Big jobs usually go to the men who prove their ability to outgrow small ones.
-Theodore Roosevelt
While President Trump is halfway through his first trip abroad, it is slated to be another noisy week back in Washington with a rollout of the president's budget today and the release of the much-anticipated Congressional Budget Office (CBO) analysis of the House passed American Health Care Act.
The budget is a governing document and, as most president's budgets do, will find many detractors of specific proposals. The Democrats will condemn the whole document. While the budget is likely to balance over 10 years, there will be some Republicans who will support specific proposals in the document, but many of them will have issues with the particulars in the budget as well and will oppose it as well. Notably, Senate Majority Whip John Cornyn has already declared the budget “dead on arrival.” This is not unusual. The three items to watch closely before attention is turned back to the budget process in the legislative branch: (1) the specifics on the size of the tax cuts and what the dynamic effect of those tax cuts are estimated to be, (2) defense spending (our General Emo Gardner has a breakdown here), and (3) those pieces of the budget that preview the future of health care reform.
Tomorrow's release by the CBO of their analysis of the American Health Care Reform Act will have a powerful impact on the Senate discussions of health care reform. The House has held up transferring the papers on the House passed bill out of an abundance of caution. Because significant changes were made to the legislation passed on the House floor, they are waiting to send the bill to the Senate. The rules for reconciliation require that the bill save $2 billion. While it is highly unlikely that it won't save that amount, the House has held up sending the bill because if it doesn't save $2 billion, it is not a reconciliation bill and would not receive the procedural protections afforded a reconciliation bill in the Senate. Most important of these is that it can be passed with a simple majority vote. Rather than belabor this point, if the “unlikely” occurs, we will send out a special midweek notice to review the actions which will be necessary to get the health care reconciliation bill back on track should this occur.
Once they receive the CBO analysis, the Senate Republicans can begin in earnest to discuss the bill they will bring to the Senate floor. Senator McConnell has appointed a 13 member task force to take the lead. Since the Republican Senators have several luncheon meetings together every week (the Democrats have the same sort of meetings), at these meetings all Republicans Senators can participate - and, as we mentioned last week, it’s almost certain that health care will be the first issue discussed at every one of these meetings. So all Republican Senators will have as much input into the proposal as they want to have. The major focus will be on Medicaid, coverage, premium costs and waivers for states. There are a range of other important issues which must also be decided. Senator McConnell wants to move as quickly as possible, but it could well be July before the health care reconciliation bill is taken up on the Senate floor. A conference with the House is the most likely step to develop the final bill. September could be the target for finishing a conference report.
The House Ways and Means Committee held hearings on tax reform last week. This is the beginning of developing a tax reform package that is targeted for action on the House floor in the fall. That vehicle will be the reconciliation bill which comes from the FY'18 budget agreement. Reaching agreement on the FY'18 budget will be a challenge. However, Way and Means Chairman Kevin Brady is determined to start this discussion in his committee to prepare for fundamental tax reform.
It appears now that it will be possible for the House to begin work on the FY '18 budget before the reconciliation bill for FY'17 has been finalized. The target for completing action on the FY'18 reconciliation bill in the House is this fall.
There are two other critical issues that must be handled over the next four or five months: debt limit and the FY'18 appropriations bills. A continuing resolution is to be expected to extend spending beyond September 30th. What will happen later in the calendar year on appropriations is yet to be determined, but one thing is certain - there will have to be ‘sweeteners’ added to get the votes to pass the debt limit when it comes to a vote, possibly not until the fall.
Looking back at last week, the appointment of Director Mueller as Special Counsel and the president's foreign travel have taken the edge off of the mainstream media for the time being. The carry-over from last week will separate into three parts: (1) Having a Special Counsel means that the White House staff will have their focus diverted to some degree from the President's agenda, (2) there is only so much "air in the room" at any one time to deal with major issues. This will suck up some of the oxygen, and (3) as the investigation continues, it could reduce the political currency that the president has to use to get his agenda enacted into law. It does not mean that the Senate or the House will not be able to move the agenda forward, but it does add to the degree of difficulty in executing on the plan.
Up until the tragic events out of Manchester, the president's first foreign trip has dominated the news. The Middle East, a visit with the Pope, NATO, and the G7 summit in Italy provides the broadest agenda for a president's first foreign trip in memory. It has the potential to set the terms for discussions of a new broad coalition against terrorism, open up a Trump Administration effort to build a peace process in the Middle East, define NATO's future direction, and begin a dialogue with world economic powers on the Trump growth agenda.
David Hoppe was Speaker Paul Ryan's Chief of Staff and left his post in the Office of the Speaker in January 2017.
TRUMP TO PROPOSE $640B PENTAGON BUDGET AS EXPECTED; SIGNS $110B ARMS DEAL WITH SAUDIS: Our Senior Defense Policy Analyst Emo Gardner writes good three days for defense primes: POTUS signed $110B Saudi arms deal on Saturday and will propose $640B Pentagon budget on Tuesday. You can find the full analysis here.
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