President Trump’s trip to the Middle East and Europe provided a brief respite from the continuous Russia watch and the effort to move the president's agenda forward is hurt in a number of ways by returning to this diversion. The focus of the senior staff at the White House will be divided between the agenda and responding to the questions from Robert Mueller in the coming months. President Trump's political currency is drawing down to pay for things having nothing to do with achieving his legislative goals and it soaks up some of the oxygen needed to support his initiatives.
The budget introduced last week was meant to respond to the promises made by candidate Trump during the campaign. It attacks the growing deficits of the past 17 years, but especially of the last eight years. Like most White House budgets, it will change in a multitude of ways as it winds through the process. It does set out the themes that will be argued over the next eight months in the upcoming budget and appropriations process.
Congress returns early next week to kick off what’s expected to be a packed summer with, of course, plenty of fireworks as Trump’s impatience with his fellow Republicans on the other end of Pennsylvania Avenue grows.
Health care:
We’ve mentioned before that health care task force Senate Republicans are now meeting several times a week. Now that the Congressional Budget Office (CBO) score of the House-passed bill is in, the Senate can begin in earnest to discuss more details. The CBO report was a wash and predicted only minor changes from the final changes enacted by the House.
The most difficult number for the CBO to explain is how 23 million people will lose their insurance coverage in the tenth year. As insurance companies withdraw on a weekly basis from state after state, how do people who have no one to insure them in the exchanges under Obamacare lose coverage under the new system. Sometimes using current law as your baseline makes no sense because current law doesn't reflect current reality.
Majority Leader Mitch McConnell hopes that the task force can put together a proposal that gets at least 50 votes as quickly as possible. The hope is that this can be done by making discrete changes in the House-passed bill. It seems more likely that the development of the Senate legislation will more resemble "demo day” on Fixer Upper. That all means that it will take time. It will be an achievement for the Senate to get a reconciliation bill to the floor before the August recess. That would give staff the month of August to prepare the papers and then final work on a conference report could begin in September.
While the discussions are proceeding, Senate Republicans have the opportunity to reset the debate on health care. The details of health legislation are all-important, but the narrative of what Republicans want to do to create the best health care system for America has gone unaddressed because of the focus on the details of community rating, premiums, deductibles, coverage estimates, etc.
The health care debate is quite straight forward. President Obama and the Democrats put government control of people's health care on steroids in 2010. The results are clear: you can't pick your own doctor, you can't keep your plan, and you can't afford to pay the premiums and deductibles of government controlled health care. The Republican’s aim is to create a new system based on the patient with the patient/doctor relationship at the center of the system. Better access, benefits that fit your family's needs, choices, flexible health savings accounts that let the patient decide how to use their tax free health savings accounts are the building blocks of patient centered health care. Before it fails completely, government controlled health care must be changed to allow the patient to control their health care decisions for them and their families. This is what the discussion is all about - who controls my health care? The individual or the government.
Budget:
It appears that work can begin on the FY'18 budget before Congress finishes the health care reconciliation bill. Passing a FY'18 budget will not be a picnic. Most Republicans want to balance the budget at the end of 10 years as the president's budget did. This is going to be difficult with the need to rebuild our defenses, repair infrastructure, and provide for a tax reform that might trade revenue neutrality for more growth – not to mention the politically-charged issues such as funding for Planned Parenthood and the wall. The politics of passing such a budget are daunting. And if you don't pass a FY '18 budget, you don't have a reconciliation vehicle to use for tax reform. You also need a budget to help set the spending numbers for the appropriations process. It is entirely possible you won't see a budget until July. Look for a continuing resolution into December and then...
The opening salvo from a number of House Republicans on the debt limit is to request more spending reductions. Some would like these to be entitlement savings. OMB Director Mick Mulvaney said last week that revenues are not coming in as fast as some predicted which might require a vote on the debt limit before the August recess rather that in the fall – how many days do they have in July?
Tax Reform/Tax Cuts:
The Ways and Means Committee held its first hearing on tax reform and the big message is that there are a number of House Republicans who are less than supportive of the border adjustment tax (BAT) – no surprise here after an effective lobbying campaign led by the retail industry. Senate Republicans have had some serious questions about the BAT for several months and many have declared BAT dead. However, it appears likely that there will be some significant internal discussions about the potential structure of a BAT as well as the need to answer the question of where revenue come from to reduce the deficit cost of tax reform. Of course, there are people who are willing to vote for a paper deficit, if that will achieve a bigger, growth-oriented tax reform bill.
BAT is a significant, but not the only threshold question facing the tax writing committees. The basic question of revenue neutrality is an a priori question that must be answered before serious development of a tax bill begins. There is also the ongoing discussion of whether tax reform should be a fundamental restructuring of the code like in 1986 or just a common variety tax cut package. A myriad of other questions will also have to be answered, but these are a couple of the questions that must be addressed to move any tax legislation. Republicans on both side of the Capitol are feeling the pressure, but taking a serious look at the calendar would suggest that House consideration of the tax reconciliation bill wouldn't come until the fall.
Dodd-Frank Reform/The Choice Act:
House leadership and the Financial Services Committee did answer a big question last week. They have cleared the way for floor consideration next week of the Choice 2.0 legislation to reform the Dodd-Frank bill passed in 2010. It was decided to take out the section that would revoke the Durbin amendment that sets swipe card fees. This avoids a fight (for now) between the retail industry and the bankers. Since the Choice Act must be done under regular order, it would not be possible for the bill to pass in the Senate with language revoking the Durbin amendment in it. With the Durbin amendment no longer an issue all that is necessary is to get Senate Democrats to agree to repeal most of the Dodd-Frank law – and it goes without saying that that is a very high hurdle. Don't look for the House Choice Act, if it passes the first week of June, to come to the floor very soon in the Senate.
David Hoppe was Speaker Paul Ryan's Chief of Staff and left his post in the Office of the Speaker in January 2017.
