Washington Weekly – December 20, 2013

Before adjourning for the year, the Senate passed the budget agreement and defense authorization bill, and approved several nominations. The House passed both of these bills last week. Both the House and Senate are adjourned for the year and will return the week of January 6.

Budget Conference and FY14 Appropriations

On Wednesday the Senate passed the $1.01 trillion budget deal, the first bipartisan budget produced by a divided Congress in 27 years. The deal eases $63 billion in automatic spending cuts (sequestration) that were to kick in starting in January using a combination of cuts to mandatory spending programs and increased user fees. The President is expected to sign the budget agreement into law.

House and Senate appropriations staff have been meeting behind closed doors to prepare an omnibus FY14 appropriations bill pursuant to the budget agreement. They intend to have an omnibus bill ready for the House and Senate to pass before the current continuing resolution (CR) expires on January 15. Subcommittee chairs have been given their 302(b) allocations, providing them with the overall funding levels they will use to write their bills. The allocations were not made public and are likely to be closely held until the omnibus reaches the House floor.  Subcommittee chairs have not even been allowed to see the allocations for other subcommittees. Senate Appropriations Committee chair Barbara Mikulski (D-MD) and House Appropriations Committee chair Hal Rogers (R-KY), along with their ranking members, plan on meeting when they return on Jan. 6, and hope to have the omnibus on the House floor by Jan. 10 and Senate floor by Jan. 13. If Congress runs out of time, it is likely to pass a short-term CR to enable it to finish the bill. If House and Senate appropriators are unable to reach agreement on some controversial appropriations bills, like Labor-HHS, those programs might end up being funded by a year-long CR.

Defense Authorization

The Senate passed the FY14 National Defense Authorization Act conference report last night by a vote of 84 to 15. The bill authorizes $625.1 billion in discretionary funding for FY14 (~$3.1 billion less than FY13 enacted level). Of that, the legislation authorizes $526.8 billion for the Defense Department’s base budget, $80.7 billion for overseas operations, and $17.6 billion for national security programs within the Department of Energy. The bill now goes to the President for his signature.

Tax Reform

The Senate Finance Committee released an energy tax overhaul plan this week that creates a whole new system of incentives for producing low-carbon electricity and fuels. The draft proposal replaces the current 42 different energy tax incentives (25 of which are temporary and expire every year or two) with a streamlined, predictable, and technology-neutral set of energy tax incentives that focuses on promoting domestic energy production and reducing pollution. Senate Finance Committee staff stated that while the chairman believes tax reform as a whole can raise revenue for deficit reduction, this package of reforms and others released by the committee are intended to be revenue neutral in the long-term. The draft proposal can be found here.

Political Updates

Three members of Congress announced this week that they were retiring or not seeking re-election in 2014 – Rep. Frank Wolf (R-VA), chair of the House Appropriations Commerce, Justice and Science (CJS) subcommittee, Rep. Tom Latham, (R-IA) chair of the House Appropriations Transportation-Housing and Urban Development (THUD) subcommittee, and Rep. Jim Matheson (D-UT), member of the House Energy and Commerce Committee.  The next most senior member on the CJS subcommittee is Rep. John Culberson (R-TX), who is currently the chair of the Military Construction/VA subcommittee. On the THUD subcommittee, Rep. Charlie Dent (R-PA) is next in line after Latham and Wolf.

Rep. Mel Watt (D-NC) formally announced today that he would leave Congress the first week of January to join the Obama Administration as the new director of the Federal Housing Finance Agency.  His resignation allows Gov. Pat McCrory (R-NC) to call a special election in the heavily Democratic 12th congressional district. A number of Democrats are either actively campaigning or considering running for the seat. In Alabama’s special election for the 1st Congressional District, Republican Bradley Byrne easily defeated Democrat Burton LeFlore. Byrne is a lawyer and former state senator. He will succeed Rep. Jo Bonner (R-AL) who resigned earlier this year to take a job with the University of Alabama.

Senator Max Baucus (D-MT), chair of the Senate Finance Committee will be nominated by President Obama to be the next US ambassador to China. When he is nominated and confirmed, the Democratic Governor of Montana Steve Bullock may appoint Lt. Governor John Walsh to fill the remainder of Baucus’ term, giving him an advantage going into the fall election to replace Baucus. Baucus had previously announced his retirement from Congress at the end of 2014. While Sen. Jay Rockefeller (D-WV) is next in line for the Finance chairmanship, Rockefeller has also announced his retirement and is said to have declined the position. Sen. Ron Wyden (D-OR) is rumored to be the next chair, and has purportedly privately accepted the post. Wyden is currently the chair of the Senate Energy and Natural Resources Committee. Sen. Mary Landrieu (D-LA) is next in line for the gavel on that committee.

Next Year

When the House and Senate reconvene in January, their first order of business will be to complete action on the FY14 appropriations bills and begin negotiations on raising the debt ceiling.  Senate Majority Leader Harry Reid (D-NV) has also said that an extension of unemployment benefits will be the first item of business for the Senate when it returns in 2014.

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