Capitol to Capitol | May 1, 2017

Shutdown Averted – House May Vote on ACA Replacement

On Friday, Congress passed, and President Donald Trump signed, a one-week continuing resolution (CR) that kept the government open until this Friday. The extra week bought bipartisan negotiators more time to reach agreement on legislation to fund the government for the rest of the 2017 fiscal year. And as the prospects of a government shutdown fade, the House may once again look to vote on a revised healthcare measure this week, but it remains to be seen if they have the votes for passage.
 

DYK?

The first dinner, the White House Correspondents' Dinner (WHCD) was held in 1921 at the Arlington Hotel. The dinner, nicknamed “nerd prom,” is billed to celebrate freedom of the press and the First Amendment. It also serves to honor young and veteran journalists alike with scholarships and awards that are funded by ticket proceeds.

In 1924, President Calvin Coolidge became the first presidential attendee. Since then, every president has attended the dinner at least once during his term in office. This year’s dinner was held on Saturday, April 29th.  Breaking from recent tradition, President Donald Trump was the first president in 36 years to skip the event. 

Bipartisan Budget Bill Expected to Pass This Week

On Sunday evening, congressional negotiators reportedly reached an agreement on a broad funding package that will keep the government open through the remainder of FY17, which concludes on Sept. 30. The deal includes $15 billion in new defense spending to fight terrorism and $1.5 billion in new spending for border security, but it does not include new funds for the president’s proposed wall on the border with Mexico. The over 1,600-page bill also includes a permanent extension of health insurance for coal miners, which was a key provision for Senator Joe Manchin (D-W.Va.) and other members of Congress from the Appalachian region. It also includes $2 billion in new spending for the National Institutes of Health, a down payment on former President Barack Obama's cancer moonshot initiative.

Assuming the funding package is signed into law this week, the president and Congress will soon begin work on appropriations for Fiscal Year 2018, which begins on Oct. 1. The president is expected to release his full budget blueprint the week of May 22, which will serve as a benchmark for Congress as it begins drafting spending measures for the next fiscal year. If the more detailed budget follows the blueprint the administration released in March, known as the “skinny budget,” expect the proposal to include $54 billion in domestic funding cuts that are intended to offset the $54 billion increase in military spending.

NCSL Contacts: Max Behlke, Jake Lestock
 

DYK?

Until 1937, presidents weren’t sworn in until March 4. As technological advances greatly reduced the times to tabulate votes, report the results and travel, such a long lame-duck period was no longer logistically necessary. As a result, the 20th Amendment, which was ratified on January 23, 1933, moved up Inauguration Day to January 20 and the first meeting of the new Congress to January 3.

The 20th Amendment didn’t take effect until October 1933, after the long lame-duck period once again proved problematic. With the U.S. in the throes of the Great Depression, incoming President Franklin D. Roosevelt had to wait four months to implement his New Deal while uncertainty further roiled financial markets. January 20 first served as Inauguration Day in 1937 when Roosevelt was sworn in for a second term. 

House Considers Another Vote on Health Care Legislation 

As prospects of a government shutdown have all but disappeared, the House this week will look to pass a revised version of the American Health Care Act, legislation to repeal and replace the Affordable Care Act (ACA). The revised measure aims to win over support of conservatives, whose opposition to the original version forced House leadership to pull the legislation from the floor on March 24, before a final vote, as it did not have enough support for passage.

The updated bill includes the MacArthur Amendment, proposed by the centrist New Jersey congressman who also co-chairs an informal caucus of moderate Republicans known as the “Tuesday Group,” that would allow states to opt out of certain ACA rules, including requirements pertaining to minimum coverage of health insurance, and would allow insurers to charge more based on individuals' health. The amended legislation has the support of the House Freedom Caucus and outside conservative groups. The question is whether the amended bill will have the support of GOP moderates, and even some conservatives, whose opposition could mean that the legislation would still lack the vote necessary for passage. If, as expected, no Democrats vote for the bill, Republicans can only afford 22 defections.

White House National Economic Council Director Gary Cohn said on Monday that he and other members of President Donald Trump’s administration are “convinced we’ve got the votes” in Congress to pass the health care legislation. However, that assumption may be optimistic. Last Friday, The Hill reported that 21 House Republicans have singled that they will vote against the amended bill and 55 remain undecided.

If the amended bill does make it to the Senate, it is all but certain that it will be “Dead-on-Arrival.” But, that would mean that the House could claim victory and could move on to other priorities, such as comprehensive tax reform, while the Senate contemplates the next steps for healthcare.

NCSL Contact: Rachel Morgan
 

DYK?

Founded in August 1909 outside Washington D.C. by the United States Army Signal Corps, the College Park Airport in the state of Maryland is the oldest airport in the world that is still in operation. Established as the military demonstration site for the Wright Brothers, the airport originally served as the training location for two military officers to fly in the government’s first airplane, which was purchased from the Wright’s. It is home to many "firsts" in aviation, including the first mile-high flight by a powered airplane, the first female passenger, and the first controlled helicopter flight, and is particularly significant for the well-known aviators and aviation inventors who played a part in this field's long history.

In Search of the Unicorn of Comprehensive, Bipartisan Tax Reform

Last Wednesday, Trump administration officials released a broad outline to overhaul the federal tax code. After summarizing the plan, White House chief economic advisor Gary Cohn and Treasury Secretary Steven Mnuchin said that they’d be in constant dialogue with lawmakers to remake U.S. tax laws based on four principles: reduced rates, simplification, middle-class tax cuts and getting American businesses with foreign earnings to bring home that international income.

Key details of the plan:

  • Reduces the number of individual income tax brackets from seven to three, with a top rate of 35 percent and lower rates of 25 percent and 10 percent. (Does not specify the income ranges.)
  • Doubles the standard deduction, from $6,350 to $12,700 for single filers, and from $12,700 to $25,400 for married filers.
  • Cuts the corporate tax rate from 35 percent to 15 percent.
  • Eliminates all itemized tax deductions (including the state and local tax deduction), with the exceptions of the charitable deduction and the mortgage interest deduction.
  • Mnuchin said the U.S. would move to a "territorial" tax system, which would exempt foreign-sourced income from U.S. tax.
  • A "one-time tax" on the trillions of dollars held by corporations overseas, but did not determine the rate.
  • Eliminates the federal estate tax.
  • Repeals the alternative minimum tax and the 3.8 percent Net Investment Income Tax that helps pay for Obamacare.

The proposed plan would have significant impact on state and local government. The most noticeable would be the elimination of the deduction for state and local taxes. It is estimated that eliminating the deduction would provide the federal treasury an additional $1.3 trillion over a decade, according to the Tax Policy Center. But eliminating or capping federal deductibility for state and local property, sales, and income taxes would result in double taxation, as these taxes are mandatory payments for all taxpayers. Also, eliminating the deduction would increase taxes, particularly for higher-income residents in higher-income states. The same Tax Policy Center study estimated the elimination of the deduction would increase taxes for about 24 percent of taxpayers nationwide, with much higher percentages in select states. NCSL, along with other organizations that represent state and local governments, released a joint letter last Wednesday stating strong opposition of the administration’s plan to eliminate the federal income tax deduction for state and local taxes.

But while this specific issue has brought about considerable concern from state groups, a number of other obstacles remain in the way of the president’s plan. Tax and budget experts alike are saying it’s a fair bet that the administration’s tax plan would add to the deficit. Secretary Mnuchin has stated that he’s counting on a 3 percent economic growth, which will help pay for the plan. Some budget experts suggest that the 15 percent tax rate for all businesses makes deficit neutrality almost mathematically impossible without also reducing other tax benefits and cutting spending, both politically difficult.

What’s also notable is that House Speaker Paul Ryan's import tax idea, known as the border adjustability tax (BAT), is not mentioned at all in the president’s plan. While this idea has gained considerable criticism from the retail industry and members on both sides of the aisle, Ryan has signaled he wants to salvage the idea in some form. It has also been circulating that most top House Republicans are privately saying that the president’s tax framework is fundamentally flawed. During a panel discussion at the Institute of International Finance event last week, one of Ryan’s top aides called the idea of enacting a temporary business tax cut through the reconciliation process a “magic unicorn running around.”

“A plan of business tax cuts that has no offsets, to use some very esoteric language, is not a thing. It’s not a real thing!” said George Callas, Ryan's senior tax counsel. “And people can come up with whatever plans they want. Not only can that not pass Congress, it cannot even begin to move through Congress. … And there are political reasons for that. Number one, members wouldn’t vote for it. But there are also procedural, statutory and legal reasons why that can’t happen.”

If Congress plans to enact permanent tax reform through Budget Reconciliation, under the rules, the measure cannot increase the deficit after a decade. Callas explained that in order to satisfy this requirement, corporate tax cuts would probably have to sunset after two years. “A corporate rate cut that is sunset after three years will increase the deficit in the second decade. We know this. Not 10 years. Three years. You could not do a straight-up, un-offset, three-year corporate rate cut in reconciliation. The rules prohibit it. You might be able to do two years.” He went on to say that “A two-year corporate rate cut … would have virtually no economic effect. It would not alter business decisions. It would not cause anyone to build a factory. It would not stop any inversions or acquisitions of U.S. companies by foreign companies. It would just be dropping cash out of helicopters onto corporate headquarters.”

NCSL Contacts: Max Behlke, Jake Lestock

Massachusetts Senate and Wisconsin Assembly Members Advocate for Federalism

On Tuesday and Wednesday of last week, the members of the Massachusetts Senate Committee on Intergovernmental Affairs and the Wisconsin Assembly Committee on Federalism and Interstate Relations were in our nation’s capital to meet with their congressional delegations and officials of various federal agencies. The delegations were led by the respective chairs of the committees, Senator Sal DiDomenico (Mass.) and Representative Tyler Vorpagel (Wis.).

Their visit to Washington started with a joint luncheon briefing on state federal issues conducted by NCSL DC policy staff. The briefings helped the legislators prepare for their congressional meetings as well as the visits to federal agencies. NCSL staff also arranged meetings for the delegations with officials at the Departments of Education, Transportation, Health & Human Services, Center for Medicaid and CHIP Services, and the Environmental Protection Agency.

NCSL encourages state legislators and state legislative delegations to reach out to NCSL when visiting Washington D.C. NCSL staff will be happy to assist in arranging meetings as well as provide policy briefs on important state-federal issues.

NCSL Contacts: Neal Osten, Molly Ramsdell

President Issues Two Executive Orders Regarding Federal Lands and Waters

On April 26, President Donald Trump signed an executive order “Review of Designations Under the Antiquities Act,” which orders the Department of Interior (DOI) to review many of national monument designations made by the past three presidents, and potentially all past designations. Specifically, the review by DOI Secretary Ryan Zinke will include more than two dozen monuments created over the past 21 years.

Shortly thereafter, on April 28, the president signed a second executive order that directs DOI to begin the process for examining and considering allowing offshore oil and gas drilling in areas where such actions had previously been closed. Specifically, Zinke will review the five-year offshore leasing plan issued by the department in November 2016, prior to the inauguration of President Trump. Due to statutory requirements for reviewing and updating the five-year plan, the study could take approximately two years to conduct.

More information on the Executive Orders can be found here.

NCSL Contacts: Ben Husch; Kristen Hildreth

E-Fairness Legislation Reintroduced in Congress

Last week, Representative Kristi Noem (R-S.D.) and Senator Mike Enzi (R-Wyo.) were joined with their colleagues on both sides of the aisle in the introduction of legislative measures that would allow states to collect sales taxes they are owed on purchases made by their residents from out-of-state businesses. The Remote Transactions Parity Act, H.R. 2193, was previously introduced in the previous congress, and despite having 68 cosponsors, never received a hearing or a vote. In the Senate, the Marketplace Fairness Act, S. 976, is almost identical to the bill that passed the Senate 69-27 in 2013, but ultimately died at the end of that Congress having never been considered in the House.

NCSL Contacts: Max Behlke, Jake Lestock

The April 24, 2017, Capitol-to-Capitol can be found here

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

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
  • Rachel Morgan | 202-624-3569 | Health and Human Services
  • Jon Jukuri  | 202-624-8663 | Labor, Economic Development and International Trade
  • Susan Frederick | 202-624-3566 | Law, Criminal Justice, and Public Safety
  • Ben Husch | 202-624-7779 | Natural Resources and Infrastructure