The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) released their cost estimate for the American Health Care Act (AHCA) this week. Here are some highlights:

Costs:

• Reduce federal deficits by $337Bover the 2017-2026 period ($323B on-budget savings, $13B off-budget savings)
  • Outlays are reduced by $1.2T, while revenues decrease by $0.9T
  • Largest savings are from reductions in Medicaid and eliminating subsidies for non group health insurance
  • Largest costs are from repealing “Obamacare” taxes and fees, and for establishing a new tax credit for health insurance

Coverage:

• Initially in 2018, 14 million more people would be uninsured under the AHCA than under “Obamacare” – most of these are from repealing the penalties associated with the individual mandate
• In 2020 this number would rise to 21 million more uninsured people under the AHCA than under “Obamacare” because of changes to subsidies for insurance purchased in the individual market and to the Medicaid program
• And by 2026, the additional number of uninsured people under AHCA as compared to “Obamacare” would rise to 24 million because of changes in Medicaid enrollment

Stability of Health Insurance Market:

• The individual market would probably be stable in most areas under the AHCA or under “Obamacare”

Effects on Premiums:

• Prior to 2020, premiums for the individual market would increase 15-20% more than they would under “Obamacare”
• After 2020, increases in premiums for the individual market would be lower than they would under “Obamacare”
• By 2026, the increase in premiums in the individual market would be about 10% lower than under “Obamacare”
• These are average premiums – changes in premiums would differ significantly for people of different ages because the AHCA changes the age-rating rules. Under “Obamacare,” insurers can’t charge more than 3X for older enrollees than younger ones. Under the AHCA, insurers would be allowed to charge 5X more for older enrollees than younger ones. This could result in substantially reduced premiums for young adults and substantially increased premiums for older adults.

The full CBO/JCT cost estimate can be found at:

https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/costestimate/americanhealthcareact_0.pdf

FY17 Defense Appropriations Bill Passes House

The House passed a conference report for the FY17 Defense appropriations bill by a vote of 371 to 48 this week, with 141 Democrats voting for the measure and five Republicans voting against it. However, it faces an uncertain vote in the Senate. The Senate is scheduled to be in session only 23 more days and the House 20 more days before the current FY17 continuing resolution (CR) expires on April 28. Additionally, the Senate will be focused on confirming Neil Gorsuch for the Supreme Court before the April recess. The two potential outcomes at this point are an omnibus funding package for the remaining 11 FY17 spending bills plus any supplemental funding requested by the Administration for the military or border wall, or another stopgap measure extending current funding levels through the end of the fiscal year, Sept. 30. If they go with the latter alternative, federal agencies would be unable to start new programs or shift funding priorities from FY16.

FY17 Defense Appropriations Bill Text:

https://appropriations.house.gov/uploadedfiles/03.02.17_defense_-_fy_2017_appropriations_bill.pdf

FY17 Defense Appropriations Explanatory Statement:

https://appropriations.house.gov/uploadedfiles/03.02.17_defense_-_fy_2017_appropriations_bill_-_explanatory_statement.pdf

President to Submit FY18 Budget Request to Congress Next Week

President Trump is expected to submit his “skinny” FY2018 budget request to Congress next Thursday, March 16. However, work on an FY18 budget resolution by Congress will be on hold until after Congress passes legislation repealing the 2010 Affordable Care Act (“Obamacare”). The repeal bill is using the FY17 budget reconciliation process, which needs to be completed before Congress can begin the FY18 budget. The FY18 budget resolution is expected to include reconciliation instructions for overhauling the tax code.

President Trump is expected to request an additional $54B in defense spending in his FY18 budget request, offset by similar cuts in non-defense discretionary spending. This increase would exceed the $549B defense cap set by the Budget Control Act of 2011 and would violate a Senate budget rule. While the rule could be waived, it would require 60 votes in the Senate. This is unlikely to occur, as Senate Democrats would object to any defense spending increase without an equivalent increase in non-defense spending.

The House Appropriations committee released an FY17 defense appropriations conference report this week, which will be consider on the House floor next week. The bill could become the vehicle for all of the remaining FY17 spending bills given the lack of floor time before April 28 when the current continuing resolution expires.

The $577.9B bill boosts funding for the Department of Defense by $5.2B over FY16 enacted levels and is $1.6B over what former President Obama requested for FY16. The bill includes $516.1B in base discretionary funding and $61.8B in Overseas Contingency Operations (OCO)/Global War on Terrorism (GWOT) funding.

FY17 Defense Appropriations Bill Text:

https://appropriations.house.gov/uploadedfiles/03.02.17_defense_-_fy_2017_appropriations_bill.pdf

FY17 Defense Appropriations Explanatory Statement:

https://appropriations.house.gov/uploadedfiles/03.02.17_defense_-_fy_2017_appropriations_bill_-_explanatory_statement.pdf

Today President Trump signed an executive order (EO) directing each federal agency and department to identify regulations that the administration considers no longer needed. The President’s Executive Order on Enforcing the Regulatory Reform Agenda requires the head of each agency to designate within 60 days a Regulatory Reform Official (RRO) and the establishment of a Regulatory Reform Task Force composed of the agency RRO, the agency Regulatory Policy Officer, a representative from the agency’s central policy office, and at least three additional senior agency officials. Each Regulatory Reform Task Force will evaluate existing regulations and make recommendations to the agency head regarding their repeal, replacement, or modification. Other entities staffed by officials of multiple agencies, such as the Chief Acquisition Officers Council, shall form Joint Regulatory Reform Task Forces that will implement this EO with the Regulatory Reform Task Forces of their respective agencies. Within 90 days (May 25) of this EO and on a schedule determined by the agency head thereafter, each Regulatory Reform Task Force shall provide a report to the agency head detailing the agency’s progress. Those agencies directors that determine that their agency generally issues very few or no regulations can request a waiver for compliance.

Executive Order on Enforcing the Regulatory Reform Agenda:

https://www.whitehouse.gov/the-press-office/2017/02/24/presidential-executive-order-enforcing-regulatory-reform-agenda

Republican House Appropriators indicated this week that they have been authorized to begin negotiations with their Senate counterparts on completing the 11 remaining FY17 appropriations bills. The current continuing resolution (CR) funding the federal government expires on April 28. Congress may try to pass the bills individually or, as Republican House Appropriators proposed to their leadership this week, in one big omnibus. House Armed Services Committee Chairman Mac Thornberry (R-TX) said that Republicans will not support a CR funding the Department of Defense through the remainder of FY17. And House Energy Appropriations Subcommittee Chairman Mike Simpson (R-ID) said that he is not supportive of an effort to just pass a defense spending bill and then do a CR for the remaining 10 bills. An omnibus also is the most practical approach given that the House is only scheduled to be in session 28 days from now until April 28 while the Senate is scheduled to be in session 33 days during that same time period.

Thornberry also mentioned this week that he expects the administration to submit their FY17 defense supplemental spending request to Congress by March 1. It was originally reported that Defense Secretary Mattis had sent a memo to his department requiring that the FY17 budget amendment request be delivered to the White House Office of Management and Budget (OMB) no later than March 1, 2017.

The President signed four executive orders this week – one providing an order of succession within the Department of Justice, another directing the Departments of Justice and Homeland Security to “break the back of criminal cartels”, another forming a task force on reducing violent crime, and the final one directs planning to stop crime and crimes of violence against law enforcement.

Providing an Order of Succession Within the Department of Justice

This Executive Order (EO) replaces a previous EO issued by President Trump on January 13. It provides for an order of succession at the Department of Justice in the event that the Attorney General, the Deputy Attorney General, the Associate Attorney General, and any officers designated by the Attorney General have died, resigned, or otherwise become unable to perform the functions and duties of the office of Attorney General. The new order of succession following the incapacitation of all of the above individuals is the U.S. Attorney for the Eastern District of Virginia, followed by the U.S. Attorney for the Northern District of Illinois and the U.S. Attorney for the Western District of Missouri. The January 13 EO established the succession order as the U.S. Attorney for the District of Columbia, the U.S. Attorney for the Northern District of Illinois, and the U.S. Attorney for the Central District of California.

Providing an Order of Succession Within the Department of Justice Executive Order

https://www.whitehouse.gov/the-press-office/2017/02/10/providing-order-succession-within-department-justice

Executive Order on Enforcing Federal Law with Respect to Transnational Criminal Organizations and Preventing International Trafficking

The EO directs the Secretary of State, the Attorney General, the Secretary of Homeland Security, and the Director of National Intelligence to co-chair and direct the existing interagency Threat Mitigation Working Group (created by President Obama in 2011 to identify transnational organized crime networks that present a sufficiently high national security risk) to:

• Work to support and improve the coordination of Federal agencies’ efforts to identify, interdict, investigate, prosecute, and dismantle transnational criminal organizations and subsidiary organizations within and beyond the United States;
• Work to improve Federal agencies’ provision, collection, reporting, and sharing of, and access to, data relevant to Federal efforts against transnational criminal organizations and subsidiary organizations;
• Work to increase intelligence and law enforcement information sharing with foreign partners battling transnational criminal organizations and subsidiary organizations, and to enhance international operational capabilities and cooperation;
• Assess Federal agencies’ allocation of monetary and personnel resources for identifying, interdicting, and dismantling transnational criminal organizations and subsidiary organizations, as well as any resources that should be redirected toward these efforts;
• Identify Federal agencies’ practices, any absence of practices, and funding needs that might hinder Federal efforts to effectively combat transnational criminal organizations and subsidiary organizations;
• Review relevant Federal laws to determine existing ways in which to identify, interdict, and disrupt the activity of transnational criminal organizations and subsidiary organizations, and ascertain which statutory authorities, including provisions under the Immigration and Nationality Act, could be better enforced or amended to prevent foreign members of these organizations or their associates from obtaining entry into the United States and from exploiting the United States immigration system;
• Issue quarterly reports detailing convictions in the United States relating to transnational criminal organizations and their subsidiaries;
• Identify methods for Federal agencies to coordinate with State, tribal, and local governments and law enforcement agencies, foreign law enforcement partners, public-health organizations, and non governmental organizations in order to aid in the identification, interdiction, and dismantling of transnational criminal organizations and subsidiary organizations;
• Consult with the Office of National Drug Control Policy in implementing this order; and
• Within 120 days of the date of this order, submit to the President a report on transnational criminal organizations and subsidiary organizations and issue additional reports annually thereafter.

Executive Order on Enforcing Federal Law with Respect to Transnational Criminal Organizations and Preventing International Trafficking

https://www.whitehouse.gov/the-press-office/2017/02/09/presidential-executive-order-enforcing-federal-law-respect-transnational

Executive Order on Task Force on Crime Reduction and Public Safety

This EO directs the Attorney General to establish a Task Force on Crime Reduction and Public Safety. The Task Force shall exchange information and ideas and develop strategies to reduce crime (in particular illegal immigration, drug trafficking, and violent crime), identify deficiencies in existing laws, evaluate the availability and adequacy of crime-related data and identify measures that could improve data collection, and conduct any other studies and develop any other recommendations as directed by the Attorney General. The Task Force must submit at least one report to the President within one year.

Executive Order on Task Force on Crime Reduction and Public Safety

https://www.whitehouse.gov/the-press-office/2017/02/09/presidential-executive-order-task-force-crime-reduction-and-public

Executive Order on Preventing Violence Against Federal, State, Tribal, and Local Law Enforcement Officers

The Attorney General is directed to develop a strategy to use existing Federal laws to prosecute individuals who commit or attempt to commit crimes of violence against Federal, State, tribal, and local law enforcement officers and to coordinate with State, tribal, and local governments, and with law enforcement agencies at all levels to prosecute these crimes. The AG will also review existing Federal laws to determine whether they are adequate, make recommendations to the President for legislation to address the gaps in protection and safety of law enforcement officers, coordinate with other Federal agencies to develop an executive branch strategy on the issue, and evaluate grant funding programs and make recommendations to the President for any changes to grant funding.

Executive Order on Preventing Violence Against Federal, State, Tribal, and Local Law Enforcement Officers

https://www.whitehouse.gov/the-press-office/2017/02/09/presidential-executive-order-preventing-violence-against-federal-state

Ethics Commitments by Executive Branch Appointees Executive Order

The President signed an Ethics Commitments by Executive Branch Employees executive order last weekend. The EO does the following:

1. Requires all Executive Branch appointees to sign a pledge and contractual obligation to:
   1. Not lobby any agency in which they served for five years after they leave
   2. Abide by the post-employment restrictions in section 207(c) of Title 18, US Code if they were a covered employee
      1. Sec 207(c) of Title 18, US Code – https://www.law.cornell.edu/uscode/text/18/207
   3. Not lobby covered officials or non-SES appointees for the remainder of the Administration
   4. Not act on behalf of foreign governments or foreign political parties (lifetime ban)
   5. Not accept gifts from lobbyists or lobbying organizations
      1. Gift Definition – https://www.law.cornell.edu/cfr/text/5/2635.203
   6. Not engage for 2 years in a matter that is related to their former employer or former clients, including regulations and contracts
   7. For a period of 2 years, not participate in a matter on which they lobbied during the previous 2 years if they were a registered lobbyist
   8. Agree that any hiring or employment decisions that he/she makes will be based on a candidate’s qualifications, competence, and experience.

2. Each federal agency will establish rules or procedures for:
   1. Ensuring each appointee signs the pledge.
   2. Ensures compliance with the EO.
   3. Adopt rules or procedures as necessary or appropriate to:
      1. Carry out the EO
      2. Apply the lobbyist gift ban
      3. Authorize limited exceptions to the lobbyist gift ban
      4. Make it clear that no person shall have violated the lobbyist gift ban if they properly dispose of the gift
      5. Ensure existing rules and procedures for employees engaged in negotiations for future employment don’t affect integrity
      6. Ensure, in consultation with OPM Director, that the hiring or employment decisions requirement (H in the above list) is honored

3. Enforcement
   1. The commitments in the pledge are enforceable by any legally available means:
      1. Debarment proceedings or civil judicial proceedings for declaratory, injunctive, or monetary relief
   2. Anyone who violates the pledge can be barred from engaging in lobbying activities with respect to that agency for up to 5 years in addition to the 5-year time period covered by the pledge.
   3. Attorney General is authorized to:
      1. Request any appropriate federal investigative authority to conduct investigations of a possible breach
      2. Commence a civil action in US District Court if a breach has occurred.
      3. Request relief including:
         1. Temporary restraining orders and preliminary and permanent injunctions
         2. Establishment of a constructive trust for payment to the US Treasury

Ethics Commitments by Executive Branch Appointees Executive Order:

https://www.whitehouse.gov/the-press-office/2017/01/28/executive-order-ethics-commitments-executive-branch-appointees

Reducing Regulation and Controlling Regulatory Costs Executive Order

The President also signed an executive order for reducing regulations and controlling regulatory costs. The EO requires that whenever an executive department or agency publicly proposes for notice or comment or otherwise promulgates a new regulation, it has to identify two existing regulations to be repealed. The total costs for all new regulations, including repealed ones, cannot be greater than zero for FY17. Any new incremental costs associated with new regulations have to be offset by the elimination of existing costs associated with at least two prior regulations.

Reducing Regulation and Controlling Regulatory Costs Executive Order

https://www.whitehouse.gov/the-press-office/2017/01/30/presidential-executive-order-reducing-regulation-and-controlling

OMB Memo: Interim Guidance Implementing Section 2

https://www.whitehouse.gov/the-press-office/2017/02/02/interim-guidance-implementing-section-2-executive-order-january-30-2017

Senate Budget Committee Chairman Michael Enzi (R-WY) released an FY17 budget resolution (https://www.congress.gov/115/bills/sconres3/BILLS-115sconres3pcs.pdf) this week that includes reconciliation instructions (Title II) that will allow Congress to repeal the 2010 Affordable Care Act (Obamacare). The Senate voted 51 to 48 to proceed with consideration of the budget resolution. Sen. Rand Paul (R-KY) joined Democrats in trying to block the measure, but for different reasons. Paul, a fiscal conservative, said he couldn’t support a budget outline that calls for ever-rising deficits. Sen. Dianne Feinstein (D-CA) did not vote.

The measure includes reconciliation instructions that require two House committees (Energy and Commerce and Ways and Means) and two Senate committees (Finance and Health, Education, Labor and Pensions) to submit changes in law to reduce the deficit by not less than $1B for FY17-FY26 to their respective Budget Committees by January 27, 2017. The reconciliation process allows the Senate to approve legislation by a simple majority vote, instead of the 60-vote threshold normally required under Senate rules.

A floor vote on the budget resolution is expected in the Senate next week (late Wednesday or early Thursday). Enzi expects three days of debate followed by a “vote-a-rama,” which is expected to begin at 5 pm on Wednesday.

There is still no consensus among Republicans on what a replacement for Obamacare would like or how it would be phased in. It is also unclear if Republicans want to repeal the entire law or if they will try to preserve some of the more popular provisions. And they may consider retaining some of the law’s taxes that could be needed to finance any replacement plan.

House Speaker Paul D. Ryan (R-WI) confirmed this week that the repeal measure would include a provision to strip federal funding from Planned Parenthood. This may cause some problems in the 52 Republican to 48 Democrat Senate as Sen. Susan Collins (R-ME) offered an amendment to the 2015 reconciliation bill to continue funding for Planned Parenthood. Sen. Lisa Murkowski (R-AK) has also expressed concerns about defunding Planned Parenthood as she is a longtime support of Planned Parenthood and has opposed broadly defunding the organization. Finally, Sen. Tom Cotton (R-AR) indicated this week that he wants a replacement measure before voting on repeal. If these three Senate Republicans and Sen. Rand Paul (R-KY) join all Senate Democrats in voting against the reconciliation measure it will not have the 50 votes needed for passage.

After meeting with House Republicans, Vice President-Elect Mike Pence said Trump’s staff is preparing executive orders related to the health care law, but he declined to offer any details. Pence also set an ambitious timeline, with a goal of getting repeal legislation to Trump’s desk by February 20. They hope to pass the budget resolution needed for the reconciliation measure by January 20.

The Senate is currently debating whether to pass the FY17 continuing resolution (CR) or force a temporary government shutdown. The current CR expires at midnight tonight. Sen. Joe Manchin (D-WV) is leading the effort to block the CR in the Senate over funding for health insurance for retired coal miners. Manchin is pushing for more than the four-month extension of benefits that was included in the CR. The House passed the CR by a vote of 326 to 96 on Thursday.

The CR extends current funding levels for most federal agencies through April 28, 2017 and maintains the current budget cap level of $1.07T put into place under the Budget Control Act of 2011.

The bill includes $170M to help repair the contaminated water system of Flint, MI, but most of that funding hinges on passage of a separate water projects bill (S 612) that would authorize the work. That bill passed the House earlier this week, but Sen. Barbara Boxer (D-CA) has raised concerns in the Senate over an unrelated provision concerning drought relief for California. Democrats are also objecting to what they consider is a weak “Buy America” provision in the bill.

The CR includes a requirement for the Office of Management and Budget (OMB) to calculate whether the CR violates the spending caps that would result in an across-the-board sequester. The Congressional Budget Office (CBO) has estimated that the current CR that expires tonight would exceed the $518.5B limit on FY17 non-defense discretionary spending by $1.6B. Under current law, if the CR exceeds the spending caps the President is required to order across-the-board cuts to most programs. The White House had sought a provision to delay those potential cuts until a final appropriations package is completed next year.

It also contained language designed to speed the confirmation of retired Gen. James Mattis to be President-Elect Trump’s Secretary of Defense. The language would require Mattis to receive 60 votes for a waiver needed to join the cabinet because of his recent military service, but it would expedite the process in the Senate in advance of Trump’s swearing in. Senate Majority Leader Mitch McConnell (R-KY) or Senate Armed Services Committee (SASC) Chairman John McCain (R-AZ) could introduce the waiver legislation within the first 30 days of the new Congress. The bill would be referred to the SASC and if it is not acted on within five days it would go directly to the Senate floor where the process would limit debate to 10 hours.

FY17 CR:

http://docs.house.gov/billsthisweek/20161205/CPRT-114-HPRT-RU00-SAHR2028.pdf

House Appropriations Committee Summary:

http://appropriations.house.gov/news/documentsingle.aspx?DocumentID=394665

Senate Appropriations Committee Summaries:

Security Assistance Appropriations Act Summary

http://www.appropriations.senate.gov/imo/media/doc/120616-FY17-CR-DIVISION%20B%20OCO-DOD-SFOPS-final.pdf

Disaster Relief Summary

http://www.appropriations.senate.gov/imo/media/doc/1206016-FY17-CR-DISASTER-SUPP-Final.pdf

Section-by-Section Summary

http://www.appropriations.senate.gov/imo/media/doc/120616-FY17-Second-CR%20Section-By-Section-Final-Revised.pdf