Capitol Hill Update, 1 December, 2014
House & Senate/Schedule: Both the House and the Senate are back in action this Monday, and they hope to conclude their business for the year and leave town by the 11th. If government funding talks become contentious enough, it is possible they could stay in town for a few days more.
House& Senate/Spending: The one item that absolutely must be taken care of during this Lame Duck session of Congress is funding for the government, which is currently set to expire on December 11th. There are several scenarios for how Congress may proceed:
- Omnibus: Congress has been trying to reach an agreement on an actual appropriations “omnibus” bill, which would combine the individual departments’ spending bills passed by the House this year. An omnibus allows Congress to make actual changes to programs and funding levels. Obviously, with the Democrats still in charge of the Senate, this does open the door for changes conservatives would not appreciate.
- Continuing Resolution (CR): Congress can continue funding itself via CR, which merely keeps spending at current levels until a date specified in the resolution. The upside of this is that Congress could punt funding the government into early next year, when Republicans would have full control over the budget and appropriations process.
- A hybrid: The final result could be a hybrid “CRomnibus” that passes most of the spending bills for individual departments through the end of the next fiscal year, but funds certain department for only a short period of time like in a CR. This would be particularly useful for Republicans hoping to restrict funding for the enforcement of President Obama’s executive order on immigration, allowing them to potentially defund the specific programs involved next year.
House & Senate/Taxes: Both chambers are struggling to reach an agreement over several dozen tax provisions that either have expired or will expire by the end of the year. The tax code is full of these temporary tax policies which Congress has taken to just reauthorizing every year in a package of “tax extenders”. Some of these, such as expensing allowances for small businesses and deductions for S-corporations, are good for the economy in that they provide some relief from what is currently the highest corporate tax rate in the developed world. Others, such as the Wind Production Tax Credit, are corporate welfare handouts only to certain favored industries.
The White House has issued a veto threat against these extenders, which has greatly complicated the process of brokering a deal. Republicans are attempting to make some of the small business tax deductions permanent, while the White House has ironically objected to the potential deficit increases that reduced tax revenues could cause.
House & Senate/Defense: The House and Senate are likely to work on the National Defense Authorization Act (NDAA), the annual funding bill for most defense-related programs. This bill is relatively straightforward, but it is worth watching out for the possibility that Congress may try to sneak in some unrelated provisions, or that they may try to use the emergency war funding portion of the bill to cover even more non-emergency expenses.
House/Insurance: Next week, Congress is likely to reauthorize the Terrorism Risk Insurance Act (TRIA). This obsolete program was created as a stopgap after 9/11, when insurance companies became reluctant to offer coverage for damages caused by terrorist acts because of the scale of the destruction in New York. In the intervening years, the market has since largely taken care of the coverage problem, but the government continues to run TRIA, which not only subsidizes the cost insuring terrorism damages, but promises to cover much of the payouts in the event that another attack occurs. This program has become another avenue for corporate welfare, with insurance companies shifting the cost and risk over to taxpayers, and FreedomWorks believes that it should be discontinued.