Capitol to Capitol | Jan. 30, 2017

1/30/2017

Capitol to CapitolExecutive Orders Highlight President Donald Trump's First Week

Since his inauguration on Jan. 20, President Donald Trump has issued executive orders in areas that include health care, immigration and energy. Notably, on Friday afternoon, the president signed an executive order that: temporarily halts the admission of new refugees from entering the country, imposes an indefinite ban on the entry of refugees from Syria, and suspends citizens from several countries from entry in the United States. The order also includes language intended to give state and local governments more discretion of whether to allow refugees to settle in their areas.

And while most of the orders will do relatively little to advance the president's main policy goals, they have outlined the direction and policy focus of his administration. The president will need the help of Congress to see his full policy goals realized. For instance, the Jan. 25 executive order calls for the secretary of the Department of Homeland Security "to immediately plan, design, and construct a physical wall along the southern border," but it offers no cost estimate nor does it suggest a source of funding, which would likely have to be congressionally appropriated.

Read the president's executive orders.

Republicans Outline Ambitious 2017 Agenda During Retreat

In addition to confirmation hearings, the issues of reforming health care and the tax code have dominated the policy discussions of the early portion of the 115 th Congress, and they are expected to remain at the forefront for the bulk of 2017. During the House and Senate Republicans' joint three-day retreat in Philadelphia last week, House Speaker Paul Ryan on Wednesday mapped out the GOP's 200-day legislative strategy, with the goal of repealing and replacing portions of the Affordable Care Act by spring and by finishing tax reform before the August recess. The party's only obstacle? Coming to agreement on what exactly its health care and tax reform packages will look like.

The Senate Democrats' Congressional Retreat took place Jan. 25-27 in Shepherdstown, W. Va., but attendees have been relatively tight-lipped on the discussions. However, their agenda did include discussions on their strategy for this Congress as well as how to rebound from their 2016 election losses in upcoming elections.

The House Democrats will hold their retreat Feb. 8-10 in Baltimore.

Health Care: After Executive Order, Reform Plan Expected by End of Spring

The president's Jan. 20 executive order declares that it is the policy of his administration to seek a prompt repeal of the Patient Protection and Affordable Care Act (ACA). Pending repeal and replacement, the administration aims to ensure that the provisions of the law are being efficiently managed while it is also taking every action consistent with the law to minimize the economic and regulatory burdens of the ACA. The executive order serves as a pledge of the administration to afford states more flexibility and control to create a freer and open health care market.

In short, the administration plans to employ its executive authority, primarily in the Department of Health and Human Services (HHS), to exercise at its discretion to:

  • Waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the ACA that would impose a fiscal burden on the states, patients, consumers, health providers and other health system stakeholders.
  • Maximize, to the extent possible, flexibility to states that cooperate in implementing health care programs.
  • Encourage, to the extent permitted by law, the development of a free and open market in the interstate commerce for the offering of health care services and health insurance, to maximize options for patients and consumers.

During a private meeting at the Republican policy retreat in Philadelphia, Ryan announced that in the coming weeks House committees will mark up a reconciliation package that will both repeal the Affordable Care Act and replace portions of it. The speaker ultimately expects that the final reconciliation package will make it to the House floor by the end of February or in early March. For more information, visit NCSL's Federal Health Care page. 

NCSL Contact:  Rachel Morgan

D.Y.K ?? Due to American Public Law 94-479, by the 94th Congress, George Washington is protected from being outranked by any officer in past, present and future. Therefore, if there's a six-star general, Washington is automatically upgraded to seven.

Tax Reform

Reforming the federal tax code, especially corporate taxes, has long been a top priority for Ryan. And while there is bipartisan agreement for the necessity of tax reform, finding consensus on what the reform would look like has been anything but easy. The House Republican tax reform plan outlined in Ryan's " A Better Way" agenda, has emerged as the starting point for reform, but many of the plan's provisions remain highly controversial.

The most controversial element of the House Republican plan is its border adjustability provision, which radically changes the way that corporate earnings are taxed. Currently, American businesses are taxed on their worldwide income (both domestic and foreign earnings) at a rate of 35 percent. However, taxes on foreign income are deferred until those profits are brought back to the U.S. As a result, multinational companies have kept trillions of dollars of earnings in other countries in order to avoid the 35 percent tax rate in the U.S., which is among the highest rates in the industrialized world.

Rather than imposing a tax on where a product is produced or where a company is headquartered, the proposed border adjustability plan imposes taxes on where the products are consumed. In essence, the plan turns the corporate income tax into a cash flow consumption tax that imposes taxes on products consumed in the U.S., while it exempts domestic exports from tax, and lowers the tax rate from 35 percent to 20 percent. As expected, the business community's response has been mixed. While businesses applaud the lower tax rate, larger importers, such as retailers, have come out strongly against border adjustability as it will increase the prices of imports, such as consumer products and clothing, sold in the U.S. Conversely, large exporters support the new tax plan as it will mean that many of them may never have to pay corporate taxes again, should it become law.

Reforming the personal income tax code has its own share of controversies and at the top of the list is the fate of the State and Local Tax Deduction (SALT). State and local taxes have been deductible since the creation of the federal income tax in 1913, but it is also one of largest federal tax expenditures, estimated to cost the federal government $1.3 trillion over the next 10 years. Eliminating or limiting the SALT deduction would increase the burden of state and local taxes on taxpayers and may put pressure on states to either lower their tax rates or shift their revenue sources to a mixture of fees and charges.

NCSL Policy Opposes the Elimination of the SALT Deduction.

NCSL Contact: Max Behlke

Uncertainty Around Infrastructure Package

Last week, Ryan shed some light on the prospects of an infrastructure package this year, including the size of the package, how it would be paid for, or when it would be considered. He said that the answers to these questions will not begin to be flushed out until the House starts putting together its budget in the spring. "This is something that we will figure out in our spring budget, we will have to carve out the fiscal space necessary for the infrastructure package," Ryan told reporters on Jan. 25. "The size of the package will be determined by the fiscal space we create in the spring budget, which means we don't know the answer to that question yet. But our goal is to leverage as much as possible."

Senate Democrats released a $1 trillion infrastructure funding proposal on Jan. 24 that would include more than $200 billion for roads and bridges, more than $100 billion for water and sewer upgrades, nearly $200 billion for transit projects, and more. However, the plan does not include a "pay-for."

NCSL Contact: Ben Husch

D.Y.K ?? The sound of carriages and carts passing on cobblestone streets outside the Pennsylvania State House distracted the delegates to the Constitutional Convention, who were busy writing the Constitution. They solved the problem by hiring people to shovel dirt onto the street to muffle the noise.

Federal Education Regulations

On Inauguration Day, White House Chief of Staff Reince Priebus issued a memo to executive branch agencies delaying (by 60 days) the effective date of all published regulations not yet in effect. Final regulations issued by U.S. Department of Education for the accountability, data, and reporting provisions of the Every Student Succeeds Act (ESSA) were set to go into effect Jan. 30, and are now delayed until the end of March. The delay could complicate ESSA state plan submission for the 17 states and the District of Columbia that have declared their intention to the U.S. Department of Education to submit plans by April 4. (States are not bound by that intention, and can always chose instead to submit plans on the later submission date, Sept. 18.)

The future of the accountability regulations after this delay is unclear. The regulations could be repealed by Congress under the Congressional Review Act. Less likely, but possible scenarios include selective enforcement of the regulations by the U.S. Department of Education under the new secretary, or even repeal and reissue of the new regulations by the department under the Administrative Procedures Act.

In the meantime, states should keep in mind that ESSA provided states with the ability to determine their own accountability systems. The absence of federal regulations does not have to change state's decisions in this area as long as those decisions are in compliance with the statue.

Testing regulations and guidelines for the Innovative Assessment Pilot under the Every Student Succeeds Act (ESSA) were not impacted as they went into effect in early January. During the Obama administration's final week in office, the department announced that it would not publish final regulations governing ESSA Supplement, Not Supplant regulations. Those regulations set out guidelines for ensuring that Title I funds were used to provide additional services to disadvantaged students, not used as a substitute for state and local funds.

NCSL Contact: Lee Posey

Trump Administration Taking Shape

Confirmations: South Carolina Gov. Nikki Haley was confirmed as U.S. ambassador to the United Nations last Tuesday with a nearly unanimous Senate voting 96-4 in her favor. The Senate also confirmed Mike Pompeo as CIA director and Trump has asked James Comey to stay on as FBI director. Rex Tillerson, nominee for secretary of state,  was approved 11-10 by the Senate Foreign Relations Committee early last week. A full Senate confirmation vote will take place this week and is all but guaranteed to succeed.

Expected Confirmations: Senate Democrats asked Senator Lamar Alexander to have a second confirmation hearing for Betsy DeVos, nominee for education secretary, which was declined. The committee is scheduled to vote on her nomination this Tuesday. The Senate Committee on Energy and Natural Resources is also scheduled to vote Tuesday to confirm Representative Ryan Zinke (Mont.) to head the Department of the Interior and Texas Governor Rick Perry to be the secretary of the Department of Energy.

Last Week's Hearings: Department of Health and Human Services nominee Representative Tom Price (Ga.) was under fire last week for his past financial, campaign and legislative activities that some believe show potential ethics violations. Representative Mick Mulvaney (S.C.) was also under increased scrutiny for his past votes to reduce defense spending and also his support of cuts to popular entitlement programs that the president vowed to keep intact. Mulvaney said he remains in favor of raising the retirement age for Social Security to 70 but underlined that he would not reduce benefits for current recipients.

Supreme Court Nominee Expected this Week: Trump is expected to name his Supreme Court nominee this week and could do so as early as today. Reports suggest that the president has narrowed his shortlist to three federal appeals court judges: Neil Gorsuch, William H. Pryor Jr., and Thomas Hardiman.

Read the Jan. 23, 2017 Capitol-to-Capitol.

If you have comments or suggestions regarding Capitol-to-Capitol, please contact Max Behlke


Capitol to Capitol is a publication of the National Conference of State Legislatures, the premier bipartisan organization representing the interest of states, territories and commonwealths. The conference operates from offices in Denver and Washington, D.C.