Tax Cuts and Budget Resolution On Fast Track

Last week Congressional Republicans released an outline of their tax reform proposal for 2017. They hope to move the package on a fast track both in process and time. The process part is that they will try and use a new 2018 budget resolution and reconciliation tool to fast track the legislation through the Senate where only 50 votes would be needed under the budget reconciliation rules.

The time aspect of it is that the House hopes to pass a tax cut package or tax reform package by the end of this month. That would then leave the Senate the shortened month of November to act on their proposal. Presumably they could then negotiate differences in the remaining days of this year’s session and pass something in December.

That timetable would seem to be very ambitious even if it were only a tax cut package which it still may end up being. A comprehensive reform proposal will have its challenges as it eliminates various deductions and exemptions as well as controversies over how to set the tax rate and for which income brackets.

Another challenge will be, will it be paid for? If it is paid for, how does that happen? Will tax changes simply be expected to pay for themselves or will Congress also intend to cut programs outside of the defense budget? The broad outline released by Budget Committee Chair, Senator Mike Enzi (R-WY) will allow for up to $1.5 trillion in tax cuts. A number of blanks must be filled in but the current draft resolution would appear to contain budget language directing the Senate Interior Committee to find some savings, a provision that is an attempt to open the state of Alaska to more oil drilling. That is something supported by Senator Lisa Murkowski (R-AK).

The first steps in this process should take place this week when the Senate begins to act on a 2018 budget resolution and reconciliation instruction. Two weeks ago, Senate leaders led by Senator Bob Corker (R-TN) indicated that Republican leadership had come to an agreement on a budget resolution for 2018. The budget resolution released by Chairman Enzi appears to leave out budget reconciliation language to repeal the ACA.

Under the proposed agreement Congress would be able to provide a $1.5 trillion tax cut (over ten years). It would not necessarily have to be paid for. The budget resolution would provide for what is called dynamic scoring. Dynamic scoring would bypass the traditional CBO calculations that attempt to calculate the cost of a tax cut. Instead, dynamic scoring would calculate the amount of economic growth that would be projected because of a tax cut, and suggest that a tax cut would not increase deficits but would increase economic activity to such an extent that deficits would not occur.

On the House side, a budget resolution and reconciliation had been written in July but not voted on due to objections by House conservative Republicans. They didn’t feel it cut enough in entitlement spending and they wanted to see the outline of tax cuts. Early indications are they are satisfied with the tax outline released last week.

What’s in It

Generally, the proposal would eliminate most deductions for individuals and couples. Under the broad document, certain deductions for charitable giving and the mortgage interest deductions would stay. Most others would disappear. Perhaps most controversial is the elimination of taxpayer’s ability to deduct state and local taxes. A big deduction for many on the coasts and middle west where governments fund services through a state and local income tax. The Republican plan envisions that this would be offset by doubling the current standard deduction to $12,000 for single filers and $24,000 for couples. It would also lower tax brackets to 12 percent, 25 percent and 35 percent although it does not indicate at which income levels those brackets would hit—an issue that will be significant.

Deductions for dependent children would be eliminated but the document indicates that the child tax credit would be increased while the first $1000 would be refundable. It doesn’t indicate how much the credit would increase. The proposal also eliminates the inheritance tax, which its critics always label as a “death tax” that only hits the very wealthy and is also a major generator of federal revenue.

The plan also focuses heavily on reducing corporate taxes. Currently the rate is 35 percent (although the actual taxes paid are calculated to be below 30 percent). It would lower this rate to 20 percent although some in the Senate are talking about a 15 percent rate—which the President prefers.

It is assumed many individual credits and deductions could go. That would likely include the adoption tax credit. It is silent on the Earned Income Tax Credit but it is believed that the EITC will remain. Some also assume there would be some form of child care tax credit since Ivanka Trump has supported such a credit.

Debate Over Next HHS Leader Could Be Challenge

On Friday evening September 29, Secretary of Health and Human Services Tom Price stepped down unexpectedly during the controversy over his private chartered flights. The resignation marks the first cabinet secretary to leave the Trump Administration less than eight months after he was confirmed by the Senate.

Deputy Assistant Health Secretary Don Wright was appointed to serve as Acting Secretary. HHS oversees an annual budget of $1.15 trillion and includes the Medicare and Medicaid programs, as well as the FDA, NIH, CDC and all child welfare and most children’s programs.

The resignation and the vacancy now opens a potential political battle in the months ahead to fill the cabinet spot. Congressman Price was approved on a party line vote of 52 to 47 in February. He had been criticized by some groups and Senate Democrats for some stock profits he earned that appeared to benefit from some of his past legislation he had sponsored. In addition, Democrats were concerned about how he would oversee the implementation of the ACA.

Democrats are certain to make an issue of the next nominee and their willingness to support the Affordable Care Act. The position of HHS Secretary provides a great deal of influence and power over how successful the ACA can be and it will be the flashpoint of debate. Various rumors are starting to float around Washington for the next Secretary. Possible nominees include current HHS agency heads as well as names such as senator Bill Cassidy (R-LA) who headed up the last effort to repeal the ACA.

No indication yet as to how soon that replacement will be announced.

Health Care Maybe Alexander-Murray or Nothing

What is next for ACA repeal may be clearer later this week when and if Congressional leaders decide whether to include in the 2018 budget resolution an instruction to repeal the ACA. Such a provision would muddy the fast track for tax cuts but would keep alive another shot at the Graham-Cassidy-Johnson-Heller block grant/Medicaid per capita cap proposal.

By week’s end there were signs that Senator Lamar Alexander (R-TN) and Senator Patty Murray (D-WA) will be reviving their efforts to find a temporary bipartisan fix to the current ACA law.

The HELP Committee held four hearings in September. The hearings focused on the need to fund the CSRs, Cost-Sharing Reductions, greater flexibility in the current waiver process and as Senator Lamar Alexander (R-TN) suggested, expand the availability of “copper” or catastrophic plans. There are likely some bipartisan ideas such as placing a time limit on HHS in their approval process. There also seemed to be a consensus on allowing “copy-cat” waivers that would allow one state to copy another state’s proposal and adjusting the current cost neutrality requirement to apply across both Medicaid and the ACA.

Alexander was attempting to announce a deal just when Senator Lindsey Graham pushed his way into the health care debate and pushed the Senate to re-open the ACA repeal effort. That resulted in Alexander calling off all his efforts. If there is an Alexander-Murray deal, perhaps by the end of this week, the bigger question will be can it get 60 votes in the Senate and then there is the House challenge.

It is uncertain where the President is on such an effort although he said he might talk to Democrats next year on a health care deal that would be “bigger and better.”

Home Visiting Approved by House, Waiting on Senate

On Tuesday, September 16, the House passed the Increasing Opportunity and Success for Children and Parents through Evidence-Based Home Visiting Act (H.R. 2824). Support was not overwhelming at 214 to 209. The Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program, would be reauthorized for 5 years at its current funding level of $400 million, and include many other policy changes to the program.

Four amendments were considered on the House floor. Three were agreed to, and one failed (an amendment from Rep. Pascrell (D-NJ) to strike employment and earnings as a measure of self- sufficiency). The most significant change was exempting tribal communities from the new state match requirements. That was through an amendment by Congresswoman Suzan Delbene (D- WA).

In addition to the reauthorization, the House bill requires a new state needs assessment by FY2020; requires measures and data on improvements in family economic self-sufficiency by factoring in measures of employment and earnings; allows states to take into account staffing, community resource, and other requirements when determining how to operate at least one home visiting model in communities in need of services; and allows a state to use their MIECHV allocation for “pay for outcomes” or “pay for success” projects, but requires that in doing so, a state cannot reduce funding for current services.

Although it now exempts tribal governments, it still requires a state or non-profit match of MIECHV grant funds beginning in FY2020 phasing to 50-50 match by FY2022 and beyond.

It now goes to the Senate where Senator Charles Grassley (R-IA) and Senator Robert Menendez (D-NJ) introduced the “Strong Families Act of 2017,” reauthorizing the Maternal, Infant, and Early Childhood Home Visiting Program (MIECHV).

The Senate legislation was also co-sponsored by Senators Roy Blunt (R-MO), Bob Casey (D- PA), Cory Gardner (R-CO), Ben Cardin (D-MD), and Sherrod Brown (D-OH). It extends MIECHV for five years without the requirement that states match the grant dollar-for-dollar to remain eligible. It will continue at the same level of $400 million a year through 2022.

To Contact your Senator and to urge them to support the Senate bill, go here.
The Senate and Senate Finance Committee have many expired programs as of September 30.

There have been constant rumors that some of these expired programs including home visiting could be combined with CHIP but last week’s health care debate complicated a number of these efforts. Other programs for inclusion with CHIP include community health centers, many health- related “extenders” and unfounded outside-the-beltway rumors that the Families First Act could be tacked on. Along with expiring appropriations and the need for more disaster relief, it all makes for a very packed October, November and December.

CHIP Extension Waits Longer

By mid-week House Republicans were throwing cold water on the idea that they would move the CHIP (Children’s Health Insurance Program) before the fiscal year and the authorization ran out.

The debate and chance to act on CHIP by October 1, were thrown off when the Senate engaged in another ACA-repeal effort.

On Monday, September 18, Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) released their bill to extend CHIP for five years. The Keeping Kids’ Insurance Dependable and Secure (KIDS) Act (S. 1827), would largely maintain the program as is with an overtime reduction in the enhanced match. The ACA debate delayed any action or talk and the Senate is really where most of the interest had been the greatest.

The first sign of trouble for an October 1, renewal came on the House floor debate over a rule. Democrats were told that the Chairman of the Energy and Commerce Committee, Congressman

 

Greg Walden (R-OR.) was not convinced that CHIP could not survive beyond the expiration date of September 30. Some have argued states can stretch current funding while states and advocates are concerned about critical outreach and planning is threatened by the lack of funding and uncertainty created by a delayed reauthorization.

There are some other programs that need extension such as the community health centers program but Republican leaders view that funding in the same way. The hope had been that CHIP would get done by October 1 and it might carry some other reauthorizations but now some are saying the extensions may not happen until as late as December when Congress is likely to be in a jam to clean up must-pass end-of-the year legislation.

The Senate should want to act soon since they expect to spend their time on tax cuts. Plus, Finance Committee Chair Senator Orrin Hatch (R-UT) is one of the fathers of CHIP.

In releasing the bill, Senator Hatch said, “Introducing this legislation is an important next step toward ensuring uninterrupted funding for CHIP, providing much-needed certainty for the vulnerable children and families who rely on this critical program for health coverage. I look forward to continuing our efforts to develop a smart and fiscally responsible solution. Working with my colleagues in both the Senate and House, we will push to advance this initiative and ensure the continued healthcare coverage for American children.”

Finance Committee Ranking Member Senator Ron Wyden said, “This strong, bipartisan CHIP bill ensures that children and their families will have good health care and states will have the certainty they need for years to come. I look forward to working with Chairman Hatch and members on both sides of the aisle to focus on this bipartisan priority and move it through Congress as quickly as possible.”

Commission on Opioids

Last week, the President’s Commission on combating Drug Addiction and the Opioid Crisis held its third formal public hearing. The Commission which had an original date of October 1 for recommendations has delayed that date until November 1.

Opening comments included the testimony of Dr Francis Collins, Director of the National Institutes of Health. He told the Commission that NIH was looking at building partnerships with the research community to cut in half the time needed to provide less-addictive pain killing prescriptions.

This hearing focused on prevention initiatives. Along with Dr Francis Collins, witnesses included Stephen J. Ubl, President and CEO, PhRMA, James N. Campbell, M.D., Centrexion Therapeutics, Christian Kopfli, Chromocell Corporation, David M. Stack, Pacira Pharmaceuticals, Mike Derkacz, Braeburn Pharmaceuticals, George M. Savage, Proteus Digital

Health, Corey McCann, Pear Therapeutics Richard Pops, Alkermes, Ponni Subbiah, Indivior, Roger Crystal, Opiant Pharmaceuticals, and Kristen Gullo, US World Meds.

Stephen Ubl from PhRMA testified that his pharmaceutical company would support limiting the supply of opioids to seven days in replacement of the traditional 30-day limit for short-term pain management plans for minor treatment situations.

Last week, CWLA submitted comments to the President’s Commission on Combating Drug Addiction and the Opioid Crisis. The comments focus on how the Commission needs to include certain actions that can help address the drug epidemic’s impact on child welfare.

On July 31, the Commission released an interim report of recommendations, which can be found on the CWLA Legislative index under substance use. Overall, the report offers proposals targeted more toward treatment than law enforcement measures—a significant political turn from the law- and-order approach to crack-cocaine in the 1980s.

The CWLA comments provides numerous examples of how the epidemic is affected child welfare systems and the recommendations include, protecting Medicaid, assisting states in developing and funding plans of safe care for infants, reauthorization of regional drug treatment grant, extension of the Court Improvement Program, assistance in addressing the workforce impact on child welfare workers and enactment of the expansion of Title IV-E funding to treatment and interventions services as proposed in last year Families First Act.

The CWLA comments provides numerous examples of how the epidemic is affected child welfare systems and the recommendations include, protecting Medicaid, assisting states in developing and funding plans of safe care for infants, reauthorization of regional drug treatment grant, extension of the Court Improvement Program, assistance in addressing the workforce impact on child welfare workers and enactment of the expansion of Title IV-E funding to treatment and interventions services as proposed in last year Families First Act.

UPCOMING CAPITOL HILL BRIEFINGS/EVENTS

  • Senate Finance Committee, Hearings to tax reform, Tuesday, October 3, 10:00 AM, Senate Dirksen Room 215
  • Senate Judiciary Committee, Oversight hearing to examine the Administration’s decision to End Deferred Action for Childhood Arrivals (DACA), Tuesday October 3, 10:00 AM, 3:00 PM, Room 216 Hart senate Office Building
  • October 1, 2017, Start of Fiscal Year 2018.
  • November 1, 2017, Final Recommendations for President Commission on Combatting DrugAddiction and the Opioids Crisis
  • National adoption Month Briefing and 13th Annual Adoptive Family Portrait Project Display, Room 106 Senate Dirksen Office Building, November 15, 2:00 to 4:00 PM • December 8, 2017, Continuing Resolution and Debt Ceiling Expire