January 17, 2014

The House and Senate passed a three-day continuing resolution (CR) giving them a few extra days to pass the FY14 omnibus appropriations bill. The House also passed a bill requiring the Secretary of Health and Human Services (HHS) to deliver weekly reports on health insurance in the Federal and state-based marketplaces. The Senate failed to get cloture on the unemployment insurance extension bill and turned their attention to a bill to delay the implementation of certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012.

FY2014 Appropriations

Both houses of Congress passed a three-day CR (House on Tuesday, Senate on Wednesday) averting a federal government shutdown and buying themselves a few more days to complete action on the $1.1 trillion FY14 omnibus appropriations bill. The omnibus bill provides $1.012 trillion in discretionary spending and $98 billion in war funding and disaster relief. The House passed the omnibus on Wednesday by a vote of 359 to 67, and the Senate followed on Thursday passing it 72 to 26. The bill now goes to the President who is expected to sign it before the CR expires on Saturday. It is the first time since FY02 that all 12 annual spending bills have cleared Congress.

The Congressional Budget Office scored the omnibus this week and determined that it would not violate the new spending caps and trigger sequestration. The White House Office of Management and Budget, by law, must also review the bill and budget caps to determine if another round of budget cuts under sequestration is necessary.

Debt Ceiling

The next fiscal hurdle facing Congress is the debt ceiling. There is much uncertainty/debate over when action will be needed. Treasury Secretary Jack Lew has warned that the debt ceiling will need to be raised in late February, but others are saying not until as late as May. Congress agreed to suspend enforcement of the debt limit until Feb. 7 in the deal passed last fall that reopened the federal government after the shutdown. The deal also allowed Treasury officials to use “extraordinary” measures to extend borrowing when the government approaches this new deadline.

A debt limit strategy will be the main topic during a Republican retreat later this month. Republicans have said that they will not agree to raise the debt limit without concessions on spending.

FY2015 Budget

The chairmen of the Senate and House budget committees filed deeming resolutions this week to enforce FY14 spending limits provided for in last month’s budget deal. A deeming resolution is used when the House and Senate have not agreed on a budget resolution. Although the spending limits are already in law, the deeming resolutions allow the caps to be enforced through House and Senate procedural points of order and could lead to floor fights.

Homeland Security

The Senate Homeland Security and Government Affairs Committee approved by voice vote the nominations of John Roth to be DHS Inspector General and Suzanne Spaulding to be Under Secretary of the National Protection and Programs Directorate (NPPD). Roth has led the Food and Drug Administration’s criminal investigations for the past year while Spaulding currently serves as the deputy undersecretary for the NPPD.

Cybersecurity

The House Homeland Security Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies met this week and marked up H.R. 3696, the National Cybersecurity and Critical Infrastructure Protection Act of 2013. The bill amends the Homeland Security Act to make certain improvements regarding cybersecurity and critical infrastructure protection. It codifies DHS’ central role in facilitating cyberthreat information sharing between the federal government and the private sector and creates public-private threat assessment information sharing programs. The bill also would bar DHS from requiring businesses to adopt the resulting recommendations. The bill was introduced last year and the committee intended to mark it up when the Edward Snowden revelations became public. Five amendments were offered and passed by voice vote during the subcommittee markup. One other amendment offered by Rep. Rogers (R-AL) was withdrawn after Rep. Clarke (D-MI) voiced her concerns. Rogers intends to work with the subcommittee to improve the language and offer it again during full committee markup.

Political Updates

Four more House members announced they won’t run again in 2014, bringing the total to 16 (six Democrats and 10 Republicans).

Rep. George Miller (D-CA), Ranking Member of the House Education and Workforce Committee, announced on Monday that he would not seek reelection after nearly four decades of service in the House of Representatives. The seat is considered a safe seat for Democrats with State Sen. Mark DeSaulnier a possible replacement. Rep. Rob Andrews (D-NJ) is the next senior Democrat on the Education committee.

Rep. Bill Owens (D-NY) continued the trend on Tuesday announcing that he also would not run for reelection. Owens is a member of the House Appropriations Committee holding seats on the Defense and Homeland Security subcommittees. His seat is considered a toss up as he won his 3^rd term in Congress with 50% of the vote.

On Wednesday, Rep. Jim Moran (D-VA) announced he would not seek reelection. Moran, a senior member of the House Appropriations Committee, is the ranking democrat on the Interior subcommittee. He is also on the Defense and Legislative Branch subcommittees. Rep. Betty McCollum (D-WI) is next in line for Democrats on the Interior subcommittee.

Finally, Rep. Buck McKeon (R-CA), Chairman of the Armed Services Committee (HASC) also announced his retirement on Wednesday. McKeon is in his 11^th term in Congress and also holds a seat on the Education and Workforce Committee. Republican House term limits would have prevented McKeon from staying on as HASC chairman in the next Congress. While Rep. Thornberry (R-TX) is next in line for the HASC chair, has been endorsed by McKeon, and is considered the frontrunner, Thornberry could face a challenge from Rep. Forbes (R-VA) and/or Rep. Turner (R-OH). McKeon’s congressional district is slightly Republican leaning, but could become a competitive race.

Sen. Tom Coburn (R-OK) confirmed this week that he will resign at the end of this session of Congress as he has been undergoing chemotherapy to treat recurrent prostate cancer.

David Jolly won the Republican primary in the special election to fill the seat of the late Rep. C.W. Bill Young (R-FL). Jolly served as Young’s general counsel and worked as a lobbyist in DC for Three Bridges Advisors. Jolly faces Democrat Alex Sink in a March 11 election to fill the seat for the remainder of the year. Sink was the Chief Financial Officer for the state of Florida and the Democratic nominee for the Governor of Florida, losing to Republican Rick Scott in 2010. This special election is a toss up and could be a barometer for November’s midterm elections.

President Obama nominated Maria Contreras-Sweet to be the Administrator of the Small Business Administration. Contreras-Sweet is the Founder and Chairwoman of the Board of ProAmerica Bank, a Latino owned community bank focusing on small business and non-profits in Los Angeles.

Next Week in Congress

Next week both the House and Senate are in recess. They reconvene the week of Jan. 27. The Senate will resume consideration of the Homeowner Flood Insurance Affordability Act of 2014 (S. 1926).

Before adjourning for the year, the Senate passed the budget agreement and defense authorization bill, and approved several nominations. The House passed both of these bills last week. Both the House and Senate are adjourned for the year and will return the week of January 6.

Budget Conference and FY14 Appropriations

On Wednesday the Senate passed the $1.01 trillion budget deal, the first bipartisan budget produced by a divided Congress in 27 years. The deal eases $63 billion in automatic spending cuts (sequestration) that were to kick in starting in January using a combination of cuts to mandatory spending programs and increased user fees. The President is expected to sign the budget agreement into law.

House and Senate appropriations staff have been meeting behind closed doors to prepare an omnibus FY14 appropriations bill pursuant to the budget agreement. They intend to have an omnibus bill ready for the House and Senate to pass before the current continuing resolution (CR) expires on January 15. Subcommittee chairs have been given their 302(b) allocations, providing them with the overall funding levels they will use to write their bills. The allocations were not made public and are likely to be closely held until the omnibus reaches the House floor.  Subcommittee chairs have not even been allowed to see the allocations for other subcommittees. Senate Appropriations Committee chair Barbara Mikulski (D-MD) and House Appropriations Committee chair Hal Rogers (R-KY), along with their ranking members, plan on meeting when they return on Jan. 6, and hope to have the omnibus on the House floor by Jan. 10 and Senate floor by Jan. 13. If Congress runs out of time, it is likely to pass a short-term CR to enable it to finish the bill. If House and Senate appropriators are unable to reach agreement on some controversial appropriations bills, like Labor-HHS, those programs might end up being funded by a year-long CR.

Defense Authorization

The Senate passed the FY14 National Defense Authorization Act conference report last night by a vote of 84 to 15. The bill authorizes $625.1 billion in discretionary funding for FY14 (~$3.1 billion less than FY13 enacted level). Of that, the legislation authorizes $526.8 billion for the Defense Department’s base budget, $80.7 billion for overseas operations, and $17.6 billion for national security programs within the Department of Energy. The bill now goes to the President for his signature.

Tax Reform

The Senate Finance Committee released an energy tax overhaul plan this week that creates a whole new system of incentives for producing low-carbon electricity and fuels. The draft proposal replaces the current 42 different energy tax incentives (25 of which are temporary and expire every year or two) with a streamlined, predictable, and technology-neutral set of energy tax incentives that focuses on promoting domestic energy production and reducing pollution. Senate Finance Committee staff stated that while the chairman believes tax reform as a whole can raise revenue for deficit reduction, this package of reforms and others released by the committee are intended to be revenue neutral in the long-term. The draft proposal can be found here.

Political Updates

Three members of Congress announced this week that they were retiring or not seeking re-election in 2014 – Rep. Frank Wolf (R-VA), chair of the House Appropriations Commerce, Justice and Science (CJS) subcommittee, Rep. Tom Latham, (R-IA) chair of the House Appropriations Transportation-Housing and Urban Development (THUD) subcommittee, and Rep. Jim Matheson (D-UT), member of the House Energy and Commerce Committee.  The next most senior member on the CJS subcommittee is Rep. John Culberson (R-TX), who is currently the chair of the Military Construction/VA subcommittee. On the THUD subcommittee, Rep. Charlie Dent (R-PA) is next in line after Latham and Wolf.

Rep. Mel Watt (D-NC) formally announced today that he would leave Congress the first week of January to join the Obama Administration as the new director of the Federal Housing Finance Agency.  His resignation allows Gov. Pat McCrory (R-NC) to call a special election in the heavily Democratic 12^th congressional district. A number of Democrats are either actively campaigning or considering running for the seat. In Alabama’s special election for the 1^st Congressional District, Republican Bradley Byrne easily defeated Democrat Burton LeFlore. Byrne is a lawyer and former state senator. He will succeed Rep. Jo Bonner (R-AL) who resigned earlier this year to take a job with the University of Alabama.

Senator Max Baucus (D-MT), chair of the Senate Finance Committee will be nominated by President Obama to be the next US ambassador to China. When he is nominated and confirmed, the Democratic Governor of Montana Steve Bullock may appoint Lt. Governor John Walsh to fill the remainder of Baucus’ term, giving him an advantage going into the fall election to replace Baucus. Baucus had previously announced his retirement from Congress at the end of 2014. While Sen. Jay Rockefeller (D-WV) is next in line for the Finance chairmanship, Rockefeller has also announced his retirement and is said to have declined the position. Sen. Ron Wyden (D-OR) is rumored to be the next chair, and has purportedly privately accepted the post. Wyden is currently the chair of the Senate Energy and Natural Resources Committee. Sen. Mary Landrieu (D-LA) is next in line for the gavel on that committee.

Next Year

When the House and Senate reconvene in January, their first order of business will be to complete action on the FY14 appropriations bills and begin negotiations on raising the debt ceiling.  Senate Majority Leader Harry Reid (D-NV) has also said that an extension of unemployment benefits will be the first item of business for the Senate when it returns in 2014.