TRUMP MULLING OMNI RESCISSIONS: Continuing frustration over the size of the $1.3 trillion Omnibus bill and having to cave to Democrats on domestic spending, conservatives are backing President Trump and their Republican leaders to move forward with a rescissions package with the aim of cutting billions from the measure passed in March. Leaders would use “the Congressional Budget and Impoundment Control Act of 1974 — more frequently referred to as the Budget Act, the sections of the law that are more commonly used — that provides an expedited process for the President to propose and Congress to review a rescission resolution identifying appropriations that the Administration does not want to spend.” The Administration is considering a surgical approach by cutting billions of dollars from a number of programs just passed in the Omni and submitting their proposal to Congress. Congress has 45 days to act on the measure and simple majorities are needed in both Chambers. We see a path forward in the House, but have a hunch that a number of Senators won’t be keen to advance this measure in this political climate. Trump is also calling on his allies in Congress to grant him line-item veto powers to ensure he doesn't have to sign another bill like this one.
NUDGING NAFTA NEGOTIATORS: The Trump Administration wants Canada, Mexico and the United States to come to an initial agreement on a renegotiated NAFTA when leaders gather in Peru for the Summit of the Americas that's scheduled to begin April 13, according to three unnamed sources familiar with the negotiations. The Administration is planning to invite cabinet ministers from Canada and Mexico to Washington to finalize the deal, which would still require technical and legal work following the announcement of a mid-April agreement. Negotiators are still finalizing a date for the eighth round of talks slated to take place in Washington this month.
AN EPA HEADLINE THAT DOESN’T MENTION PRUITT: The Environmental Protection Agency (EPA) granted waivers last month to three small refineries of Andeavor (ANDV) that exempted them from compliance under the Renewable Fuel Standard (RFS) for 2016. The waivers mean the refineries do not have to blend ethanol or other biofuels and do not have to buy RIN credits to comply with the RFS. Under the RFS law, EPA is allowed to grant waivers to small refineries for economic hardship due to compliance. ANDV shares were up 1.35 percent on the news and closed at $104.11 on Wednesday. While the waivers alone are a big development for the individual companies receiving them, we think it signals a larger policy change being considered by the Trump Administration. Our senior energy policy analyst Joe McMonigle believes there is a greater than 50 percent chance the White House will soon implement changes to the RFS regulations that will provide relief to refiners from costly RINS compliance. Ethanol groups may also get a waiver to sell E15 ethanol in summer months. In his note today, Joe said the bankruptcy of Pennsylvania refiner Philadelphia Energy Solutions has injected a new urgency into the policy process, and we could see a decision as soon as this month.
BALANCED BUDGET AMENDMENT?: With the fiscal spending hangover about to kick in, House Republican leaders are looking to round out their agenda this year with a vote on a Balanced Budget Amendment (BBA). The measure would give Republicans some cover headed into the mid-terms, but it’s yet another effort being pushed by the two most conservative elements of the House - the Freedom Caucus and the Republican Study Committee - in an attempt to make amends for the sins of the Omnibus passed in March along with lifting the debt ceiling. Since a BBA would amend the Constitution, it would need two-thirds of the House and Senate for passage - and you quickly see where this is headed.
NOT SO FAST: One thing the White House might have overlooked in its ritual housecleaning of recent weeks - those potential new Cabinet members still must be confirmed by the Senate. Dr. Ronny Jackson, nominee for Veteran Affairs chief, could face a battle after former Secretary David Shulkin said that he didn’t resign but was fired. CIA Director Mike Pompeo will face tough questions as the nominee for Secretary of State, as will Gina Haspel, the nominee for CIA director who formerly oversaw a CIA “black site” in Thailand. Should the Democrats unite against Trump’s nominees and with Senator John McCain (R-AZ) still coping with serious health issues back in Arizona, Majority Leader Mitch McConnell has very little wiggle room on his side of the aisle.
SUNNY DAYS FOR MEDICARE ADVANTAGE AS POLICY ENVIRONMENT CONTINUES TO IMPROVE | UNH, AET, HUM: Great policy environment but 3.4 percent increase may not be reproducible in light of FFS changes; get ready for Part D rebate changes. Read the piece by our Senior healthcare analyst Emily Evans here.
JUSTICE STRUGGLES TO MAKE ITS CASE AGAINST THE ATT/TIME WARNER MERGER (T, TWX, CMCSA): The Court does not seem convinced as DOJ's first expert attempts to quantify AT&T's market power increase if it acquires Time Warner. Read Paul Glenchur's note here.
