’s borrowing patterns, incoming receipts, and the government’s rate at which is burns through cash. Extraordinary measures could meet the Treasury’s needs through next year’s April 15 tax date. If that happens, the debt ceiling debate could extend through August or September of 2018.

Section-By-Section Summary

https://www.appropriations.senate.gov/imo/media/doc/090617-CONTINUING-APPROPRIATIONS-ACT-FY18-SECTION-BY-SECTION.pdf

Additional Summary Information

https://rules.house.gov/sites/republicans.rules.house.gov/files/115/PDF/SA%20to%20HA%20to%20SA%20to%20HR%20601/Additional%20Summary%20Information.pdf

FY18 House Omnibus

The House began consideration of its $1.23T FY2018 omnibus appropriations bill this week but delayed a final vote on the bill citing the impending hurricane. They will resume consideration of the bill next week. The bill isn’t likely to be passed by the Senate as it exceeds the FY18 budget caps by $72B.

Senate

The Senate Appropriations Committee marked up and reported out two FY18 spending bills this week leaving the committee with four more FY18 spending bills to complete.

State Foreign Ops

The Senate Appropriations Committee approved its FY18 State, Foreign Operations, and Related Programs spending bill this week and reported it out of committee unanimously. The bill provides $51.2B in discretionary funding, of which $30.4B is for enduring costs and $20.8B is for Overseas Contingency Operations (OCO). This is $10.7B above the President’s FY18 budget request as scored by the Congressional Budget Office, and $1.9B below the FY17 enacted level. Funding for the agencies in the bill are at, or close to, the FY17 levels.

The bill included the Taylor Force Act, which would restrict U.S. economic aid to the West Bank and Gaza until the Palestinian Authority stops paying terrorists guilty of violence against Israelis and Americans. There is also a new provision to prohibit assistance to the central government of a country that contributes to the nuclear, ballistic missile, or cyber-intrusion/cyber-warfare capabilities of the Government of North Korea. The bill continues a prohibition on enforcement of any rules or regulations implemented by the Export-Import Bank, Overseas Private Investment Corporation, or the World Bank that would prohibit coal-fired power plants. The bill repeals the Mexico City policy, but continues the long-standing prohibition on the use of Federal funds for abortion as a method of family planning.

Committee members also highlighted that the bill does not endorse the reorganization or redesign of any part of the Department of State, USAID, or any other entity funded in the bill absent consultation with the committee.

Bill Text:

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20State%20Foreign%20Operations%20Appropriations%20Bill%20-%20S1780.pdf

Report Language:

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20State%20Foreign%20Operations%20Appropriations%20-%20Report%20115-152.pdf

Labor HHS

The Senate Appropriations Committee also approved its $164.1B FY18 Labor HHS Education spending bill by a vote of 29 to 2. The bill is $3B above the FY17 enacted level and $27.5B above the President’s FY18 budget request. The bill provides $36.1B for the NIH ($2B more than FY17), $12B for the Department of Labor ($61.5M below FY17), $79.4B for the Department of Health and Human Services ($1.7B more than FY17), $68.3B for the Department of Education ($29M above FY17), $235M for the Institute for Museum and Library Services ($4M above FY17), $445M for the Corporation for Public Broadcasting (level with FY17), $1.02B for the Corporation for National and Community Service ($11M below FY17), and $274M for the National Labor Relations Board, $12B for the Social Security Administration.

Bill Text:

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Labor%20HHS%20Education%20Appropriations%20Bill%20-S1771.pdf

Report Language:

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Labor%20HHS%20Education%20Appropriations%20-%20Report%20115-150.pdf

Status of FY18 Appropriations Spending Bills

Before the August recess, the House passed a four-bill “securitybus” that included the FY18 Defense, Energy & Water, Legislative Branch, and Military Construction-Veterans Affairs spending bills. The House will consider an eight-bill appropriations “minibus” when they return next week and roll the four-bill securitybus into it before final passage. Over 900 amendments have been filed for the eight-bill minibus: https://rules.house.gov/bill/115/hr-3354. The House Rules Committee will meet on September 5 at 4:00 PM to determine which amendments will be made in order for consideration on the House floor. The Senate Appropriations Committee has passed six of their FY18 spending bills and is scheduled to mark up its FY18 Labor HHS Education and State Foreign Operations spending bills in subcommittee on September 6 and full committee on September 7.

Funding for FY2017 ends on September 30 leaving Congress four short weeks to pass the FY18 spending bills or risk a government shutdown. There has been discussion this week of combining a short-term (through December?) FY18 continuing resolution (CR) with emergency funding for Hurricane Harvey and possibly lifting the debt ceiling. The President may attach his disaster aid request to a measure increasing the debt limit. Rep. Mark Meadows (R-NC), Chairman of the House Freedom Caucus, said that conservatives could support attaching some Harvey aid to a CR but that the emergency aid bill should not be part of a vehicle to raise the debt ceiling. Meadows said that it would send the wrong message to add spending to a bill that is also increasing the debt ceiling. The caucus has been pushing for a debt ceiling package that includes spending reforms.

Emergency funding for Harvey may be complicated by the fight four years ago over funding for Superstorm Sandy. Some conservative Republicans voted against that emergency funding bill because of concerns that the funding included unrelated “pork,” while others pushed amendments that would have required offsetting part of the cost of the disaster aid with cuts to other discretionary programs. OMB Director Mick Mulvaney authored the offset amendment when he was a member of Congress. Tom Bossert, White House Homeland Security Advisor, said on Thursday that they want a clean supplemental that is focused on funding “obvious needs” like repairing a highway. He stressed that Harvey funding should not be part of a debate about the debt ceiling. While Texas Governor Greg Abbott estimates that the state might need $100 billion in federal aid, the Administration is still tabulating how much it will request from Congress.

House Majority Whip Steve Scalise (R-LA), OMB Director Mick Mulvaney, officials from FEMA and DHS, members of the Texas delegation, and House Appropriations Committee Chairman Rodney Frelinghuysen (R-NJ) held a conference call yesterday to discuss an emergency funding package for Texas. The President is expected to request an initial $5.95B in emergency relief – $5.5B for FEMA and $450M for the Small Business Administration. Whatever Congress appropriates for Hurricane Harvey relief might impact the timeframe with which Congress needs to lift the debt ceiling. And because the extent of the damage is not known yet, aid is likely to come in installments.

Status of FY18 Appropriations Spending Bills

During a rally speech in Phoenix, AZ this week, President Trump threatened to shut down the government if Congress doesn’t appropriate money for a wall on the Southwest border. The President said, “Build that wall. The obstructionist Democrats would like us to not do it, but believe me, if we have to close down our government, we’re building that wall.” House Speaker Paul D. Ryan (R-WI) responded that he doesn’t want a government shutdown and that he does think a continuing resolution (CR) will be needed to keep the government funded into the new fiscal year beginning October 1.

The House passed HR 3219, the Make America Secure Appropriations bill on July 27, which includes the FY18 Defense, Legislative Branch, Energy and Water, and Military Construction-Veterans Affairs spending bills. The “securitybus” included $1,571,239,000 for the Department of Homeland Security to construct physical barriers along the southwest border of the United States in the Rio Grande Valley of Texas and in San Diego, California. But the Senate appears unlikely to take up this spending package because its allocation for defense spending violates the spending caps set in the 2011 Budget Control Act.

There could be two shutdown showdowns this year – September and December. If Congress passes a clean debt ceiling and short-term CR funding the government through December, there could be another potential shutdown towards the end of the year. President Trump would have to veto any spending measure to trigger a shutdown, but Congress could then override the veto.

While the path to funding FY2018 isn’t clear, one thing that is clear is that the longer Congress “fights” over how to keep the government open, the less time they will be have to work on tax reform.

In other FY18 funding news, White House Office of Management and Budget Director Mick Mulvaney sent a letter to President of the Senate Mike Pence earlier this month notifying Congress that it is the President’s intention to exempt all military personnel accounts from sequestration in FY18, if sequestration is necessary. Mulvaney also writes that this action would mean that non-exempt accounts would then be subject to higher reductions to make up for this exemption.

Mulvaney’s letter to President of the Senate Pence:

https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/Letters/Military_personnel_exemption_senate_transmit.pdf

Status of FY18 Appropriations Spending Bills

The House Rules Committee released the bill text and report language for an eight-bill appropriations minibus this week. Amendments are due by next Friday 8/25 at 10:00 am. The eight bills included in the minibus are: Agriculture, Commerce-Justice-Science, Financial Services, Homeland Security, Interior-Environment, Labor-HHS-Education, State-Foreign Operations, and Transportation-HUD.

The Rules Committee will meet the week of September 4^th to grant a rule to provide a structured amendment process for floor consideration of the minibus. The rule will not make in order amendments that have offsets or transfers between bills (e.g. members cannot transfer funds from an account in the Agriculture division to an account in the Interior division).

The notice from the Rules Committee also mentioned that they struck a provision from the FY18 Financial Services Appropriations bill that would ensure Deferred Action for Childhood Arrivals (DACA) recipients are eligible to be employed by the federal government.

The House Rules Committee also plans to use a self-executing rule to roll the text of the four appropriations bills passed in July (Defense, Energy & Water, Legislative Branch, and Military Construction-Veterans Affairs) into the eight-bill minibus creating a 12 bill omnibus for final vote.

While this movement by the House Rules Committee is a good indication that they have the 218 votes needed for passage on the floor, the omnibus isn’t expected to go far in the Senate where 60 votes are needed. The Senate Appropriations Committee has marked up and approved six of its 12 annual spending bills, but it is unclear if any of these bills will see floor time in September. A continuing resolution (CR) is likely come September 30.

Eight-Bill Minibus Bill Text:

https://www.gpo.gov/fdsys/pkg/BILLS-115hr3354rh/pdf/BILLS-115hr3354rh.pdf

Eight-Bill Minibus Report Language:

https://www.gpo.gov/fdsys/pkg/CRPT-115hrpt238/pdf/CRPT-115hrpt238.pdf

Status of FY18 Appropriations Spending Bills