Capitol to Capitol | March 5, 2018

Trump: New NAFTA Would Prevent Proposed Tariffs 

DYK?

Until the adoption of the 20th Amendment to the U.S. Constitution in 1933, U.S. presidents where inaugurated on March 4. However, the first president, George Washington, was not inaugurated until April 30. Although Congress had scheduled the first inauguration for March 4, 1789, they were unable to count the electoral ballots as early as anticipated.

Last Thursday, President Donald Trump announced that the United States would impose 25 percent tariffs on imported steel and 10 percent tariffs on imported aluminum. The move, which surprised many in Washington and even many of the president’s advisers, rattled the stock market as well as many manufacturing companies that rely on the metals. The announcement also surprised officials in the European Union, who have threatened to retaliate by imposing penalties on $3.5 billion of U.S. exports, especially on products manufactured in states of Republicans leaders, including Harley-Davidson motorcycles (Wisconsin, Speaker Paul Ryan) and bourbon (Kentucky, Senate Majority Leader Mitch McConnell).

The U.S. has experimented with steel tariffs relatively recently. In 2002, President George W. Bush imposed sweeping tariffs on steel imports but dropped them in 2003. The tariffs raised the cost of steel by 3 percent and a 2003 study by the research firm Trade Partnership Worldwide estimated that the higher steel prices, caused chiefly by the tariffs, cost 200,000 steel-consuming jobs in 2003, largely in manufacturing.

This morning, the president tied the tariffs to the ongoing negotiations to rewrite the North American Free Trade Agreement (NAFTA) by tweeting that the “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.” The comments are not particularly surprising as Canada and Mexico were the first and fourth top suppliers of U.S. imported steel in 2017. Given that it is an election year both in the U.S. and in Mexico, many NAFTA watchers believe that talks to renegotiate the three-country agreement may last the rest of the year. However, retaliation against the U.S. tariffs could come much more quickly.

Seventh round of the North American Free Trade Agreement (NAFTA) Renegotiations Wrap up Today

Representatives from Mexico, Canada and the U.S. convened over the past week for the seventh round of NAFTA negotiations in Mexico City.

Later today, the seventh-round negotiations are scheduled to conclude with a meeting among the U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo. The three top trade officials from the NAFTA countries are expected to hold a press conference after the formal round of negotiations are completed.

Last week, Trump announced plans to impose tariffs on steel (25 percent) and aluminum (10 percent) to protect natural security interests. However, Trump has not specified whether he will grant exemptions to the tariffs for key allies and vital trading partners. An eighth round of NAFTA negotiations in Washington, D.C., is expected to be held in early April.

NCSL Contacts: Jon Jukuri

This Week on Capitol Hill

The Senate is turning to banking reform as efforts to pass gun control legislation appear to have stalled. The financial legislation, which will provide relief to small financial institutions and community banks, would be the first rewrite of the Dodd-Frank reform bill, legislation enacted nearly eight years ago in wake of the financial crisis. The legislation is expected to consume most of the chamber’s floor time this week.

During its brief sessions on Monday and Tuesday last week, the House passed a bill to make it easier for victims and prosecutors to sue websites linked to sex trafficking. This week, the House is expected to vote on two energy and environment bills: the Blocking Regulatory Interference from Closing Kilns (BRICK) Act and the Satisfying Energy Needs and Saving the Environment (SENSE) Act. The BRICK Act would change certain Environmental Protection Agency regulations to benefit the brick and structural clay ceramics manufacturing industries. The SENSE Act would exempt certain power plants, which burn coal refuse, from parts of a 2012 air pollution rule. The House is expected to vote on the bills on Wednesday and Thursday.

The House is also expected to vote on the Comprehensive Regulatory Review Act on Tuesday, which is aimed at eliminating outdated or unnecessary regulations. The bill would require the audit of financial regulations to be completed every seven years, instead of every 10, and would expand the number of federal financial agencies the review requirements apply to.

Roadblock to 2018 Infrastructure Bill?

DYK?

Before the 20th Amendment, presidential inaugurations were typically held on March 4. However, when the March 4 fell on a Sunday, as it did in 1821, 1849, 1877, and 1917, the ceremonies were held on March 5.

In 1877, March 4 fell on a Sunday, so on March 3, 1877, Rutherford B. Hayes became the first president to take the oath of office in the White House during a private ceremony. Hayes’ also took the oath in a public ceremony on March 5.

On March 4, 1917, President Woodrow Wilson became the first person to break precedent and take the oath of office on Sunday, which was also the first time that the oath was taken privately in the President's Room at the Capitol.

Also, Inauguration day has only fallen on a Sunday three times since the passage of the 20th Amendment. In all three instances, the presidents were sworn in during a private ceremony on Sunday, followed by a public ceremony on Monday.

Last week, Assistant Majority Leader, Senator John Cornyn (R-Texas) conveyed doubt that a large infrastructure package would pass Congress by the end of the year because of  the large number of other priorities it must complete. While last month’s budget deal calls for a $10 billion boost to infrastructure funding for both FY 2018 and FY 2019, it remains unclear how such funding will be allocated with broadband, surface transportation, and clean and safe drinking water among a bevy of potential options.

While the funding in the budget deal is needed given the state of the nation’s infrastructure, it is far from Trump’s proposed $1.5 trillion infrastructure plan. Senator Tom Carper (D-Del.), the ranking member of the Senate Environment and Public Works Committee, responded to Cornyn’s remarks by saying, “I hope he’s wrong. This administration, the president has talked so much about infrastructure, transportation, broadband deployment, water, sewer. If we can’t figure out a path forward on this, shame on the president, shame on the administration, shame on the Congress.”

Although a large infrastructure package may face a difficult road to passage, Congress still anticipates passing two other main infrastructure bills—a full four-year reauthorization of the Federal Aviation Administration (airports and drones) and a two-year reauthorization of the Water Resources Development Act (ports, harbors, inland waterways, and clean and safe drinking water).

NCSL Contacts: Ben Husch, Kristen Hildreth

Commerce Committees Announce Broad Telecom Package

Lawmakers on both the House and Senate Commerce committees have reached a bipartisan deal on a broad package of telecom provisions that will likely be bundled in this month’s omnibus bill if a standalone package is not passed beforehand. The deal includes elements of the House’s Federal Communications Commission (FCC) reauthorization package, which would provide the agency with more than $330 million annually in FY 2019 and FY 2020, and includes key provisions from the Senate’s Mobile Now spectrum bill. The Mobile Now Act provisions include allowing the FCC to hold upfront spectrum auction bids later this year with the U.S. Treasury.

In a joint statement, House and Senate committee leaders, Representative Greg Walden (R-Ore.), Representative Frank Pallone (D-N.J.), Senator John Thune (R-S.D.) and Senator Bill Nelson (D-Fla.) said the “bipartisan, bicameral product puts consumers first and solidifies the nation’s critical telecommunications infrastructure, giving the U.S. a global edge” in the race to develop fifth-generation, or 5G, wireless networks “and in improving internet services across the country.”

The legislation, Ray Baum’s Act (H.R. 4986), will first be voted on in the House tomorrow, March 6, which is said to be a demonstration vote to congressional leadership that including the legislation in the omnibus bill will not threaten the package’s chances of passage.

NCSL Contacts: Danielle Dean

Federal Reserve Chair Jerome Powell Testifies before Congress

Last week, Fed Chair Jerome Powell appeared before the House and Senate testifying on the Federal Reserve’s semiannual Monetary Policy Report. In his first appearance before Congress as one of the nation’s top financial regulators, Powell commented on current economic conditions, addressing hot topics such as inflation, interest rates and the Fed’s years-long accommodative monetary policies. Congressional members also peppered Powell with questions on myriad issues ranging from the new tax law and pending banking reform legislation to lending practices and consumer protection. View the full Senate testimony.

During his testimony, Powell recognized the Fed’s congressional mandate of promoting both maximum employment and stable prices–economic dynamics that tend to operate inversely, especially during times of relatively swift economic growth. Powell reported a generally favorable U.S. economic outlook, citing current job gains, economic growth and unemployment (4.1 percent) numbers. He went on to note that the Fed expects the inflation rate to tick upward, moving closer to the agency’s target rate of 2 percent.

Questions remain as to the full cumulative effects of the recent tax legislation combined with historically low unemployment, high labor demand and increasing wages. With more money in the economy and wages on the rise, some believe that inflation will rise at a higher pace than anticipated by the Fed. For now, it appears that the Fed will proceed with at least three incremental interest rate hikes this year, with a fourth possible.

NCSL Contact: Ethan Wilson

Senate to Debate Bill That Exempts Small Banks from Dodd-Frank

DYK?

Thirty-six hours after his inauguration on March 4, 1933, President Franklin D. Roosevelt declared a "bank holiday," which closed all U.S. banks and froze all financial transactions for a week to stem bank runs during the financial crisis of the Great Depression. Following the bank holiday, on March 9, Congress introduced, passed, and the president signed the Emergency Banking Relief Act, which allowed banks to reopen as soon as examiners had found them to be financially secure. Within three days, 5,000 banks had been given permission to be re-opened.

Last Thursday, Senate Majority Leader Mitch McConnell (R-Ky.) filed a cloture motion on S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, which is legislation intended to provide smaller banks relief from rules and regulations established under Dodd-Frank. Debate on the measure is expected to last most of the week in the chamber.

In general, the legislation raises the threshold at which a bank is deemed big enough to warrant tighter oversight from $50 billion to $250 billion. An initial procedural vote on the bill is expected on Tuesday, where the legislation will need 60 votes to pass, which it is expected to attain given that it is supported by moderate Democrats. More progressive members, however, have vocally opposed the bill. “The Senate–with the support of some Democrats–is set to start debate on a bill to roll back regulations on the same big banks we bailed out a few years ago. If we lose the final vote next week, we’ll be paving the way for the next big crash,” Senator Elizabeth Warren (D-Mass.) said in a tweet Friday.

Warren, considered a potential 2020 contender, rose through the Democratic Party’s ranks by focusing on financial oversight.

NCSL Contact: Ethan Wilson

Carrying Firearms in K-12 Schools

In the wake of the tragic events in Parkland, Fla., federal and state laws governing firearms have been in the forefront of public attention. Last week, the president held a bipartisan meeting to discuss school violence and access to firearms. Trump has indicated support for school staff having access to firearms. This week, the president is expected to meet with “members of the video game industry” to discuss the relationships between violence and video gaming. Read NCSL’s Blog post on Carrying Firearms in K-12 Schools: A Policy Snapshot. NCSL Summary Carrying Firearms K-12 Schools

NCSL Contact: Joan Wodiska

Court Hears Oral Argument in Janus v. AFSCME Case

Last week, the U.S. Supreme Court heard oral arguments in Janus v. American Federation of State, County, and Municipal Employees, Council 31. The case considers the question of whether state laws that require the collection of “fair-share” dues in unions violate the First Amendment. While Justice Neil Gorsuch is expected to be the swing vote, last week he remained silent during the oral arguments

NCSL Contacts: Jon Jukuri (Labor); Joan Wodiska (Education)

NCSL Files Amicus Brief in South Dakota v. Wayfair Sales Tax Case

On March 2, NCSL, along with the national organizations that represent state and local officials, filed an amicus brief in the U.S. Supreme Court for one of the most important state tax cases in decades: South Dakota v. Wayfair.  

In this case, South Dakota is asking the Supreme Court to rule that states and local governments may require retailers with no in-state physical presence to collect sales tax. Ruling this way will require the Supreme Court to overturn long-standing precedent.  

The amicus brief points out that states and local governments lost an estimated $26 billion in sales tax revenue in 2015 because they were unable to collect owed taxes. The brief encourages the Court to overturn Quill. If the Court decides to replace the physical presence requirement, the brief asks the Court to adopt an economic nexus requirement—like the one the South Dakota legislature adopted. 

NCSL Contacts: Max Behlke, Jake Lestock

Opioids Crisis Garners Further Federal Attention

This week, the U.S. Senate Health, Education, Labor and Pensions (HELP) Committee will hold a full hearing on the Opioid Crisis: Leaderships and Innovation the States. Guest witnesses are Governors Larry Hogan (R) of Maryland and Kate Brown (D) of Oregon. Last week, the president hosted an opioid summit to discuss the administration’s efforts to confront the opioid crisis.

NCSL Contacts: Haley Nicholson (Health); Susan Frederick (Criminal Justice); Joan Wodiska (Education)

Also of Note …

  • This Democrat Is Running for Congress—but Not Against TrumpThe Atlantic
  • Ryan splits with Trump on trade as GOP lawmakers move to block planned tariffs - Washington Post
  • Inside the $9.1 Million Effort to Bolster Republican Running in Trump CountryThe Wall Street Journal    
  • Mueller subpoenas witness for documents tied to Trump, campaign associates: reportsThe Hill

Read the Feb. 26, 2018 Capitol-to-Capitol.

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NCSL's Advocacy in Washington

NCSL's Washington staff advocate Congress, the White House, and federal agencies on behalf of state legislatures in accord with the policy directives and resolutions that are recommended by the NCSL Standing Committees and adopted by the full conference at the annual NCSL Legislative Summit Business Meeting. As a result of the advocacy that is guided by these policies positions, NCSL is recognized as a formidable lobbying force in state-federal relations.

NCSL Staff in Washington, D.C.

  • Neal Osten | 202-624-8660 | Molly Ramsdell | 202-624-3584 | Directors
  • Max Behlke | 202-624-3586 | Budgets and Revenue
  • Danielle Dean | 202-624-8698 | Communications, Financial Services
  • Susan Frederick | 202-624-3566 | Law, Criminal Justice, and Public Safety
  • Abbie Gruwell | 202-624-3569 | Human Services
  • Ben Husch | 202-624-7779 | Natural Resources and Infrastructure 
  • Jon Jukuri  | 202-624-8663 | Labor, Economic Development and International Trade
  • Haley Nicholson | 202-624-8662 | Health
  • Ethan Wilson | 202-624-8686 | Commerce and Financial Services
  • Joan Wodiska | 202-624-3558 | Education