The White House is still considering cutting funds from the recently negotiated and enacted FY2018 omnibus appropriations bill despite warnings from several Democrats and Republicans in Congress that it could “poison the well” for future negotiations. Office of Management and Budget Director Mick Mulvaney is taking the lead on developing a rollback proposal that could cut anywhere from $30B – $60B. The White House expects to submit its proposal to Congress sometime around May 1. The House could take up the measure, but it isn’t clear if they would have the votes for passage. What is clear though is that it wouldn’t stand a chance of passage in the Senate.

Republican leaders in Congress instead are considering drafting a spending cuts package that would avoid the FY18 omnibus, which could help them win broader support. Leadership is looking for unexpended balances to include in the package that would not affect funding included in the FY18 omnibus. President Trump may not be satisfied with this approach though.

President Trump and Republican Congressional leaders are considering using a budget rescissions process to rollback some of the funding that was approved in the FY18 omnibus spending bill. However, reaction to this proposal has been tepid among some Republicans. They are looking to House Speaker Paul D. Ryan (R-WI) for guidance, but the Speaker has not made any public comments on the proposal.

The Congressional Budget and Impoundment Control Act of 1974 provides an expedited process for the President to propose and Congress to review a rescissions package identifying appropriations that the administration does not want to spend. The President must first submit a message to Congress specifying the amount of funds they want to rescind from which accounts and programs along with estimated fiscal and program effects and the reasons for the rescission. Congress would then have 45 legislative days to approve all or part of the President’s request. A rescissions package could pass the Senate with a simple majority vote.

After signing the FY18 omnibus, President Trump called on Congress to give him line-item veto authority on spending bills. The Supreme Court has declared the line item veto unconstitutional. This rescissions process could be a way around that, but he would need Congressional approval.

Republicans hold a slim 50-49 majority in the Senate, which will be 51-49 when Cindy Hyde-Smith is sworn in on Monday. With Sen. McCain (R-AZ) not voting, they can’t lose any Republicans in order to pass a rescissions package. And they may be reluctant to open up that can of worms given the effect it would have on negotiating future bipartisan spending deals.

The House passed the 2,232-page $1.3T FY2018 omnibus appropriations bill today by a vote of 256 to 167 (90 Republicans, many of whom are conservatives, and 77 Democrats voted against passage). The bill then went to the Senate for consideration. Senate Majority Leader Mitch McConnell (R-KY) moved to cut off debate this evening after failing to get the consent of all 100 senators to waive procedural hurdles and move quickly to final passage. This means that the Senate may have to wait until cloture ripens at 1 am on Saturday to vote on cloture. This is one hour after the current FY18 continuing resolution (CR) expires. If cloture is invoked, a 30-hour clock begins, and absent a time agreement, a vote on final passage could occur as late as 8 am Sunday morning. Senate Majority Whip John Cornyn (R-TX) confirmed this evening that several senators are objecting to the bill, but said he’s optimistic that the Senate will get it done. Senate Minority Leader Chuck Schumer (D-NY) also said he’s confident the bill will pass by a comfortable margin in the Senate. But in the interim, the government could briefly shutdown unless another CR is passed. The President has indicated that he will sign the omnibus spending bill.

In addition to including funding for the federal government through the end of the fiscal year, the omnibus includes extensions of the FAA authorization and Airport and Airway Trust Fund (through September 30, 2018), the National Flood Insurance Program (through July 31, 2018, a deadline which decouples it from the federal funding cycle), the Pesticide Registration Improvement Act (through September 30, 2018), the Trade Act of 1974 (through December 31, 2020), redaction authority concerning sensitive security information in the Ethics in Government Act of 1978 (through December 31, 2027), the Brownfields Law, the Conrad 30 Waiver program (through September 30, 2018), EB-5 Regional Center Program (through September 30, 2018), E-Verify authorization (through September 30, 2018), Generalized System of Preferences, authority of the Judicial Conference to redact personal and sensitive information from the financial disclosure report of a judge or judicial employee if it finds that revealing the information could endanger that individual or a family member of that individual, the FCC, the Special Immigrant Religious Workers Program (through September 30, 2018), and pass through status from 3 to 5 years for certain drugs which not enough data has been collected to allow the drug to be priced properly by Medicare.

The omnibus also includes a technical correction to remove state match requirements for Abstinence Education, continues the EPA’s exemption for low-level livestock emissions, establishes a national criminal history background check system and criminal history review program for organizations that serve children, reforms forest management, clarifies the treatment of minor league baseball players under the Fair Labor Standards Act’s minimum wage and overtime rules, reauthorizes the Secure Rural Schools payments for two years, directs the SEC to change certain requirements relating to the capital structure of business development companies, and includes a “fire borrowing fix” and a prohibition on employers keeping tips received by employees.

And the bill includes the CLOUD Act, the TARGET Act, the Taylor Force Act, legislation to strengthen the National Instant Criminal Background Check System, the Keep Young Athletes Safe Act, Kevin and Avonte’s Law, legislation to relocate broadcaster spectrum, tax technical corrections, revenue provisions (fixing the “grain glitch” and enhancing the low-income housing credit), and legislation to provide local law enforcement, school personnel and students with the tools they need to proactively prevent a threat.

FY18 Omnibus Appropriations Bill Text

https://www.gpo.gov/fdsys/pkg/CPRT-115HPRT29374/pdf/CPRT-115HPRT29374.pdf

Explanatory Statements

Introduction

http://docs.house.gov/billsthisweek/20180319/INTRODUCTION%20FY18%20OMNI.OCR.df.pdf

Agriculture, Rural Development and FDA

http://docs.house.gov/billsthisweek/20180319/DIV%20A%20AG%20SOM%20FY18%20OMNI.OCR.pdf

Commerce, Justice, Science

http://docs.house.gov/billsthisweek/20180319/DIV%20B%20CJS%20SOM-%20FY18-OMNI.OCR.pdf

Defense

http://docs.house.gov/billsthisweek/20180319/DIV%20C%20-%20DEFENSESOM%20FY18%20OMNI.OCR.pdf

Energy & Water

http://docs.house.gov/billsthisweek/20180319/DIV%20D%20EW%20SOM%20FY18-OMNI.OCR.pdf

Financial Services

http://docs.house.gov/billsthisweek/20180319/DIV%20E%20FSGG%20SOM%20FY18%20OMNI.OCR.pdf

Homeland Security

http://docs.house.gov/billsthisweek/20180319/DIV%20F%20HOMELAND%20SOM%20FY18%20OMNI.OCR.pdf

Interior, Environment and Related Agencies

http://docs.house.gov/billsthisweek/20180319/DIV%20G%20INTERIOR%20SOM%20FY18%20OMNI.OCR.pdf

Labor, HHS, Education

http://docs.house.gov/billsthisweek/20180319/DIV%20H%20LABORHHS%20SOM%20FY18%20OMNI.OCR.pdf

Legislative Branch

http://docs.house.gov/billsthisweek/20180319/DIV%20I%20LEGSOM%20FY18%20OMNI.OCR.pdf

Military Construction-Veterans Affairs

http://docs.house.gov/billsthisweek/20180319/DIV%20J%20MilConVASOM%20FY18-OMNI.OCR.pdf

State, Foreign Operations

http://docs.house.gov/billsthisweek/20180319/DIV%20K%20SFROPSSOM%20FY18-OMNI.OCR.pdf

Transportation HUD

http://docs.house.gov/billsthisweek/20180319/DIV%20L%20THUD%20SOM%20FY18%20OMNI.OCR.pdf

Summary of Additions

https://rules.house.gov/sites/republicans.rules.house.gov/files/115-2/HR%201625%20%28OMNI%29/SUMMARY.pdf

The current FY18 continuing resolution (CR) is set to expire next Friday, March 23. Appropriators had hoped to file a final FY18 omnibus appropriations bill this week in order for the House to consider the bill on Thursday, but negotiators failed to reach a final spending agreement.

Appropriators are claiming that progress is being made, but still several policy disputes remain to be settled. They started with 150 issues to be negotiated, but still need to settle several disagreements including whether health care workers should be able to opt out of performing abortions under a “conscience” objection, whether the federal government can provide grants to Planned Parenthood, environmental regulations, campaign finance law (relaxing rules that limit coordination between political parties and their candidates and rolling back the Johnson amendment), and funding for the NY/NJ Gateway project. An online sales tax measure, technical changes to fix the recent tax law, and provisions to defund sanctuary cities are not likely to be included in the final omnibus measure. The bill could include an extension of the Federal Aviation Administration excise taxes that are set to expire on March 31.

The Deferred Action for Childhood Arrivals (DACA) also remains a sticking point in negotiations. House Minority Leader Nancy Pelosi (D-CA) said this week that a deal for providing “Dreamers” temporary protection in exchange for funding for a border wall was meaningless because of court rulings saying that the program can’t be ended while it faces a legal challenge. The administration also pulled back the offer saying that negotiations on DACA should be kept separate from spending negotiations. The administration is seeking $1.6B in FY18 to build 74 miles of physical barriers.

House Appropriations Committee Chairman Rodney Frelinghuysen (R-NJ) said appropriators should have everything done this weekend. To comply with the House’s “three-day rule,” Appropriators would have to file the bill by Wednesday in order to bring it to the floor for a vote by Friday.

House Majority Leader Kevin McCarthy (R-CA) wants to put the FY18 omnibus spending bill on the House floor next week (Thursday, March 15) assuming it can be finalized and filed the day before. Some think this is an ambitious agenda, and that it could slip a day or two especially since the House adjourned yesterday and is not scheduled to reconvene until Tuesday. The current continuing resolution expires on March 23.

While appropriators typically settle the funding levels first, this year they are trying to resolve the policy disputes first. There are still some unrelated add-ons that are complicating the process. Some of the more difficult issues were kicked up to the chairmen and ranking members last week for resolution, while others are being handled at the subcommittee level. The three hardest bills to complete are Labor HHS Education, Financial Services, and Homeland Security.

The Labor HHS Education bill is at an impasse over a Planned Parenthood funding provision. While federal funding can’t be used for providing abortions, the Senate bill provides $286.5M for family planning programs and stipulates that the funding can’t be used to make changes to existing regulations on how grant money is awarded. The House bill provides no funding for family planning, and specifically prohibits funding for Planned Parenthood. Republican House appropriators think the Senate language goes too far.

Another issue appropriators have to take into consideration in their negotiations is the veto President Trump threatened if funding for the Gateway tunnel project in New York/New Jersey is included in the omnibus bill. The project is expected to cost $30B, and an agreement with the previous administration has NY and NJ paying half the cost with the federal government paying the rest. Trump may be using the veto threat to leverage funding for his other priorities (e.g. a border wall) in the omnibus.

Congress passed the Bipartisan Budget Act of 2018 earlier this year and the President signed it into law on February 9. The bill included an FY2018 continuing resolution (CR) funding the federal government through March 23 and raised the spending caps for FY2018 and FY2019. With agreement on the overall spending caps and six weeks to write a final FY18 omnibus spending bill, another CR didn’t seem likely. However, a $3B dispute is currently holding up the final omnibus spending bill.

Republicans and Democrats are disagreeing over the use of $3B in Changes in Mandatory Program Spending (ChIMPS), which is funding that appropriators often dip into to offset raises in discretionary spending. Democrats are pushing to use all $17B ChIMPS allowed under the FY18 budget resolution, while Republicans are holding the line at $14B. In this case, the disagreement is over $3B in mandatory offsets to discretionary spending for the Labor-HHS-Education appropriations bill.

Another potential holdup could be policy riders that are added to the omnibus spending bill. Lawmakers could try to add language on immigration, gun control, health care reform, Planned Parenthood, Russian interference in U.S. elections, aid for Puerto Rico, rolling back Obama-era environmental regulations, barring the government from using taxpayer funds at Trump properties, easing campaign finance rules, and making fixes to the recently passed tax reform.

Appropriators are still aiming to file their FY18 omnibus spending bill by March 14.

Senate Majority Leader Mitch McConnell (R-KY) brought up a House-passed shell bill to use as the vehicle for the Senate’s immigration debate this week, and directed his colleagues that “whoever gets 60 votes wins.” The President, meanwhile, threatened to veto any bipartisan agreement that didn’t advance his four principles, two of which were non-starters for Democrats. The debate got off to a slow start, as members couldn’t agree on how to even begin. This didn’t leave them much time to reach a deal as McConnell said that debate on immigration reform would be limited to this week.

The Senate held four votes on immigration reform amendments and none of them had the 60 votes needed for passage. Here’s a summary of the four amendments, the vote tally for each amendment, a link to the amendment language, and the members whose votes broke with their party’s consensus.

Coons/McCain Amendment

Vote: 52-47

https://www.congress.gov/amendment/115th-congress/senate-amendment/1955/text

The amendment provided a pathway to citizenship for the 1.8M undocumented immigrants who came to the country as children. It did not offer any funding for a border wall, but it did include some border security measures.

Democrats voting no:

Manchin (D-WV)

Republicans voting yes:

Flake (R-AZ)

Gardner (R-CO)

Graham (R-SC)

Murkowski (R-AK)

Toomey Amendment

Vote: 54-45

https://www.congress.gov/amendment/115th-congress/senate-amendment/1948/text

This amendment didn’t actually address the DACA issue. Instead, it would have penalized sanctuary cities that refuse to enforce federal immigration policy by withholding federal funding from those municipalities.

Democrats voting yes:

Donnelly (D-IN)

Manchin (D-WV)

McCaskill (D-MO)

Stabenow (D-MI)

Schumer/Collins/Flake/Graham Amendment

Vote: 54-45

https://www.congress.gov/amendment/115th-congress/senate-amendment/1958/text

This was a centrist deal from the Common Sense Caucus, but President Trump and his supporters in the Senate opposed it because it did not cover all four immigration pillars he demanded. The amendment provided a pathway to citizenship for the 1.8M undocumented immigrants who came to the country as children, but it prevented DACA recipients from sponsoring their parents for legal status. It also included $25B for border security. This amendment was the one that was thought to have the best chance of passing.

Democrats voting no:

Harris (D-CA)

Heinrich (D-NM)

Udall (D-NM)

Republicans voting yes:

Alexander (R-TN)

Collins (R-ME)

Flake (R-AZ)

Gardner (R-CO)

Graham (R-SC)

Isakson (R-GA)

Murkowski (R-AK)

Rounds (R-SD)

Grassley Amendment

Vote: 39-60

https://www.congress.gov/amendment/115th-congress/senate-amendment/1959/text

This was the White House’s immigration framework, which included a pathway to citizenship, $25B in border security, tougher interior enforcement, curtailment of family immigration, and elimination of the diversity visa lottery program. Failure of this amendment demonstrates that the President’s preferred immigration plan cannot pass the Senate.

Republicans voting no:

Barrasso (R-WY)

Collins (R-ME)

Cruz (R-TX)

Daines (R-MT)

Enzi (R-WY)

Flake (R-AZ)

Inhofe (R-OK)

Kennedy (R-LA)

Lee (R-UT)

Moran (R-KS)

Murkowski (R-AK)

Paul (R-KY)

Sasse (R-NE)

Thune (R-SD)

Democrats voting yes:

Donnelly (D-IN)

Heitkamp (D-ND)

Manchin (D-WV)

While the President initially set March 5 as the deadline for Congress to resolve the DACA issue, a federal judge has blocked the termination of the program. The injunction probably won’t get lifted before April at the earliest, and June at the latest. So Congress has at least another month to sort it out before dreamers will face deportation.

Republicans are now looking for a Plan B. Sens. John Thune (R-SD), Rob Portman (R-OH), and Jerry Moran (R-KS) are floating a proposal to extend the DACA program indefinitely in exchange for $25B for border security. More specifically, the deal would provide “Dreamers” with two-year renewal periods to protect them from deportation in exchange for a $25B trust fund for border security that would cap outlays at $5B a year. This proposal, however, does not include the President’s demands for changes to family immigration and the visa lottery program. The President will need to support any backup plan in order for it to have a chance of passing.

The federal government briefly shut down at midnight last night as Congress worked to complete action on the fifth continuing resolution for fiscal year 2018. The Senate passed H.R. 1892, the Bipartisan Budget Act of 2018 by a vote of 71-28 (37 Democrats/Independents voted in favor of the measure while 16 Republicans voted against it) and the House followed passing it by a vote of 240-186 (73 Democrats voted in favor of the measure while 67 Republicans voted against it – many of whom are members of the House Freedom Caucus). While the Senate had secured a bipartisan agreement earlier in the week, Sen. Rand Paul (R-KY) wanted the Senate to vote on an amendment to restore the budget caps to the lower levels. He objected to requests to allow an expedited vote on the spending deal so the Senate had to wait to vote on the measure until Sen. Paul’s allotted time ran out after midnight.

The bill includes an FY2018 continuing resolution (CR) funding the federal government through March 23 and raises the spending caps for FY2018 and FY2019. The budget agreement lifts the defense spending caps from $549B in FY2018 and $562B in FY2019 to $629B (base budget)/$700B (with OCO funds) in FY2018 and $647B (base budget)/$716B (with OCO funds) in FY2019. For nondefense spending, the caps are raised from $516B in FY2018 and $530B in FY2019 to $579B in FY2018 and $598B in FY2019. The agreement also suspends the debt ceiling until March 2019. At that point, the Treasury Department would again begin using extraordinary measures to avoid default buying Congress some additional time before they would have to address the issue.

H.R. 1892 also included:

• $6B over two years would go towards anti-opioid and mental health efforts
• $20B for infrastructure projects like surface transportation, rural broadband, and clean drinking water
• $5.8B for Child Care Development Block Grants
• $4B to rebuild veterans hospitals and clinics
• $2B for the National Institutes of Health
• $4B for college affordability programs, including those for police officers, firefighters, and teachers
• $4B to help clear out a Veterans health care maintenance claims backlog
• Only $100B of the spending increases would be offset (most of the increased spending will be financed by additional borrowing)
• $89.3B in Emergency Funds for Hurricane-Affected Communities
• $4.9B in increased Medicaid funding for Puerto Rico and the U.S. Virgin Islands with a 100% federal cost share
• Tax Extenders – one year extensions of tax breaks that expired after CY2016
• Repeal of the Independent Payment Advisory Board established by the Affordable Care Act to help rein in Medicare costs
• $1.1B to help dairy and cotton farmers
• A 10 year extension of the authorization of the Children’s Health Insurance Program (CHIP)
• $7B over two years for community health centers
• Closes the Medicare Part D prescription drug benefit “donut hole” for seniors in 2019
• Creation of two joint select congressional committees tasked with:
  • Developing legislation on multi-employer pension plans
  • Come up with budget process reform legislation

With the overall funding levels for defense and nondefense now agreed to, the House and Senate Appropriations committees can begin to rewrite their 12 FY2018 spending bills to the higher spending levels. The FY2018 omnibus spending bill is expected to be considered before this new CR expires on March 23.

H.R. 1892

https://www.appropriations.senate.gov/imo/media/doc/Bipartisan%20Budget%20Act%20of%202018.pdf

Summary

https://www.appropriations.senate.gov/imo/media/doc/020718-CR-SUMMARY.pdf

Disaster Relief Summary

https://www.appropriations.senate.gov/imo/media/doc/020718-SUPPLEMENTAL-SUMMARY.pdf

The House passed a $659B FY18 defense appropriations bill (H.R. 695) this week for the third time on a mostly party-line vote of 250-166 (23 Democrats voted yes). The bill includes $584B in regular appropriations and $70B in emergency supplemental spending. The vote in the House was largely symbolic, as the bill had no chance of passing the Senate. Democrats in the Senate first want to reach a bipartisan budget deal. The funding caps for FY18 are $549B for defense and $516B for non-defense programs. H.R. 695’s funding level exceeds the FY18 funding cap by $35B, but a provision in the bill exempts it from the automatic sequestration cuts that would be triggered.

The current FY18 continuing resolution (CR) funds the federal government through next Thursday, February 8. The House will likely consider another CR (the fifth this fiscal year) that would keep the government open another six weeks through March 22.

The six week timeframe for the CR could complicate negotiations as the deadline for winding down the Deferred Action for Childhood Arrivals program set by the President is March 5, and the Congressional Budget Office now estimates that the Treasury Department will run out of extraordinary measures for the debt ceiling sometime in the first half of March. Both issues need to be addressed before March 22.

The Trump administration has asked House Republicans to include language suspending the debt ceiling in the next short-term spending bill. In addition to a provision to raise the debt ceiling, the next CR could include $80B in disaster relief as well as a $300B sequester relief package.

The federal government shutdown lasted three full days ending on Monday when the President signed another continuing resolution (CR) funding the government through February 8. The Senate approved the measure by a vote of 81-18 (two Republicans and 16 Democrats voted against the measure). The House followed and approved the measure by a vote of 266-150 (six Republicans voted against the bill, while 45 Democrats voted for passage). The President then signed the bill later that evening.

Senate Democrats agreed to vote for the measure after getting a commitment from Senate Majority Leader Mitch McConnell (R-KY) for floor time for an immigration debate. McConnell said that turning to immigration legislation was contingent on the passage of a CR to keep the government open. McConnell said his intention is to take up legislation that would address DACA, border security, and related issues, as well as disaster relief, defense funding, and healthcare and to have an amendment process that is “fair to all sides.” The debate over legislation that would protect the nearly 700,000 “Dreamers” would occur if there is no bipartisan deal before this new CR expires on February 8. There is no assurance, though, that the House will take up an immigration package. House Speaker Paul D. Ryan (R-WI) has said he will only take up legislation if it has support from a majority of his Republican conference.

The CR included a six-year reauthorization of the Children’s Health Insurance Program as well as delays for three taxes that were set to take effect under the 2010 Affordable Care Act. The CR also provided retroactive pay for federal employees who either worked or were furloughed during the shutdown and will cover periods for any future funding lapses during FY18. The Congressional Budget Office (CBO) estimated that this CR will add $31.25B to annual deficits over the next decade.

After the CR was passed, Senate Intelligence Committee leaders on both sides expressed concern over a provision that was included in the stopgap measure. The language could allow the White House to exert greater control over the intelligence community’s funding by permitting the transfer and spending of intelligence funds without congressional authorization or approval. Effectively, the intelligence community could expend funds as it sees fit without an authorization bill in place. Before final passage of the bill, Senate Intelligence Committee Chairman Richard Burr (R-NC) sought unanimous consent to change the language of the intelligence provision, but Senate Appropriations Committee Chairman Thad Cochran (R-MS) objected saying the language was requested by the administration and used in previous CRs.

The risk of another shutdown persists as this CR only funds the federal government through February 8. Congress has just two weeks (9 legislative days in the Senate, 6 legislative days in the House) to agree on new defense and non-defense spending limits for an FY18 omnibus appropriations bill as well as come to terms on an immigration deal. However, Senate Democrats may now be considering decoupling the spending caps deal from the immigration deal. Other issues that could be on the negotiating table include: measures to continue cost-sharing payments to insurers to reduce out-of-pocket costs for low-income Americans, long-term funding for community health centers, funding to address the opioid epidemic, propping up underfunded private pension plans, and emergency funding for victims of recent hurricanes and wildfires. Absent an agreement, Congress will have to pass another CR. Senate Majority Whip John Cornyn (R-TX) said this week that Congress likely would have to pass at least two more CRs.