The Department of Homeland Security (DHS) sent a $271M reprogramming notification to Congress on July 26. DHS cited the record surge in migrant arrivals at the U.S. Southern border and ensuing humanitarian crisis as the reason for needing to reprogram these funds. “Without additional resources, the safety and well-being of law enforcement personnel and migrants are at substantial risk.” While DHS has received supplemental funding to expand migrant processing centers, the administration contends that they need additional funding for detention beds, ground transportation, air transportation, transportation costs related to Migrant Protection Protocol, and the establishment and operation of temporary immigration hearing facilities on the southwest border.

House Homeland Security Appropriations Committee Chairwoman Lucille Roybal-Allard responded to DHS Acting Secretary McAleenan in a letter this week in which she stated that she has, “significant concerns about the intended use of funds and, consequently, about the tradeoffs between that use and the activities that would otherwise be funded from the source accounts.” While the chairwoman objected to the reprogramming, she noted in her letter that it was a moot point as the Department has already incurred most of the obligations related to the notification and doesn’t need congressional approval to go ahead with the transfers. Roybal-Allard wrote, “the late submission of this notification undermines and ignores the time-tested mechanism for ensuring that the House and Senate Committees on Appropriations are in concurrence with proposed transfer and reprogramming actions.” She urged DHS to work with the Committee to “restore the partnership we once had in support of the Department’s many important missions.”

Department of Homeland Security FY 2019 Southwest Border Emergency Transfer and Reprogramming Notification

Chairwoman Roybal-Allard Letter to DHS Acting Secretary McAleenan

House Homeland Security Committee Chairman Thompson Statement

https://homeland.house.gov/news/press-releases/thompson-reckless-for-trump-administration-to-divert-funding-from-tsa-and-fema-to-pay-for-ice-indefinite-detention-of-families-and-children

The non-partisan Congressional Budget Office (CBO) release an update to its 10-year budget and economic outlook projections. CBO estimates that the U.S. federal deficit is forecasted to be $960B in FY2019 and will reach $1 trillion for the 2020 fiscal year. The estimate for FY2019 is $63B or 7% above the estimate CBO released three months ago. Over the 2020 to 2029 period, projected annual deficits will equal $12.2T, or $800B more than projected in May. This is an average of $1.2T per year, or 4.7% of gross domestic product (GDP). In 2018, debt held by the public reached 78% of GDP. By 2029, the national debt is projected to grow to 95% of GDP – its highest level since immediately after WWII.

The increase in the deficit comes mostly from the higher discretionary funding limits for FY2020 and FY2021 in the Bipartisan Budget Act of 2019. An anticipated reduction in interest rates provides some relief as it lowered projections of net interest outlays by $1.4 trillion (including interest savings from the resulting reductions in deficits and debt).

CBO “An Update to the Budget and Economic Outlook: 2019 to 2029”

https://www.cbo.gov/system/files/2019-08/55551-CBO-outlook-update_0.pdf

The Office of Management and Budget (OMB) published its Fiscal Year 2018 Annual Report to Congress on the implementation of the Federal Information Security Modernization Act of 2014 (FISMA). The document includes data reported by agencies to OMB and the Department of Homeland Security Cybersecurity and Information Security Agency (CISA). The report highlights government-wide cybersecurity programs and initiatives, and federal agencies’ progress to enhance federal cybersecurity over the past year and into the future. In FY18, federal agencies reported 31,107 incidents, which is a 12% decrease from FY17. While the number of incidents has decreased, several large agencies continue to be at risk for cyberattacks. The most at risk agencies are the departments of Energy and Health and Human Services, EPA, FCC, and FTC. Email-based threats are the most prevalent means of cyberattack. And the main deficiencies are lack of data protection, inconsistent application of software security fixes, lack of strong authentication requirements for accessing systems, and absence of continuous monitoring of systems.

Federal Information Security Modernization Act (FISMA) FY2018 Report 

https://www.whitehouse.gov/wp-content/uploads/2019/08/FISMA-2018-Report-FINAL-to-post.pdf

The President signed the Bipartisan Budget Act (H.R. 3877) last week. Senate appropriators can now turn their attention to their FY20 spending bills. Last week Senate Appropriations Committee Chairman Richard Shelby (R-AL) distributed the individual spending allocations for each of his 12 subcommittees, but those figures have not been made public. The allocations will allow the Senators and committee staff to finish drafting their bills during the August recess so that they are ready when Congress returns the week of September 9. 

Senate Republicans are looking to decrease the Labor HHS Education FY20 allocation by $5 billion in order to fund the President’s border wall. This is a clear signal that negotiations between the House and Senate on the Homeland Security FY20 spending bill could be contentious. Congress approved $1.3B for the wall in the FY19 omnibus signed into law in February. The President has requested an additional $8.6B for border barriers in FY20 – $5B for the Department of Homeland Security and $3.6B for the Department of Defense to assist with the project.

The first full committee markup will be on September 12. The first package the Senate marks up could be a three-bill minibus that includes the Defense, Labor HHS Education, and Energy & Water spending bills. Chairman Shelby has the goal of marking up all 12 FY20 spending bills before the end of September. The committee will mark up four bills per week to meet that goal.

The Senate passed the bipartisan budget deal this week by a vote of 67-28. Five Democrats and 23 Republicans voted against the measure. The President signed the bill this morning. The deal sets an overall funding level of $1.37T for FY20 and suspends the debt limit through July 31, 2021. This deal officially ends the budget caps and threat of sequestration imposed by the 2011 Budget Control Act.

• Includes $103.812B in emergency supplemental disaster relief funding (P.L. 115-72) to respond to Hurricanes Harvey, Irma and Maria.

Senate appropriators can now turn their attention to their FY20 spending bills. Senate Appropriations Committee Chairman Richard Shelby (R-AL) said that he hopes to finalize the spending allocations for each of his 12 subcommittees by the end of this week or early next week. Shelby is still negotiating with Democrats on those allocations. The allocations will allow the Senators and committee staff to finish drafting their bills during the August recess so that they are ready when Congress returns the week of September 9. The first full committee markup will be on September 12. The first package the Senate marks up could be a three-bill minbus that includes the Defense, Labor HHS Education, and Energy & Water spending bills. 

The House has passed 10 of its 12 annual spending bills, but most of them will have to be rewritten to the newly agreed upon overall spending limits. House Democrats had allocated more for nondefense spending and less for defense spending when they marked up their FY20 spending bills earlier this year.

Getting all 12 bills passed, conferenced, and passed again before the end of the fiscal year is unlikely, so a continuing resolution (CR) will be needed to keep the government open. How long that CR will last – a few weeks or several months – is up for debate. And there will be much debate over the controversial Homeland Security spending bill, which could result in a year-long CR for DHS.

FY2020 Appropriations Bills Status

After weeks of negotiations between House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin, President Trump and congressional leaders signed off on Monday on a two-year budget deal. 

The deal raises the budget caps on defense and non-defense spending in FY20 and FY21 by a total of $321B. Only $77.4B would be offset with increased fees and an extension of cuts to Medicare and other programs that were set to expire in 2027. The deal provides $738B in FY20 and $740.5B in FY21 for defense spending and $632B in FY20 and $634.5B in FY21 for non-defense spending. The deal also suspends the debt ceiling for two years through July 31, 2021. At that point the debt ceiling would be reinstated and the Treasury Department would begin to use extraordinary measures to avoid defaulting on their obligations if Congress didn’t raise the debt ceiling. The extraordinary measures would potentially buy enough time until early 2022 before Congress would have to act again on the debt ceiling.

The House passed the two-year budget deal yesterday by a vote of 284 to 194. Sixteen Democrats voted against the measure: Blumenauer-OR, Brindisi-NY, Cooper- TN,Cunningham-SC, Harder-CA, Kind-WI, Lipinski-IL, McAdams-UT, Murphy-FL, Omar-MN, Peters-CA, Peterson-MN,Pressley-MA,Rice-NY, Schrader-OR, andSpanberger-VA.Republicans were divided on the measure, with 132 voting against it and 65 supporting it. The Senate will consider the measure early next week where it is expected to pass. And the President is expected to sign it given the support for the deal that he tweeted this week.

• Includes $103.812B in emergency supplemental disaster relief funding (P.L. 115-72) to respond to Hurricanes Harvey, Irma and Maria.

Congress can now turn its attention to completing action on its FY20 appropriations bills. The House has passed 10 of its 12 annual spending bills. They will have to rework some of those spending bills to reduce nondefense spending by $15B and increase defense spending by $5B to reflect the new budget deal. They will also have to strike some of the policy riders in their bills given the agreement in the budget deal prohibiting their inclusion.

The Senate will work in September on passing its FY20 spending bills. The subcommittee chairs and ranking members will get their subcommittee allocations in the next couple of weeks so that they can write their bills during the August recess. They will begin with the Defense and Labor HHS Education bills when they return the week of September 9. One more bill may be added to that first minibus package – Sen. Lamar Alexander (R-TN) would like it to be the Energy and Water bill. The committee may not mark up all 12 bills in committee given the time limitations. They may opt to send the bills directly to the Senate floor or begin conference negotiations. 

The House is scheduled to be in session 12 days in September and the Senate is scheduled for 15 days. Given the tight timeframe before the end of the fiscal year on September 30, a continuing resolution (CR) will likely be needed to avoid a government shutdown. 

FY2020 Appropriations Bills Status

Treasury Secretary Steven Mnuchin said Thursday morning that an agreement was reached between the administration and House Speaker Nancy Pelosi (D-CA) on spending levels for FY20 and FY21 as well as a two-year extension of the debt ceiling. Rep. Tom Cole (R-OK) said that the FY20 cap for defense spending would be somewhere between $733B and $750B. 

While both sides agree that there should be offsets for the spending cap increases, they are still discussing the specifics of those offsets. The last bipartisan budget deal included $38B in offsets for $296B in budget cap increases. Last night the Treasury Department sent a “menu” of $574B in spending cuts as well as $516B in savings that can be achieved by freezing spending levels in FY21-FY23. Democrats responded that the $1.1T offered by the White House are nonstarters. The administration wants at least $150B in offsets. This is the most significant final hurdle they need to clear before reaching a deal.

Secretary Mnuchin followed up stating that if they don’t get an agreement done in time, he is advocating for a separate debt ceiling increase. Speaker Pelosi didn’t comment on the Secretary’s statement that an agreement had been reached. The Speaker does want to pass an agreement on the House floor by next Thursday. House Minority Leader Kevin McCarthy (R-CA) said a final agreement wasn’t locked down yet, but that there was broad agreement on the debt ceiling timeframe. 

What’s also at play is other potential legislative riders that would be attached to the must-pass agreement such as expired tax provisions, whether the $22B needed for the Veterans Choice Program should count against the cap on nondefense spending, a retirement savings bill (H.R. 1994), and a tax technical corrections bill.Speaker Pelosi had said that she would need a deal by the end of this week in order to put it on the House floor next week. The House is scheduled to adjourn for the August recess next Friday. Both sides are continuing negotiations this weekend, but an additional week of work for the House is looking more likely.

Earlier this week the Bipartisan Policy Center (BPC) released a new forecast for when the Treasury Department will run out of extraordinary measures and can no longer pay its bills in full and on time without Congress raising the debt ceiling. BPC now forecasts the date as potentially early September, but the more likely outcome is early October. BPC’s original forecast in May was for debt default by October or early November. A decline in corporate tax revenue has pushed up these projected dates. Corporate revenue is running about 9% below the previous fiscal year. While BPC’s forecast carries uncertainty, BPC’s message to Congress is that it can’t ignore the forecast and needs to deal with the debt limit before they adjourn for the August recess. Congress is scheduled to return from the August recess on September 9.

Treasury Secretary Steven Mnuchin today sent a letter to House Speaker Nancy Pelosi (D-CA) in which he wrote that while “it is impossible to identify precisely how long extraordinary measures will last…” he requests “that Congress increase the debt ceiling before Congress leaves for summer recess.” House Speaker Nancy Pelosi (D-CA) has previously said she would not agree to raise the debt limit before an agreement on spending caps is reached. Progressives in her party are pushing her to use these negotiations to increase non-defense spending and demand action on some House-passed Democratic policies. Without a budget caps deal, an automatic $126B in sequestration cuts would kick in at the end of the year. The Administration would prefer to untangle the debt ceiling issue from the budget caps negotiations. This updated timeline could make linking the two issues more difficult.

On the Senate side, Senate Appropriations Committee Chairman Richard Shelby (R-AL) responded to the new BPC forecast saying that this would accelerate the need for serious negotiations. Senate Majority Leader Mitch McConnell (R-KY) said that he would push to get a bipartisan agreement on raising the debt limit and setting the spending limits for FY20 before the August recess. With respect to the FY20 appropriations bills, Shelby said that his committee won’t markup their FY20 spending bills until there is a budget caps deal. 

The House is scheduled to adjourn on July 26, not leaving much more time for concluding negotiations and passing whatever deal is eventually reached. The Senate is scheduled to be in session through August 2. The House will likely have to add another week of session to get this done before they leave for the August recess.

The House was the first to take up the emergency border security spending bill (H.R. 3401) this week. They passed it on Tuesday evening by a vote of 230-195. Four Democrats (Ocasio-Cortez, Omar, Pressley, and Tlaib) voted against the measure and three Republicans (Fitzpatrick, Hurd, and Smith-NJ) voted for it. A manager’s amendment helped get it across the finish line. The amendment limited to 90 days the amount of time unaccompanied migrant children can spend in unlicensed facilities and required new standards and protocols that Customs and Border Protection officials would have to meet to ensure the health and safety of those in its custody. The White House issued a veto threat on the House-passed bill. 

The Senate then took up the House-passed bill. They first voted on the House bill and it failed by a vote of 37-55. Three Democrats voted agains the House-passed bill: Manchin-WV, Markey-MA, and Merkley-OR. The Senate then amended the House bill with its own bill (S. 1900) and passed it by a vote of 84-8. The eight Senators voting against the measure were Hirono (D-HI), Lee (R-UT), Markey (D-MA), Menendez (D-NJ), Merkley (D-OR), Paul (R-KY), Wyden (D-OR), and Van Hollen (D-MD).

The $4.59B bill then returned to the House. Democrats wanted to amend the Senate-passed bill to include more protections for unaccompanied children, but Senate Majority Leader Mitch McConnell (R-KY) said the Senate would table it. The House finally agreed to accept the Senate-passed version and passed it by a vote of 305-102 (95 Democrats and seven Republicans voted against it). The White House has said that the President will sign the bill. 

May 2019 OMB Letter to Congress Requesting Additional $4.5B

https://www.whitehouse.gov/wp-content/uploads/2019/05/Pence.pdf

Senate Bill Text

https://www.appropriations.senate.gov/imo/media/doc/FY19%20Border%20Security%20Supplemental%20Appropriations%20Bill%20Text.pdf

Senate Summary

https://www.appropriations.senate.gov/imo/media/doc/FY19%20Border%20Security%20Supplemental%20Appropriations%20Summary.pdf

House Bill Text

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/LOWEY_018_xml%202019.6.21.0952.pdf

House Bill Summary

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/BORDER%20AID%20SUPPLEMENTAL%20SUMMARY.pdf

House Democratic Fact Sheet

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/House%20Border%20Supplemental%20Fact%20Sheet.pdf

House Comparison of House and Senate Bills

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/Comparison%20of%20House%20and%20Senate%20Emergency%20Border%20Supplementals.pdf

OMB Statement of Administration Policy on House Emergency Border Bill

https://www.whitehouse.gov/wp-content/uploads/2019/06/saphr3401r_20190624.pdf

CBO Cost Estimate

https://www.cbo.gov/system/files/2019-06/hr3401.pdf

On February 11, 2019, President Trump signed Executive Order (EO) 13859, which established the American Artificial Intelligence (AI) Initiative. The EO was in response to Chinese President Xi Jinping announcing that Beijing would invest as much as $150B to become a global leader in AI.

The first directive in the Executive Order was for Federal agencies to prioritize AI research and development (R&D) in their annual budgeting and planning process. Today, the administration released an updated research and development plan for AI technologies that adds to the strategy first published by the Obama Administration in 2016. The National AI R&D Strategic Plan: 2019 Update highlights the key priorities for Federal investment in AI R&D. 

In addition to reaffirming the seven strategies listed in 2016, the plan adds an eighth element calling for expanding public-private partnerships to accelerate advances in artificial intelligence, recognizing that the federal government cannot direct the national effort without collaborating with industry.

The eight strategies included in the plan are:

• Make long-term investments in artificial intelligence research.
• Develop effective methods for human-machine collaboration.
• Understand and address ethical, legal and social implications of the technologies.
• Ensure safety and security of systems.
• Share federal, public data for training and testing of technologies.
• Measure and evaluate technologies using standards.
• Understand national workforce needs.
• Expand public-private partnerships.

National Science and Technology Council National AI R&D Strategic Plan

https://www.whitehouse.gov/wp-content/uploads/2019/06/National-AI-Research-and-Development-Strategic-Plan-2019-Update-June-2019.pdf