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

Members are back in their districts/states for the August recess, but when they return in September they face a pretty daunting “to do” list with only 12 legislative days to complete some of the items on the list. Raising the debt ceiling to avoid default while simultaneously approving a spending deal to avert a government shutdown will be hefty lifts for Republican leadership. And all of this comes on the heels of failing to repeal and replace the Affordable Care Act (“Obamacare”) so there is pressure on GOP leaders to demonstrate an ability to deliver on some campaign promises while they control both the Executive and Legislative branches of government.

FY18 Appropriations

The FY18 spending bills need to be passed and signed into law by September 30, or Congress needs to pass a continuing resolution (CR) before then in order to avoid a government shutdown. Deep rifts over spending priorities could lead to a shutdown, but the more likely scenario is a short-term CR extending funding for the government for a few months, possibly through mid-December, at current funding levels. The CR could also include must-pass items such as a reauthorization of the Children’s Health Insurance Program and a raise in the debt limit.

The House Rules Committee posted a notice to members on its website this week informing them that they intend to take up the eight remaining FY18 appropriations bills in a single bill when they return from recess in September. They are likely to take up the bill the first week when they return. House Rules Committee Chairman Pete Sessions (R-TX) said that the committee will issue a deadline for amendment submission prior to the end of the August recess. The eight remaining bills are likely to be combined on the floor with the “security-bus” the House passed before the recess, effectively creating an FY18 omnibus spending bill. While the eight new bills will be subject to a limited number of amendments during floor consideration in September, the four bills already passed by the House would not be amended. Even though the House could potentially finish all of their FY18 spending bills before the end of the fiscal year, many members and staff still anticipated needing a CR to avoid a shutdown at the end of September. And if the House FY18 omnibus bill were enacted into law, the topline spending level of $1.13T and the defense discretionary spending level would break the caps set by the Budget Control Act of 2011 (BCA) triggering automatic spending cuts, or sequestration.

There are about a dozen conservatives in the House who won’t vote for most spending bills and also don’t want to increase the debt ceiling without corresponding spending cuts. That means that Republicans will need support from Democrats to both raise the debt ceiling and keep the government funded. Democrats will require a spending deal in return for their votes. The White House is pushing a deal that would lift the caps set by the Budget Control Act of 2011 in return for funding for the President’s proposed border wall with Mexico.

Status of FY18 Appropriations Spending Bills

Debt Ceiling

The debt ceiling is currently at the limit of $19.8T. The previous extension of the debt limit expired on March 15, and the Treasury Department has been using “extraordinary measures” to continue paying the nation’s bills since then. Treasury Secretary Steven Mnuchin has set a deadline of September 29 for Congress to raise the debt ceiling.

Health Care Reform

While Congressional Republicans want to use the August recess to talk about tax reform, their constituents are pressing them to stay focused on healthcare. Republicans are divided over whether to give up on health care reform or to continue the battle while also pursuing changes to the tax code. Senate Majority Leader Mitch McConnell (R-KY) said this week that there is a change the Senate could revive the measure to repeal and replace “Obamacare,” but acknowledged that the window for that is rapidly closing. McConnell noted that Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) is working on a bipartisan approach that would involve subsidies for insurance companies. But he cautioned that Democrats would have to support some “real reforms” in the measure so that it isn’t just an insurance company bailout.

Tax Reform

Republican leaders announced last month that they plan to start hearings on a tax bill in September with the hope of holding a House vote in October and a Senate one in November. White House Director of Legislative Affairs, Marc Short reiterated that timeline this week when he said that the Trump Administration sees a bill to overhaul the tax code passing the House in October and being cleared by the Senate the following month. But this week Senate Majority Leader McConnell refused to put a timeline on tax reform. Learning from his experience with deadline for repealing Obamacare, McConnell is concerned about setting artificial deadlines that are “unrelated to the reality of the complexity of legislating.”

In order to move forward with tax reform, the House and Senate have to pass an FY18 budget resolution with reconciliation instructions that will prevent Democrats from filibustering their legislation in the Senate. House Republicans have been divided over their FY18 budget resolution and were unable to pass the measure before they left for the August recess. The Senate has yet to do an FY18 budget resolution. And the looming deadlines to fund the government and raise the debt ceiling in the tight House and Senate September floor schedules doesn’t leave much time for consideration of FY18 budget resolutions on the floor.

The biggest problem for Republicans is agreeing on the scope of their potential tax package. An increasing number of Republicans want to scale back the goal of comprehensive reform in favor of narrower tax cuts as they view the latter as more achievable. Others, like Senate Finance Committee Chairman Orrin Hatch (R-UT), House Speaker Paul D. Ryan (R-WI), and the White House, are still calling for comprehensive tax reform. Some Republicans are also calling for parts of the tax-reform package to be retroactive having some changes take effect as early as January 2017. This would add to the cost of tax reform and lawmakers would need to find more ways to pay for those retroactive cuts. In the end, Republicans may have to settle for a simple tax cut rather than a sweeping overhaul like some had imagined.

When the House and Senate reconvene after the August recess, the House is scheduled to be in session 12 days and the Senate 17 days before the end of the fiscal year. Senators of both parties have acknowledged the need for passing another stopgap continuing resolution (CR) when they return in September. The CR would likely extend current funding levels into the new fiscal year.

The House passed a $790B “securitybus” appropriations bill before leaving for the August recess. Senate Majority Leader Mitch McConnell (R-KY) executed a procedural move on that bill that sets it up for potential action on the Senate floor. However, the bill violates the 2011 Budget Control Act and would trigger sequestration. Senate Appropriations Ranking Democrat Patrick Leahy (D-VT) said the four-bill minibus would not get the 60 votes needed for passage on the floor. A new bipartisan budget deal may be needed to raise spending limits in order for any FY18 appropriations bills to have a chance of passing in the Senate.

Sen. James Lankford (R-OK) suggested an appropriations bill plan for after the August recess in which three minibus bills with four titles each would be brought to the Senate floor under a structured rule. Lankford said he had discussed the idea with leadership.

Status of FY18 Appropriations Spending Bills

FY18 Budget Resolution Pushed Off Until September

House Speaker Paul D. Ryan (R-WI) is now promising a vote on an FY18 budget resolution in early September when the House returns from its August recess. The FY18 budget resolution is crucial to Republican plans for tax reform this fall. It has been stalled due to internal Republican disagreements. House Budget Committee Chairwoman Diane Black (R-TN) said this week that scrapping the border adjustment tax would make it easier for her to get support for the FY18 budget resolution. Earlier this week, Speaker Ryan, Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX) issued a joint statement on tax reform in which they wrote that they “are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base.  While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”

Joint Statement on Tax Reform:

https://www.whitehouse.gov/the-press-office/2017/07/27/joint-statement-tax-reform

FY18 Appropriations

House

The House voted 235-192 this week to pass HR 3219, the Make America Secure Appropriations Act. Five Republicans (Amash-MI, Duncan-TN, Jones-NC, Massie-KY, and Sanford-SC) voted against the bill and five Democrats (Bishop-GA, Crist-FL, Gottheimer-NJ, O’Halleran-AZ, and Sinema-AZ) voted for the bill. The “security-bus” included the FY18 Defense, Energy & Water, Legislative Branch, and Military Construction-Veterans Affairs spending bills. The $790B bill also 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. Democrats opposed the measure stating that it could never become law because the defense funding level exceeds the cap set by the 2011 Budget Control Act. If enacted as is, it would trigger sequestration. Democrats also opposed the inclusion of funding for the border wall, and were angered that Republicans stripped a provision from the bill that was approved on a bipartisan basis during committee consideration. The provision would have repealed the 2001 Authorization for Use of Military Force within eight months of the bill being signed into law, and would have required Congress pass another AUMF to continue the campaign against ISIS. While the bill passed the House, it will be difficult for it to get the 60 votes needed in the Senate for passage.

Senate

The Senate Appropriations Committee took up three FY18 spending bills this week and reported them out of committee. The committee will not hold any markup sessions next week.

Commerce, Justice, Science

The Senate Appropriations Committee marked up its FY18 Commerce, Justice, Science spending bill today and reported it out by a vote of 30-1. The $56.4B bill, which is $3.2B below FY17 enacted levels and $4.4B above the President’s FY18 budget request, funds the U.S. Departments of Commerce and Justice, the National Aeronautics and Space Administration, the National Science Foundation, and other agencies.

The bill funds the Department of Commerce at $9.16B ($76.4M below FY17) including $495 for the International Trade Administration ($2M above FY17), $254M for the Economic Development Administration, $3.5B for the U.S. Patent and Trademark Office, $944M for the National Institute of Standards and Technology ($8M below FY17 and $219M above the President’s FY18 budget request), $5.6B for the National Oceanic and Atmospheric Administration ($85.1M below FY17), and $1.52B for the Bureau of the Census ($51M above FY17 and $24M above the President’s FY18 budget request).

The bill funds the Department of Justice at $29.1B ($121M above FY17 and $740M above the President’s FY18 budget request) including $9B for the Federal Bureau of Investigation ($213M above the President’s FY18 budget request), $2.5B for the Drug Enforcement Administration ($50M above FY17), $2.8B for the United States Marshals Service, $2.1B for the Executive Office for United States Attorneys and the 94 U.S. Attorneys offices, $7.1B for the Federal Prison System, $2.3B for state and local law enforcement and crime prevention grant programs, and $3.64B distribution from the Crime Victim Fund ($1.06B above FY17).

The bill also funds NASA at $19.5B ($124M below FY17 and $437M above the President’s FY18 budget request), the National Science Foundation at $7.31B ($151M below FY17 and $658M above the President’s FY18 budget request), $385M for the Legal Services Corporation (equal to FY17), $91.5M for the International Trade Commission (equal to FY17 and $3.9M above the President’s FY18 budget request), and $57.6M for the Office of the United States Trade Representative.

Senate FY18 Commerce, Justice, Science Appropriations Summary

https://www.appropriations.senate.gov/news/majority/committee-approves-fy2018-commerce-justice-science-appropriations-bill

Senate FY18 Commerce, Justice, Science Appropriations Bill Text

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Commerce%20Justice%20Science%20Appropriations%20Bill,%20S1662.pdf

Senate FY18 Commerce, Justice, Science Report Language

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Commerce%20Justice%20Science%20Appropriations%20Bill,%20Report%20115-1391.pdf 

Legislative Branch

The Senate Appropriations Committee marked up its FY18 Legislative Branch spending bill and reported it out on a unanimous vote of 31-0. The bill provides $3.171B in discretionary budget authority. An additional $1.319B is reserved for the House. Total funding accommodated in the bill is $4.490B, which is $50M more than the FY17 enacted level and $192M less than the President’s FY18 budget request. The bill provides $899.8M for the U.S. Senate ($28.6M above FY17). The increase provides for investments in Senate cybersecurity capabilities and training to Senators and their staff. The bill also maintains the Member pay freeze first implemented in 2009. The bill also provides $422.5M for the U.S. Capitol Police ($29.2M above FY17), $454.0M for the Architect of the Capitol ($38.9M above FY17 and $125.8M below the President’s FY18 budget request), $638.9M for the Library of Congress ($6.9M above FY17 and $48.8M below the President’s FY18 budget request), $562.8M for the Government Accountability Office (GAO) ($18.3M above FY17 and $27.9M below the President’s FY18 budget request), $48.1M for the Congressional Budget Office (CBO) ($1.6M above FY17 and $1.8M below the President’s FY18 budget request), and $117M for the Government Publishing Office.

Senate FY18 Legislative Branch Appropriations Summary

https://www.appropriations.senate.gov/news/majority/fy2018-legislative-branch-appropriations-bill-approved

Senate FY18 Legislative Branch Appropriations Bill Text

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Legislative%20Branch%20Appropriations%20Bill,%20S1648.pdf

Senate FY18 Legislative Branch Report Language

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Legislative%20Branch%20Appropriations%20Bill,%20Report%20115-137.pdf

Transportation HUD

The Senate Appropriations Committee approved its FY18 Transportation, Housing and Urban Development, and Related Agencies appropriations bill this week by a unanimous vote of 31-0. The $60.058B bill funds the Department of Transportation, the Department of Housing and Urban Development, and other related agencies. The bill is $2.407B above FY17 enacted levels and $12.385B more than the President’s FY18 budget request.

The bill provides $19.47B in discretionary funding for the Department of Transportation ($978M above FY17), of which $550M is for TIGER Grants ($50M above FY17), $44.97B is from the Highway Trust Fund for the Federal-Aid Highways program ($968M above FY17), $16.97B is for the FAA ($563M above FY17), $1.1B for the FAA Next Generation Air Transportation System, $1.974B for the Federal Railroad Administration ($122M above FY17), $12.129B for the Federal Transit Administration ($285M below FY17), $577.6M for the Maritime Administration ($55M above FY17), $908.6M for NHTSA, $744.8M for the Federal Motor Carrier Safety Administration ($68M of this is to complete the modernization of border facilities to improve inspections along the Southern border), and $272M for the Pipeline and Hazardous Materials Safety Administration. The bill also blocks the administration from pursuing privatization of the air traffic control system and rejects the President’s proposals to reduce the FAA workforce, raises the cap on the Passenger Facility Charge from $4.50 to $8.50, eliminates the Contract Weather Program, consolidates offices and leases, and prevents the construction of new facilities.

The bill provides $40.244B for the Department of Housing and Urban Development ($1.4B above FY17), of which $6.85B is for Community Planning and Development programs ($47M above FY17), $2.456B for homeless assistance programs, and $160M to combat lead hazards ($15M above FY17).

Senate FY18 Transportation HUD Appropriations Summary

https://www.appropriations.senate.gov/news/majority/committee-advances-fy2018-transportation-hud-appropriations-bill

Senate FY18 Transportation HUD Appropriations Bill Text

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Transportation,%20HUD%20Appropriations%20Bill,%20S1655.pdf 

Senate FY18 Transportation HUD Report Language

https://www.appropriations.senate.gov/imo/media/doc/FY2018%20Transportation,%20HUD%20Appropriations%20Bill,%20Report%20115-138.pdf

Status of FY18 Appropriations Spending Bills