DAVID HOPPE AND JT TAYLOR: THE FAST-APPROACHING JULY + AUGUST RECESSES - JT   Potomac banner 2 

Reflecting for a moment on last week’s shooting, leaders and members of both parties in Congress responded with pledges of unity - a welcome respite in an overheated Washington. Both sides need to cool the rhetoric and remember that policy disputes don’t mean you have to disagreeable when you disagree.

Back to the Capitol grind. Senate Republicans have mostly written their health care alternative proposal, but even members of the task force don't know all of the final decisions that have been made. Those are being very tightly held by the Majority Leader McConnell’s office. The Congressional Budget Office (CBO) will work to analyze and score the bill and no one has a good estimate of when they will complete their work. But the reconciliation proposal will not come to the Senate floor for a vote until there is a final CBO report on the new Senate proposal. That could take a couple of weeks to prepare. Senator McConnell would like to bring the legislation to a vote in the Senate before the Fourth of July recess, but it seems more likely that the vote will occur after the recess when Congress returns. The key issues are how they will cover pre-existing conditions, how many people will be covered, what tax increases from the Affordable Care Act will be terminated and which ones will be kept, and how to provide help for people who don't qualify for Medicaid but need government support to afford health care insurance. Serious concerns remain about how the "Hyde Amendment" issue will be handled in the Senate bill.

Discussions about the FY '18 budget are moving slowly in the House. They are looking at several different base lines including the Congressional Budget Act, the Trump baseline, and a separate baseline developed by the House Budget Committee. Defense spending levels are a key issue (if you haven’t heard General Emo Gardner’s forecast, you are missing out). Also the size and form of the tax plan and whether it will be revenue neutral or be reported by Joint Tax and CBO as a revenue loser are being discussed. Finally, there are a number of House Republicans who desire to have mandatory spending cuts in the FY'18 budget. Beyond these questions the idea of stretching the budget window out further than the traditional 10 years is being raised by some House members. The most critical of these issues will be the size and form of the tax plan and the mandatory spending cuts. A critical point to remember is that without an agreement between the House and the Senate on a FY'18 budget, there can be no reconciliation bill to serve as the vehicle for a tax cut in 2017.

The clock is working against a solution to the budget issue as well. Health care is moving slowly in the Senate and needs to move ahead of final discussion of the FY'18 budget. There is a strong desire among House Republicans to move an omnibus appropriations bill before the August recess. And, the debt limit date is not clear, but according to Treasury Secretary Steve Mnuchin, reduced revenues may make it necessary to act on the debt limit before the August recess.

The Senate passed, by a strong bipartisan vote, sanctions against Iran and added sanctions against Russia to the legislation. A story in The Hill noted that the "legislation would impose new sanctions on any individuals tied to 'malicious cyber activity,' supply weapons to Assad's government or are tied to Russia's intelligence and defense sectors. It would also give Congress 30 days - or 60 days to review and potentially block Trump from lifting or relaxing Russian sanctions, codify the sanctions imposed by executive order by the Obama administration and allow the Trump administration to impose new sanctions on sectors of the Russian economy."

The House Foreign Affairs Committee is reviewing sanctions legislation. The range of sanctions on Russia in the House varies, but there is an intensity there as well, so one has to expect that some version of these sanctions will be approved and sent to the president for his signature.

And last but not least, Attorney General Jeff Sessions testified in open session before the Senate Intelligence Committee last week and the reaction was again a Rorschach test for political Washington. The real story is going to be in the Special Counsel's office. This will result in taking the focus of some of the senior staff at the White House away from their legislative agenda. It will also take some of the oxygen out of the room and reduce the president's political currency which will make it harder at the margin to achieve the legislative goals of the Administration and putting the lion’s share of the burden on Republican leaders in the House and Senate.