JT TAYLOR: 2018 OUTLOOK - NOT FOR THE FAINT-HEARTED - dc policy 2018outlook


The 115th Congress gets back to its second work week with an extensive list of issues from 2017 still unresolved. In late December, Congress passed another Continuing Resolution (CR) to fund the government through this Friday, January 19th, leaving a three-day window for lawmakers to reach a deal to avoid a shutdown and automatic budget cuts known as sequestration. In addition to the heated debate over government spending, lawmakers also must grapple with a number of other policy issues – some controversial – that could be attached to the spending bill, including immigration, healthcare, a tax extenders package, and national security protections.  The House Republican Conference is considering a proposal put forth last night by the leadership to extend the CR until February 16 with the addition of a six-year reauthorization of the Children's Health Insurance Program (CHIP) and a delay of several Obamacare taxes.  As of this morning, most House Republicans are supportive of the extension, but the conservative Freedom Caucus is noncommittal and House Democrats are expected to oppose the measure. If House Republicans manage to pass the CR (vote is scheduled for tomorrow), all eyes will be on Senator Minority Leader Chuck Schumer (D-NY) and his willingness/ability to convince nine members on his side of the aisle to vote for the extension.

Assuming Congress is able to navigate these early challenges, a host of issues await in the coming months, including a potential infrastructure package, another crack at repealing “Obamacare,” and entitlement reforms. While the past five days have cast a pall on any semblance of bipartisanship, early reports indicate that conversations continue to focus on, among other things, immigration and a DACA solution, military funding, possible welfare and workforce reforms, and infrastructure. All this sets the stage for what we expect to be a bumpy 2018 with rising geopolitical tensions, an ongoing White House investigation, an ambitious legislative agenda in a bitterly divided environment, and a rapidly approaching midterm election that could disrupt the current balance of power. 


January 19:  Continuing Resolution (CR) and FISA Section 702 expire

January 23-28: NAFTA negotiations continue in Montreal

January 30: State of the Union

February 5: President releases FY 19 Budget

February 16:  Proposed new date for extension of the current CR

March 5: DACA Visas expire

March: 13: Special Election in PA-13  

March 31: FAA, CHIP and other public healthcare extensions expire

March TBD: Debt Ceiling is reached


  • Budget: Members are aiming to reach an agreement on a two-year budget deal before this Friday, January 19.  Negotiations are complicated by divisions over discretionary and defense spending amounts, immigration, among other issues.
  • Healthcare: While the stopgap funding bill provided temporary relief for the Children’s Health Insurance Program (CHIP) through the end of March, other issues, including Medicare extenders, stabilizing the Affordable Care Act (ACA)’s insurance markets, relief from certain ACA taxes, and a handful of other healthcare issues all still need to be addressed in the coming weeks and months.
  • Technology: The Senate is expected to act this week on a compromise on the controversial program, Section 702 of the Foreign Intelligence Surveillance Act (FISA), also expiring on January 19th.  New regulations for internet companies could come as lawmakers work to combat nefarious activity online. Action to codify net neutrality has begun in the wake of the FCC’s decision to repeal the Obama-era rules.
  • Transportation/Infrastructure: Administration officials have indicated they will send an outline for an infrastructure plan to Congress ahead of the annual State of the Union (SOTU) address on January 30th. We hear the announcement may slip until after the SOTU. Proposals to reauthorize the Federal Aviation Administration (FAA), which will expire March 31st, are stalled.
  • Energy: Lawmakers are considering an extenders package to renew a slew of energy tax credits not included in the tax overhaul passed in December. In addition, debate over the Renewable Fuel Standard (RFS) continues.
  • Trade: NAFTA negotiations remain ongoing, though contentious proposals tabled by the United States related to auto rules of origin, a sunset proposal, and dispute settlement have complicated its path forward. The Administration also is engaged in discussions with South Korean officials to amend and modify the U.S.-Korea Free Trade Agreement and intends to finalize a series of trade remedy reports in the coming weeks. Congressional action to reform the Committee on Foreign Investment in the United States (CFIUS) could significantly impact foreign relations and investment in the U.S.  Hearings are expected in the first quarter of 2018.
  • Financial Services: House Financial Services and Senate Banking Committee Republicans remain focused on rolling back the Dodd-Frank Act and providing regulatory relief for financial institutions. The Senate is expected to consider the Banking Committee’s bipartisan Dodd-Frank reform bill in the first quarter of 2018. Other priorities include housing finance reform and a reauthorization of the National Flood Insurance Program (NFIP).
  • Immigration: Bipartisan negotiations on DACA continue in a very toxic environment. Democrats have indicated they will leverage their support for a long-term spending bill in exchange for a deal on DACA. However, Republicans are demanding certain provisions be included in any potential fix, like construction of a border wall and limits on family-based immigration or what the Administration is calling chain migration, which are nonstarters for Democrats.
  • 2018 Midterms: Democrats hope to win back both chambers and the majority in Congress, which the political map suggests will be a challenge, but not impossible. A total of 55 lawmakers so far are not seeking reelection in 2018 – including six House committee chairs. In addition to all 435 seats in the House, 34 Senate seats are up for grabs with 25 of those held by Democrats.


Given the short-term CR, lawmakers still need to come to an agreement to raise budget caps for increased defense and discretionary spending. While Republicans are supporting higher budget numbers for defense, Democrats want to see parity between defense and discretionary increases. Solving this issue is a prerequisite for any broader legislative deal. 

Adding further complication, Republicans are looking to separate immigration discussions from the budget fight, and President Trump said he will refuse any DACA deal that does not include spending for a southern border wall (which Democrats have ruled out). But Democratic votes will be necessary to pass a spending bill, giving them leverage in the negotiations. However, even if lawmakers are able to hammer out a deal, it is likely they would have to pass another short-term CR until February 16 to avoid a shutdown. Earlier in the month, the Democratic leadership indicated they would be willing to vote for another CR as long as a long-term deal was imminent, but the dynamic changed with the president's controversial comments stemming from an immigration meeting with key Senators at the White House last Thursday.

Congressional leaders are seeking a two-year budget deal in order to provide greater certainty for the Pentagon, which has voiced its displeasure at the stopgap funding approach, and to avoid future budget fights in the face of the upcoming midterm elections. In addition to reaching a federal spending agreement, Congress is also under pressure to approve an $81 billion disaster relief package to aid communities ravaged by hurricanes and wildfires, as well as raise the debt ceiling at some point in March to avert a default before the country reaches its borrowing limit in the next few months.


The day after Congress passed a short-term continuing resolution funding the federal government until January 19th, President Trump signed into law a tax overhaul bill that, among other things, repealed the Affordable Care Act’s (ACA) individual mandate. While the stopgap funding bill provided temporary relief for the Children’s Health Insurance Program (CHIP) through the end of March, other issues, including Medicare extenders, stabilizing the Affordable Care Act (ACA)’s insurance markets, relief from certain ACA taxes, and a handful of other healthcare issues were all punted to January 19th or later. 

While healthcare stakeholders are hoping to use the looming January 19th spending deadline to address the numerous leftover healthcare issues, we would not be surprised if some of these priorities slipped to February or March. Additionally, agenda items being discussed among Republican lawmakers include another attempt to repeal the ACA, reforming Medicare, and curbing the growth of Medicaid.  However, while Speaker Ryan wants to tackle entitlement reform this year, Senate Majority Leader Mitch McConnell (R-KY) has indicated that the lack of Democratic support for entitlement reform makes it very unlikely that it will pass through the Senate during an election year.  He has also indicated he did not think there was enough support in the Senate to revisit repealing the ACA. 

Additionally, Sen. Susan Collins (R-ME) dropped her demand in December that the bipartisan Alexander-Murray and Collins-Nelson bills to restore cost-sharing reduction (CSR) payments and provide reinsurance funding be included in the stopgap spending bill, she is still expecting action in this area prior to 2019 insurance premiums being released. However, it remains to be seen whether the measures can move through both chambers as House Republicans remain opposed to the agreement forged between Collins and Majority Leader McConnell. Collins has indicated a willingness to renegotiate the deal to get House Republicans on board, although this move could end up alienating Democrats and further stall the effort. Our Senior Healthcare Analyst Emily Evans will be watching developments here very closely.


Under the CR, lawmakers have until January 19th to reauthorize a key government surveillance program. Section 702 of the Foreign Intelligence Surveillance Act (FISA) allows intelligence agencies to collect information about foreign nationals but has drawn the ire of privacy hawks who claim it violates the civil liberties of U.S. citizens. However, others argue a clean reauthorization is in the best interest of national security by providing law enforcement the necessary tools to combat the threat of terrorism.  The House voted last week to extend the program for six years.  The Senate is expected to schedule floor time on the measure today or tomorrow.

There are also ongoing conversations within the House and Senate to pass a uniformed federal data breach notification bill. While we do not expect legislation signed into law anytime soon, members are introducing various proposals and we can expect this to continue well into 2018. In the House, the Financial Services Committee will take the lead on drafting a data breach notification bill, but work closely with the Energy and Commerce Committee. The staff from the two committees are currently holding discussions on a path forward and are determined to work together on this issue. Congressman Blaine Luetkemeyer (R-MO), Chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, has publically stated he would like to produce draft language during the first quarter of the year.  Data breach and other consumer-related issues will remain at the top of the agenda for both House Committees.

New regulations for internet companies could also come this year as lawmakers consider bills to address online sex trafficking, ad disclosure, and election security. These proposals include efforts aimed at holding companies liable for third-party content posted on their sites. The Honest Ads Act (H.R. 4077/S. 1989) would require the Federal Election Commission (FEC) to create disclosure rules for internet companies to provide transparency to users about who pays for ads online. While a deluge of bills have been introduced to combat online sex trafficking, two in particular are being closely watched. The Allow States and Victims to Fight Online Sex Trafficking Act of 2017 (FOSTA) (H.R. 1865) and the Stop Enabling Sex Traffickers Act of 2017 (SESTA) (S. 1693).

The Federal Communications Commission (FCC) recently voted along party lines to end Obama-era net neutrality rules. Opponents of the repeal have indicated they will take legal action to keep the existing rules in place. In addition, lawmakers in both chambers have vowed to introduce legislation to codify rules for a free and open internet. Rep. Marsha Blackburn (R-TN) released a draft proposal last month. However, a pathway forward for any such measure is unclear.

The net neutrality issues could pick up in the spring if, as expected, Senate Democrats push a resolution of disapproval that would invalidate  FCC Chairman Ajit Pai’s net neutrality order.  Under the Congressional Review Act, Congress can pass resolutions to invalidate recently adopted regulations and prohibit the adoption of similar rules absent legislative authorization.  Such resolutions are filibuster-proof so a simple majority in both houses of Congress can put the resolution on the president’s desk.  Even if a closely-divided Senate passes the resolution, however, the House would likely reject it and the president would not sign it in any event. Still, Senate Democrats, led by Senator Ed Markey (D-MA) hope forcing a vote on the resolution will hurt Republicans in the midterm elections.  The resolution will likely be introduced in the spring. Our Senior Telecom and Media Policy Analyst Paul Glenchur will continue to weigh on net neutrality.  Glenchur also heads up our Legal Catalyst vertical - be on the lookout for his analysis on major upcoming court decisions in financial services and technology.  He’ll be closely monitoring the upcoming AT+T/ Time Warner trial as well.


While the Trump Administration cited infrastructure as a key first term priority, these efforts have been sidelined in Congress as lawmakers tackled healthcare and tax reform. However, the Administration has released some details of a proposal, including an emphasis on leveraging private investments, as part of an overall $1 trillion spending package.

In addition, the Administration’s plan would seek to relax permitting processes and regulatory restrictions. White House officials have indicated they are working on a 70-page outline of “principles” to serve as a blueprint for legislation and will send the proposal to Congress prior to the State of the Union address (January 30)– although recent reports have indicated that that timeline may slip to February.

However, one of the biggest issues remains how to pay for new investments in public works, which many were hopeful would be included in the tax overhaul. While the final tax package included a mechanism to repatriate cash stored overseas by U.S. firms, it did not carve out spending for a separate infrastructure package.

After failing to agree on a long-term Federal Aviation Administration (FAA) bill in September, lawmakers passed a temporary reauthorization measure to fund the agency through March of 2018. However, controversial provisions in both chambers continue to hinder negotiations for a permanent reauthorization. Unlike the Senate bill, legislation in the House includes a provision that would spinoff air traffic control operations into a non-profit organization. In addition to sparking controversy among lawmakers, a lobbying campaign backed by the general aviation industry has come out against the bill (H.R. 2997). In the Senate, language that would reform pilot training requirements has also prevented lawmakers from reaching an agreement on their version of the bill (S. 1405). Senate Democrats signaled their opposition to the measure by voting down two Department of Transportation nominees. However, Senate Commerce, Science, and Transportation Committee Chairman John Thune (R-SD) recently indicated a willingness to drop the provision so the bill could come to the floor for a vote in 2018.


On December 20th, Senate Finance Chairman Orrin Hatch (R-UT) introduced S. 2256, the Tax Extender Act of 2017, which includes the extension of a number of tax provisions set to expire. The bill was referred to the Senate Finance Committee, but timing on further action remains unclear. Supporters of this bill are pushing for its passage as soon as possible. The extenders bill addresses a slew of energy tax credits, including those for biodiesel blenders, cellulosic biofuel producers, and fuel cells, in addition to the Investment Tax Credit, the nuclear production tax credit, and the credit for carbon dioxide sequestration.

The Renewable Fuel Standard (RFS) came under fire in both chambers this past year, and 2018 is certain to bring more of the same. Senator Ted Cruz (R-TX) put a hold on the nomination of a U.S. Department of Agriculture undersecretary in an effort to bring RFS backers to the negotiating table. The White House recently hosted talks between Senate aides on both sides of the issue in hopes of striking a deal, though we are told the meeting lacked both substance as well as a timeframe for any agreement. Along with others, Senator Chuck Grassley (R-IA) continues to serve as the chief advocate for the current law. RFS reform could take shape still, as Rep. John Shimkus (R-IL) is leading a bipartisan group of Members on potential long-term resolutions, the exact details of which remain unclear.

Finally, while President Trump announced his decision last week to waive Iranian oil sanctions again, he also issued a warning that it would be the last waiver unless the Iran nuclear deal was fixed.  Our Senior Energy Analyst Joe McMonigle will continue to weigh in on this issue before the next deadline of May 12.


The Administration is renegotiating the North American Free Trade Agreement (NAFTA) and, to date, has held five formal rounds of negotiations and a technical “mini-round” in mid-December in Washington. Discussions have been complicated by a number of contentious proposals tabled by the U.S.

The U.S. has proposed increased auto rules of origin requirements, a five-year sunset proposal tied to the trade deficit, and an “opt-in” mechanism for the investor-state dispute settlement – three proposals viewed to be “non-starters” by Canada and Mexico. The sixth round of negotiations is scheduled for January 23-28 in Montreal, and there is some speculation if discussions do not result in concessions to U.S. demands, President Trump could announce a withdrawal from NAFTA at the end of the round – just two days before he is set to deliver the SOTU address.

While NAFTA negotiations remain ongoing, the Administration is also engaged in discussions to amend the U.S.-Korea Free Trade Agreement (KORUS). U.S. and South Korean officials convened for the first set of formal discussions this week, with follow-up sessions slated for three to four week intervals thereafter.

Importantly, USTR and other agencies are expected to send a number of significant trade remedy reports to the president’s desk in the month of January, including findings on USTR’s investigation under Section 301 of the Trade Act of 1974 into Chinese forced technology transfer; the Department of Commerce’s investigations under Section 232 of the Trade Expansion Act of 1962 on the impact of steel and aluminum imports on national security; and Section 201 safeguard investigations into large residential washers and solar cells and modules.

As we wrote last week, Congressional action with respect to the Committee on Foreign Investment in the United States (CFIUS) likely will have significant implications for foreign relations and investment in the United States. Senate Majority Whip John Cornyn (R-TX) and Rep. Robert Pittenger (R-NC) have introduced the Foreign Investment Risk Review Modernization Act to reform CFIUS, which governs reviewing transactions that could result in control of a U.S. business by a foreign person. House and Senate committees are expected to hold a series of hearings on the bill in the first quarter of 2018.


House Financial Services and Senate Banking Committee Republicans remain focused on rolling back the Dodd-Frank Act and providing regulatory relief for financial institutions. Senate Banking Committee Chairman Mike Crapo (R-ID) is pressuring the leadership for floor consideration in the first quarter on the Committee’s Dodd-Frank reform bill, which was approved in a 16-7 vote on December 5.

The bipartisan bill would raise the systemically important financial institution (SIFI) threshold to $250 billion and immediately end stricter oversight for banks with less than $100 billion in assets, among other key provisions. The bill has garnered support from 11 Democrats and one Independent (ME Senator Angus King), surpassing the nine Democratic votes needed for a filibuster-proof majority. However, the Senate bill has been met with a tepid response by some House Republicans who have pushed for the more comprehensive Financial CHOICE Act (H.R. 10), which passed the House in June. We continue to believe the House would take action if the Senate is able to pass a bill, particularly given the forthcoming retirement of House Financial Services Chairman Jeb Hensarling (R-TX).

Housing finance reform is also expected to be a key priority for the House Financial Services and Senate Banking Committees in 2018, particularly given the retirements of Chairman Hensarling and GSE reform advocate Senator Bob Corker (R-TN) at the end of this Congress. The Senate Banking Committee likely will take the lead on housing finance reform, and the Committee’s approach is expected to build on elements of a 2013 proposal authored by Senators Corker and Mark Warner (D-VA), as well a proposal drafted by Chairman Crapo and then-Senator Tim Johnson (D-SD). Both proposals include provisions to wind down Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) within five years of the bill’s passage. Importantly, Chairman Hensarling recently outlined a series of principles for housing finance reform, which track closely with those likely to be included in any Senate proposal.

In addition to the aforementioned priorities, Congress must also take action to reauthorize the National Flood Insurance Program (NFIP), which has received a number of short-term extensions in the recent Continuing Resolutions (CR) to fund the government. The House passed a five-year NFIP reauthorization on November 14th, though discussions remain ongoing in the Senate Banking Committee. The Banking Committee continues to negotiate issues related to affordability, claims processing, attracting private capital, and the duration of the NFIP extension.


As the 2018 midterm elections draw near, several factors are at play for Republicans and Democrats in both chambers that could result in an electoral shakeup. Democrats are feeling energized after big electoral wins statewide in Virginia and for Senate in Alabama, not to mention an 11-point average lead in the generic ballot. In the House, Democrats must win at least 24 seats from Republicans in order to regain the majority. But according to the Cook Political Report, only 17 Republican seats are currently considered “toss-ups.” On the Senate side, the picture is less favorable for Democrats, who are defending 25 seats (including two Independent senators), ten of which are in states that voted for Donald Trump. Historically, midterm elections have been unfavorable for the president’s party (an average of 36 losses for the incumbent party when the president’s approval rating is below 50% – Trump’s approval currently falls well-below), a trend that could serve to Democrats’ advantage in November.

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We expect the next few days, weeks and months to be a whirlwind, given the hefty legislative agenda before Congress - not to mention current geopolitical concerns. The pressure will be on for both parties to gain momentum leading into November midterm elections. At the same time, it’s unclear how much they will be able to accomplish before reelection primaries and campaigns inevitably take over. As always, we will continue to provide timely, in-depth coverage and analysis of events as they unfold.