House Passes 2nd Coronavirus Response Bill

The House passed H.R. 6201, the Families First Coronavirus Act last night by a vote of 363 (yeas) – 40 (nays) – 1 (present). All no votes were from Republicans, and the one vote “present” was from Rep. Justin Amash (I-MI). President Trump backed the deal that was negotiated between House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin. The bill includes free testing for everyone who needs it, two weeks of paid sick leave, enhanced jobless benefits and increased food aid for children, senior citizens and food banks.

The measure now goes to the Senate who could consider it this coming week.

House-Passed Version of H.R. 6201

https://docs.house.gov/billsthisweek/20200309/BILLS-116hr6201-SUS.pdf

House Speaker Nancy Pelosi’s Dear Colleagues

https://www.speaker.gov/newsroom/31320-1

https://www.speaker.gov/newsroom/31320-0

 

President and Congress Take Steps to Address Coronavirus Global Pandemic

President Trump officially declared a national emergency this afternoon and announced several other steps the White House is taking to address the coronavirus global pandemic. The national emergency declaration will allow up to $50 billion in federal aid for local municipalities and states to use to combat the illness. He also called on every state to set up emergency operations immediately and every hospital to implement their emergency procedures. The executive order also will allow the Secretary of Health and Human services to waive certain regulations and laws to more quickly deliver testing and care for coronavirus patients. And the President has directed the Secretary of Energy to purchase “large quantities” of crude oil for the strategic petroleum reserve. Finally, he said that they are waiving interest on student loans that are held by the federal government.

Earlier in the week, after the World Health Organization declared the coronavirus a global pandemic on Wednesday, the President addressed the nation from the oval office informing the country of the measures the administration was taking to stop the spread of the outbreak as well as to shore up the economy. The President called for Congress to “put politics aside, stop the partisanship, and unify together.” More specifically, he said that his administration is:

  • Suspending all travel from Europe to the United States for the next 30 days beginning on Friday 3/13 at midnight.
    • S. citizens are exempt from the ban, but must undergo “appropriate screenings.”
    • The prohibitions will not apply to trade and cargo.
    • The restrictions do not apply to the United Kingdom.
  • Reevaluating the restrictions on travel from China and South Korea for a possible early opening.
  • Working with the health insurance industry to waive all copayments for coronavirus treatments, extend coverage for these treatments, and prevent surprise medical billing.
  • Reducing federal “red tape” to make antiviral therapies available.
  • Issuing guidance on school closures, social distancing, and reducing large gatherings.
  • Instructing the Small Business Administration to provide economic loans in affected states and territories, and asking Congress to increase funding for this program by an additional $50 billion.
  • Instructing the Treasury Department to defer tax payments, without interest or penalties, for certain individuals and businesses negatively impacted.
  • Requesting Congress pass an immediate payroll tax relief bill. The president wants to cut the Social Security payroll tax from 6.2% on the first $137,700 in wages to as low as zero through December 31. Another option is to cut only the employee share of the tax to 2%.

Following the President’s initial address on Wednesday, the House Appropriations Committee introduced H.R. 6201, the Families First Coronavirus Act. The bill provides the following:

  • $500 million for a special supplemental nutrition program for Women Infants and Children (WIC)
  • $400 million for the Emergency Food Assistance Program (TEFAP)
  • Provision to allow the Department of Agriculture to provide emergency Supplemental Nutrition Assistance Program (SNAP) benefits to households with children who would have otherwise received free or reduced-price meals at their schools
  • $100 million for nutrition assistance grants to Puerto Rico, American Samoa, and the Commonwealth of the Northern Mariana Islands
  • $5 million to the Department of Labor to administer the emergency paid sick days program
  • $250 million for the Senior Nutrition program in the Administration for Community Living
  • Provides the Secretary of Agriculture the authority to issue nationwide school meal waivers
  • Allows all child and adult care centers to operate as non-congregate (i.e. they can serve outside the school or in individual settings) and waive all meal pattern requirements if there is a disruption to the food supply
  • Suspends the work and work training requirements for SNAP during the crisis
  • Allows states to request special waivers from the Secretary to provide temporary, emergency CR-SNAP benefits to existing SNAP households
  • Requires the Occupational Safety and Health Administration (OSHA) to issue an Emergency Temporary Standard (ETS) within 30 days, requiring employers within the health care sector – and any other sectors that either OSHA or the Centers for Disease Control and Prevention (CDC) designate at elevated risk – to develop and implement a comprehensive infectious disease exposure control plan to protect health care workers from exposure to the SARS-CoV-2 virus that causes COVID19
  • OSHA shall issue a permanent health and safety standard, which the Occupational Safety and Health Act stipulates shall be issued 6 months after the ETS has been issued
  • Requires that hospitals and skilled nursing facilities operated by state or local government agencies, which are not otherwise subject to the Occupational Safety and Health Act of 1970 or a State occupational safety and health plan, shall comply with the ETS and the permanent OSHA standard required in this Act as a condition of receiving Medicare funds
  • Creates a new federal emergency paid leave non-taxable benefits program as Title VI of the Social Security Act, consisting of the following Social Security Act sections
  • Provides the Social Security Administration with additional direct (mandatory) funding for both the cost of the benefits and the cost of administering the program
  • $1 billion in 2020 for emergency grants to states for activities related to processing and paying unemployment insurance (UI) benefits
  • Provides states with access to interest-free loans to help pay regular UI benefits through December 31, 2020, if needed
  • Requires the Secretary of Labor to provide technical assistance to states that want to set up work-sharing programs, in which employers reduce hours instead of laying employees off, and then employees receive partial unemployment benefits to offset the wage loss
  • Provides 100% federal funding for Extended UI Benefits for states that experience an increase of 10 percent or more in their unemployment rate (over the previous year) and comply with all the beneficiary access provisions in section 102
  • Requires all employers to allow employees to gradually accrue seven days of paid sick leave and to provide an additional 14 days available immediately in the event of any public health emergency, including the current coronavirus crisis
  • Requires all employers to provide an additional 14 days of paid sick leave, available immediately at the beginning of a public health emergency, including the current coronavirus crisis
  • Ensures paid sick leave covers days when your child’s school is closed due to a public health emergency, when your employer is closed due to public health emergency, or if you or a family member is quarantined or isolated due to a public health emergency
  • Reimburses small businesses—defined as businesses with 50 or fewer employees—for the costs of providing the 14 days of additional paid sick leave used by employees during a public health emergency
  • Enables construction employees to receive sick pay based on hours they work for multiple contractors
  • Requires private health plans to provide coverage for COVID-19 diagnostic testing, including the cost of a provider, urgent care center and emergency room visits in order to receive testing. Coverage must be provided at no cost to the consumer.
  • Requires Medicare Part B to cover beneficiary cost-sharing for provider visits during which a COVID-19 diagnostic test is administered or ordered
  • Requires Medicare Advantage to provide coverage for COVID-19 diagnostic testing, including the associated cost of the visit in order to receive testing
  • Requires Medicaid to provide coverage for COVID-19 diagnostic testing, including the cost of a provider visit in order to receive testing
  • Requires the National Disaster Medical System to reimburse the costs of COVID-19 diagnostic testing provided to individuals without insurance
  • Requires certain personal respiratory protective devices to be treated as covered countermeasures under the PREP Act Declaration for the purposes of emergency use during the COVID-19 outbreak and ending October 1, 2024
  • Ensures that individuals enrolled in TRICARE, covered veterans, and federal workers have coverage for COVID-19 diagnostic testing without cost- sharing
  • Ensures that American Indians and Alaskan Natives do not experience cost sharing for COVID-19 testing, including those referred for care away from an Indian Health Service or tribal health care facility
  • Provides a temporary increase to states’ federal medical assistance percentage for the duration of the public health emergency for COVID-19

Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-CA) have had several discussions the past two days trying to negotiate a compromise coronavirus response bill. President Trump said that House Democrats are not giving enough in the negotiations. Republican lawmakers are waiting for a signal from President Trump on whether he’ll support a deal worked out by Secretary Mnuchin and House Speaker Pelosi. Speaker Pelosi said the House will pass legislation today whether or not the President agrees.

President’s Address to the Nation

https://www.whitehouse.gov/briefings-statements/remarks-president-trump-address-nation/

H.R. 6201, the Families First Coronavirus Act Bill Text

https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116hr6201ih.pdf

H.R. 6201, the Families First Coronavirus Act Bill Summary

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/Families%20First%20summary.pdf

Speaker Pelosi’s Dear Colleague

https://www.speaker.gov/newsroom/31220-1

Small Business Administration Coronavirus Guidance

https://www.sba.gov/page/guidance-businesses-employers-plan-respond-coronavirus-disease-2019-covid-19

Department of Homeland Security Outlines New Process for Americans Returning from Certain European Countries, China, and Iran

https://www.dhs.gov/news/2020/03/13/department-homeland-security-outlines-new-process-americans-returning-certain

DHS Notice of Arrival Restrictions

https://s3.amazonaws.com/public-inspection.federalregister.gov/2020-05578.pdf

 

House and Senate Pass Coronavirus Emergency Supplemental

The House and Senate passed an $8.3B coronavirus emergency spending bill this week and sent it to the President who signed it this morning. The House passed H.R. 6074 by a vote of 415 to 2. Reps. Andy Biggs (R-AZ) and Ken Buck (R-CO) were the two dissenting votes. The Senate then cleared the package by a vote of 96 to 1. Sen. Rand Paul (R-KY) voted no after offering an amendment aimed at avoiding a deeper deficit by slashing more than $7B from foreign aid programs. The amendment was tabled by a vote of 81-15. Sen. Lindsey Graham (R-SC) criticized Paul’s amendment saying that it would not “do much for the debt, but it’s going to do a lot to make us less safe.”

The amount of funding provided in the emergency supplemental far exceeds the administration’s original $1.8B request submitted to Congress on February 24. The administration requested $1.25B in emergency funding for the Public Health and Social Services Emergency Fund at the Department of Health and Human Services (HHS) and the authority to transfer $535M from an account for the prevention and treatment of Ebola to the COVID-19 response. The funding comes as there have been 11 deaths attributed to the virus in the U.S. and the number of infections in the U.S. is 164 in 19 states (CDC data).

The bill provides the following:

  • $61M for the FDA to facilitate the development and review, both pre-market and post-market, of medical countermeasures, devices, therapies, and vaccines to combat the coronavirus.
  • $1 billion for the Small Business Administration (SBA) to provide loan subsidies to help small businesses, small agricultural cooperatives, small aquaculture producers, and non- profit organizations that have been impacted by financial losses as a result of the coronavirus outbreak. This funding could enable the SBA to provide an estimated $7B in loans to these entities. It also provides $20 million to administer these loans.
  • $2.2 billion for the Centers for Disease Control and Prevention to support federal, state, and local public health agencies to prevent, prepare for, and respond to the coronavirus
  • $300 million to replenish the Infectious Diseases Rapid Response Reserve Fund
  • $300 million for global disease detection and emergency response
  • $3 billion for research and development of vaccines, therapeutics, and diagnostics to prevent or treat the effects of coronavirus as well as a requirement that vaccines, therapeutics, and diagnostics developed using taxpayer funds must be available for purchase by the Federal government at a fair and reasonable price and must be affordable in the commercial market.
  • $1 billion for procurement of pharmaceuticals and medical supplies, to support healthcare preparedness and Community Health Centers, and to improve medical surge capacity
  • Requirement to reimburse $136 million to programs across the Department of Health and Human Services that were temporarily transferred to support emergency preparedness and response activities at the CDC and the Assistant Secretary for Preparedness and Response.
  • $10 million for worker-based training through the National Institute of Environmental Health Sciences to prevent and reduce exposure of hospital employees, emergency first responders, and other workers who are at risk of exposure to coronavirus through their work duties.
  • $2 million for the HHS Office of Inspector General to conduct oversight of activities related to coronavirus preparedness and response.
  • Authority for HHS to hire public health experts, as expeditiously as necessary, to perform critical work relating to coronavirus.
  • $264 million for consular operations, emergency evacuations of State Department staff and dependents, and other emergency preparedness needs at embassies around the world.
  • $435 million to support health systems overseas to prevent, prepare and respond to the coronavirus, of which $200 million is for the Emergency Reserve Fund.
  • $300 million to respond to humanitarian needs arising in countries coping with a coronavirus disease outbreak.
  • $250 million to protect against the effects of an outbreak including economic, security, and stabilization requirements.
  • $1 million for the USAID Inspector General to perform oversight of coronavirus response activities.
  • Requires a comprehensive strategy to respond to the coronavirus outbreak and regular reporting on the use of funding.
  • Ensures that the President cannot use funds appropriated in this bill for any other purpose, except for repayment of transfers within the Department of Health and Human Services.
  • Allows the Secretary of Health and Human Services (HHS) to waive certain Medicare telehealth restrictions during the coronavirus public health emergency. These waivers would allow Medicare providers to furnish telehealth services to Medicare beneficiaries regardless of whether the beneficiary is in a rural community. This provision would also allow beneficiaries to receive care from physicians and other practitioners in their homes. This provision is estimated to cost $500 million.

Senate Appropriations Committee Chairman Richard C. Shelby (R-AL) said even more funding would be provided if the current measure proves insufficient. “If they need money, we will provide it,” he said. “Money should be no problem or no object when it comes to the health of the American people, especially to prevent something this contagious.”

Bill Text

https://docs.house.gov/billsthisweek/20200302/BILLS-116hr6074-SUS.pdf

Section-by-Section Summary

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/Coronavirus%20Supp%20Summary%203.4.20.pdf

Congressional Budget Office Cost Estimate

https://www.cbo.gov/system/files/2020-03/hr6074.pdf

White House Sends $1.25B Supplemental Funding Request to Congress to Respond to Coronavirus

White House Office of Management and Budget (OMB) Acting Director Russell Vought sent a letter to Congress requesting additional federal resources to take steps to prepare for a potential worsening of the coronavirus situation in the United States. The administration requested $1.25B in emergency funding for the Public Health and Social Services Emergency Fund at the Department of Health and Human Services (HHS) to continue supporting critical response and preparedness activities. In addition, the administration requested that Congress permit the $535M in emergency supplemental funding appropriated in the FY20 Agriculture appropriations bill for the prevention and treatment of Ebola instead be used for COVID-19 response. Finally, the administration requested the ability for HHS to transfer funds to the Centers for Disease Control, the National Institutes of Health, the Food and Drug Administration, the Assistant Secretary for Preparedness and Response, and other components as necessary to carry out response activities.

The February 24 letter also stated that the President created a Coronavirus Task Force and appointed HHS Secretary Alex Azar as the lead on the task force. Two days later, the President held a press conference where he announced that Vice President Mike Pence would be in charge of the administration’s response to the coronavirus. Vice President Pence, in turn, appointed Ambassador Debbie Birx as the White House Coronavirus Response Coordinator. Birx serves as the U.S. government’s leader for combatting HIV/AIDS globally. She will also join the White House’s coronavirus task force led by Health and Human Services Secretary Alex Azar. Also on the task force are Steven Mnuchin, Secretary of the Treasury; Dr. Jerome Adams, Surgeon General of the United States; Larry Kudlow, Director of the National Economic Council; Robert O’Brien, Assistant to the President for National Security Affairs; Dr. Robert Redfield, Director of the Centers for Disease Control and Prevention; Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health; Deputy Secretary Stephen Biegun, Department of State; Ken Cuccinelli, Acting Deputy Secretary, Department of Homeland Security; Joel Szabat, Acting Under Secretary for Policy, Department of Transportation; Matthew Pottinger, Assistant to the President and Deputy National Security Advisor; Rob Blair, Assistant to the President and Senior Advisor to the Chief of Staff; Joseph Grogan, Assistant to the President and Director of the Domestic Policy Council; Christopher Liddell, Assistant to the President and Deputy Chief of Staff for Policy Coordination; and Derek Kan, Executive Associate Director, Office of Management and Budget.

Democrats criticized the request as falling short of what is really needed, and some Republicans also thought the administration’s plan may be insufficient. House Appropriations Chairwoman Nita Lowey (D-NY) said in a statement that the administration’s request was “woefully insufficient” and that her committee would “move quickly to enact a robust package that fully addresses this global emergency without allowing this administration to steal from other necessary programs.” Senate Minority Leader Chuck Schumer (D-NY) released an emergency funding bill totaling $8.5B. Senate Appropriations Committee Ranking Democrat Patrick Leahy (D-VT) expressed concern about the administration transferring COVID-19 emergency supplemental funds to other purposes, such as the southwest border wall.

The House most likely will vote on a funding plan to combat coronavirus the week of March 9. Bipartisan, bicameral meetings are happening now to work out the details of the supplemental funding bill. Senate and House appropriations leaders want bipartisan, bicameral agreement on coronavirus funding legislation by early next week. The measure will likely fall somewhere between $6-8 billion. Democrats are also pushing for provisions that will prevent the president from transferring these new funds to anything other than the coronavirus and fighting infectious diseases; ensure that vaccines for the coronavirus are affordable and available to all that need it; provide interest-free loans to small businesses that are impacted by the outbreak; and reimburse state and local governments for costs incurred while assisting the federal response to the coronavirus outbreak. The bill may skip committee consideration to go straight to the floor for a vote.

White House COVID-19 Funding Request Letter

https://www.whitehouse.gov/wp-content/uploads/2020/02/Coronavirus-Supplemental-Request-Letter-Final.pdf

Senate Democratic Leader Chuck Schumer’s Proposal

https://www.democrats.senate.gov/imo/media/doc/022620%20LEADER%20SCHUMER’S%20CORONAVIRUS%20REQUEST.pdf

President Releases National Drug Interdiction Plan and Border Strategies

This week White House Office of National Drug Control Policy (ONDCP) Director Jim Carroll released the National Interdiction Command and Control Plan (NICCP), which outlines the Trump Administration’s interdiction strategy to reduce the availability of illicit drugs in the United States. In conjunction with the recently released National Drug Control Strategy, the NICCP provides strategic guidance to relevant drug control agencies regarding interdiction efforts to disrupt Transnational Criminal Organizations that traffic drugs to the United States.

Additionally, the Administration released two counternarcotics strategies, outlining priorities in stopping the flow of drugs along both the Southwest and Northern borders.

The Southwest Border Counternarcotics Strategy aims to prevent drug trafficking along the almost 2,000-mile border that separates the United States and Mexico. The strategy specifically states, “To secure the SWB, the United States must continue to enhance interdiction and law enforcement capabilities at and between the ports of entry (POEs). The United States must bolster domain awareness through the employment of technologies, augmented by the fusion of investigative information and criminal intelligence to enable interdictions, facilitate criminal investigations, and achieve successful prosecutions” and “To deter effectively and reliably the trafficking of illegal drugs between Mexico and the United States, the Federal Government will implement a multi-layered deterrence capability consisting of manned and unmanned systems, physical and virtual barriers, and land and air-based sensors.” And with respect to tunnels and subterranean passages, the strategy calls for Federal agencies and departments to continue “to collaborate to develop ground-based sensors and other technology, thus enhancing domain awareness and cueing investigative and interdiction actions. Enhanced detection and monitoring of tunnel construction and use would enable law enforcement to identify unexplained voids; acoustic, gravitational, electronic, or seismic anomalies; subtle changes in ground moisture; or subsidence (sinking) for further investigation and tunnel discovery early in construction or use. Departments and agencies should continue their efforts to improve tunnel detection technology, including researching existing private sector capabilities and promising new methods. The use of horizontal directional-drilling equipment provides another opportunity for law enforcement.”

The Northern Border Counternarcotics Strategy aims to prevent the illegal trafficking of drugs across the United States-Canada border with regard to our 5,225-mile shared border – the longest in the world between two countries.

National Interdiction Command and Control Plan

https://www.whitehouse.gov/wp-content/uploads/2020/02/2020-National-Interdiction-Command-and-Control-Plan.pdf

National Drug Control Strategy

https://www.whitehouse.gov/wp-content/uploads/2020/02/2020-NDCS.pdf 

Southwest Border Counternarcotics Strategy

https://www.whitehouse.gov/wp-content/uploads/2020/02/2020-Southwest-Border-Counternarcotics-Strategy.pdf

Northern Border Counternarcotics Strategy

https://www.whitehouse.gov/wp-content/uploads/2020/02/2020-Northern-Border-Counternarcotics-Strategy.pdf

President Renews Border Emergency and Reprograms DOD Funds

President Trump on Thursday renewed a state of emergency he declared on February 15, 2019 (Proclamation 9844), which he used to reprogram $6.1B in FY19 funds from the Department of Defense to his border wall. Last year’s declaration followed a five-week government shutdown and the President’s failure to convince Congress to fund his border wall at his requested amount. In the emergency declaration renewal this week, the President claimed that the “ongoing border security and humanitarian crisis at the southern border of the United States continues to threaten our national security.”

The Pentagon then sent to Congress an FY20 reprogramming request seeking to transfer $3.831B from weapons systems into the counter-drug account that the administration has used to build the border wall. The reprogramming request is split between regular budget ($2.202B) and overseas contingency operations account ($1.629B). All of the reprogrammed funds are from items that were specifically added by Congress (Republicans and Democrats) during the FY20 defense authorization and appropriations process. 

The $3.831B reprogramming request is as follows:

Army

  • $100m from Army National Guard HMMWV Modernization
  • $101m from Heavy Expanded Mobile Tactical Truck Ext Serv

Navy

  • $223m would come out of the Navy’s F-35 Joint Strike Fighter program under contract to Lockheed Martin
  • $155m would come out of the V-22 Osprey program, made by Boeing Co. and Textron Inc.
  • $180m from Boeing’s P-8A Poseidon aircraft program
  • Shipbuilding would lose $911m: $650m from a program to replace amphibious assault ship, LHA; and $261m from the Expeditionary Fast Transport program

Air Force

  • The Air Force would lose $156m from F-35 advanced procurement funds and $196m from Lockheed’s C-130J transport aircraft
  • The Observation Attack Replacement (OA-X) Light Attack Aircraft program would give up $180m
  • From OCO: $169m would come out of the CH-130J and $160m from the MQ-9 drone program made by General Atomics

National Guard and Reserve Equipment

  • $205m from miscellaneous equipment, Army Reserve
  • $75m from miscellaneous equipment, Navy Reserve
  • $25m from miscellaneous equipment, Marine Corps Reserve
  • $205m from miscellaneous equipment, Air Force Reserve
  • $395m from miscellaneous equipment, Army National Guard
  • $395m from miscellaneous equipment, Air National Guard

In response to the reprogramming action, House Armed Services Committee Ranking Republican Mac Thornberry (R-TX) said, “Congress has the constitutional responsibility to determine how defense dollars are spent…The re-programming announced today is contrary to Congress’s constitutional authority, and I believe that it requires Congress to take action. I will be working with my colleagues to determine the appropriate steps to take.” And House Appropriations Committee Chairwoman Nita M. Lowey (D-NY) and Defense Appropriations Subcommittee Chairman Pete Visclosky (D-IN) said that the President is “disrespecting the separation of powers and endangering our security by raiding military resources to pay for his wasteful border wall.”

Rep. Visclosky sent a letter to Acting Under Secretary of Defense (Comptroller)/Chief Financial Officer Elaine McCusker saying that the House Appropriations Committee denied the Pentagon’s reprogramming request. However, appropriators also denied a similar $1B request in May 2019 that the administration ignored and moved the money anyway. Historically, administration officials have asked appropriators for permission before reprogramming funds, however it’s tradition and not a matter of law.

Department of Defense Reprogramming Notice

https://comptroller.defense.gov/Portals/45/Documents/execution/reprogramming/fy2020/reprogramming_action/20-01_RA_Support_for_DHS_Counter_Drug_Activity.pdf

President Trump’s Emergency Declaration Renewal

https://www.whitehouse.gov/briefings-statements/message-congress-continuation-national-emergency-respect-southern-border-united-states/

CBO Releases Updated Budget and Economic Outlook

The Congressional Budget Office (CBO) regularly publishes reports that present projections of what federal deficits, debt, revenues, and spending would be for the current year and for the following 10 years and beyond if existing laws governing taxes and spending generally remained unchanged.

CBO released its most current report this week in which it projects a federal budget deficit of $1.02T in 2020 and averages $1.3T between 2021 and 2030. Projected deficits rise from 4.6% of GDP in 2020 to 5.4% of GDP in 2030. Over the past century, the deficit has not exceeded 4.0% of GDP for more than five consecutive years except for a six-year period during and after World War II. Over the past 50 years, deficits have averaged around 1.5% of GDP when the economy is relatively strong (as it is now). Because of the large deficits, federal debt held by the public is projected to grow, from 81% of GDP in 2020 to 98% in 2030. The report assumed that lawmakers will allow the 2017 tax cuts to expire, which means that in reality the deficit may be worse than projected if Congress extends the cuts, further reducing revenue.

The good news is that the economy is doing well and, in 2020, inflation-adjusted GDP is projected to grow by 2.2%. After 2020, economic growth is projected to slow. From 2021 to 2030, output is projected to grow at an average annual rate of 1.7%. That average growth rate of output is less than its long-term historical average, primarily because the labor force is expected to grow more slowly than it has in the past.

CBO Budget and Economic Outlook: 2020 to 2030

https://www.cbo.gov/publication/56020

CBO Press Briefing

https://www.cbo.gov/system/files/2020-01/56080-CBO-outlook-briefing.pdf

House Sends Articles of Impeachment to Senate

The House voted this week to send the articles of impeachment to the Senate 28 days after the House voted to impeach President Trump. The vote was largely along party-lines with Rep. Justin Amash (I-MI) voting yes with Democrats and Rep. Collin Peterson (D-MN) voting no with Republicans. House Speaker Nancy Pelosi (D-CA) then appointed seven House managers to manage the impeachment trial in the Senate: Reps. Adam Schiff (D-CA), Jerry Nadler (D-NY), Zoe Lofgren (D-CA), Hakeem Jeffries (D-NY), Val Demings (D-FL), Jason Crow (D-CO), and Sylvia Garcia (D-TX).

The two articles and seven House managers appointed officially delivered the articles of impeachment to the Senate, and Rep. Schiff read the articles to the full Senate. Supreme Court Chief Justice John Roberts then swore in all members of the Senate thereby beginning the third impeachment trial in U.S. history. The trial will begin next Tuesday at 1:00 pm, when the chamber considers the rules package to govern the trial. 

Senators have been told they must stay in their seats during the trial, confine all reading to material related to the proceeding, leave their phones and other electronic devices outside the chamber, and refrain from speaking to neighboring senators while the case is being presented.

Budget and Appropriations Update

While Congress may have just finished action on the FY2020 funding bills last month, some members of Congress are already considering providing additional funding for this fiscal year to deal with the increase of troops in the Middle East and the earthquake in Puerto Rico. A supplemental appropriations measure for FY20 could be brought up later this year. The Office of Management and Budget (OMB) said that there are no plans right now for the administration to request a supplemental measure.

And the FY2021 process is set to begin in just one month. The President will deliver his FY21 budget request to Congress on Monday, February 10. Once Congress receives the request, the next step is for the House and Senate Budget Committees to draft budget resolutions. However, since the July 2019 spending agreement set the overall discretionary spending levels for FY21, Congress doesn’t need to pass budget resolutions this year. House Budget Committee Chairman John Yarmuth (D-KY) said this week that he while he has not made a final decision, he does not expect to draft a resolution. Senate Budget Committee Chairman Michael Enzi (R-WY) said that he does plan to mark up a budget resolution and hopes to include some changes to the budget process in that resolution. One potential change is moving to a two-year budget cycle.

The House and Senate Appropriations Committees could start their work on FY21 spending bills relatively quickly because the July 2019 spending agreement set the overall discretionary spending levels for FY21. The bipartisan deal provides $740.5B for defense spending (including war-related funding) and $634.5B for nondefense spending. The first hearing in the House Appropriations Committee (Interior-Environment Subcommittee) on the FY21 budget request is scheduled for February 6. House Majority Leader Steny Hoyer (D-MD) said he plans to set aside the month of June to for the House to pass most of the 12 annual spending bills. But with 2020 being an election year, appropriators are not expected to finish their work before the end of the fiscal year (September 30) and when they adjourn for the election (October 2 – House, October 9 – Senate). A lame duck session after election day is expected.

Congress to Consider Another FY2020 CR Next Week

The House and Senate are expected to consider a continuing resolution (CR) funding the federal government through December 20 next week as the current CR expires next Thursday (November 21). The White House has indicated that the President will sign the stopgap measure once it is passed by the Congress, thereby avoiding a pre-Thanksgiving shutdown.

Top appropriators from the House and Senate met this week in House Speaker Nancy Pelosi’s (D-CA) office to discuss a deal to avoid a shutdown. Their goal is to reach an agreement by next week on spending allocations for all 12 FY20 spending bills. Treasury Secretary Steven Mnuchin attended the meeting Thursday, reprising his role as the administration’s chief liaison with Congress in spending negotiations. This is a positive sign that a deal is near as Mnuchin enjoys more cordial relations with Democratic leaders than acting White House Chief of Staff  and OMB Director Mick Mulvaney. House Appropriations Committee Chairwoman Nita Lowey (D-NY) said she expects that they will get their work done by December 20. 

Negotiations are stalled over how to allocate the $632B in nondefense spending. Senate Republicans approved allocations that gave the Department of Homeland Security an 8% increase over FY19, while the Labor-HHS-Education spending bill only received a 1% increase. The White House may be receptive to a deal to lower the Homeland Security allocation, and may be willing to consider scaling back their $5B request for border wall construction. But Democrats would have to abandon their effort to curb the President’s power to transfer $3.6B in military construction funding to wall construction. 

Other legislation is being teed up now to ride on an end-of-year spending bill including a surprise medical billing bill and a short-term reauthorization of the Export-Import Bank.