What to Know in Washington: Prepare for a Spending Fight

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President Donald Trump’s gambit to extract a few billion extra dollars for border fencing in fiscal 2019 may succeed in the short term, but his emergency declaration and other tactics could set in motion long-term changes in how lawmakers deal with the White House on spending issues.

Trump threw a wrench into the normal give and take between the executive and legislative branches by signing a spending bill and then immediately seeking to undermine it. The president agreed to a measure last month that gave him $1.375 billion for border fencing and on the same day issued an emergency declaration to access another $3.5 billion.

The president’s moves have prompted discussions in Congress on stricter limits on the executive branch’s financial flexibility and a permanent change to the National Emergencies Act even as the fight over the declaration plays out.

“There’s going to be a lot of appetite for both amending the National Emergencies Act but also just making sure the statutory authority is circumscribed” in fiscal 2020 appropriations talks, said Sen. Brian Schatz (D-Hawaii), ranking member on the Appropriations Military Construction-VA Subcommittee.

The conflict between Trump and Congress will escalate in the coming weeks. With Trump’s fiscal 2020 budget request expected on Monday, lawmakers are set to begin work on the annual spending bills. Key Democrats say they want future appropriations bills to keep Trump on a shorter leash, and members of both parties are weighing permanent changes to the president’s ability to declare emergencies in order to ignore appropriators’ instructions. Read more from Jack Fitzpatrick on the spending fights ahead as appropriations season kicks off.

Budget Request: Trump on Monday will call for sharp cuts in domestic spending that likely will be mostly ignored by Congress even as it sets up a funding fight that risks another government shutdown in the fall.

Trump’s budget proposal will mark an aggressive opening bid in negotiations over the coming months to lift caps on spending for domestic and defense programs and to increase the $22 trillion federal debt limit. Trump will seek a boost in defense spending by using war contingency funds to get around the budget limits. In each year of his presidency, Trump has proposed deep cuts to domestic agency spending as well as cuts to some entitlement programs, and in each year Congress has ignored them. Read more on what to expect Monday from Erik Wasson and Steven T. Dennis.

Meanwhile, CNBC reports this morning that the budget plan will show persisting deficits despite estimated annual economic growth of 3 percent and steep spending cuts. While previous administrations sought to project the end of deficits over the long term, Trump abandoned that approach last year.

More Preparation: To answer any budget questions, read BGOV’s Budget Basics OnPoint, which provides an overview of the federal budget, including spending and revenue, annual deficits, and the debt. It also outlines the annual budget process and next steps in Congress.

Photographer: Andrew Harrer/Bloomberg

Happening on the Hill

Ethics, Campaigns and Voting: House Democrats are preparing for passage of their wide-ranging government ethics, campaign and voting rights legislation. The House will vote on the measure, fulfilling a campaign promise from many Democrats leading up to the 2018 midterms. The measure, however, is doomed in the Senate, where Republicans have derided the bill as a power grab designed to tighten Democrats’ control of congress. For more on the measure, read the BGOV Bill Summary from Michael Smallberg, Sarah Babbage, Adam M. Taylor and Naoreen Chowdhury.

Moving from Wall Street to a job with Uncle Sam would no longer be a shortcut to cashing out untouchable stock under the legislation. Spurred by multi-million-dollar payouts to former corporate executives, the sweeping ethics and campaign finance bill would ban pay rewards that are “contingent on accepting a position” in the government. At least 20 Trump appointees may have benefited from policies allowing them to cash out long-term pay rewards such as restricted stock units, according to financial disclosure forms filed with the Office of Government Ethics. Those assets were potentially worth more than $400 million, according to Bloomberg Government’s review of the documents. Read more from Michael Smallberg.

Nominations: The Senate is set to vote next week on the confirmation of William Beach, the nominee to head the Labor Department’s Bureau of Labor Statistics. Senate Majority Leader Mitch McConnell (R-Ky.) filed cloture on Beach’s nomination yesterday, setting up next week’s action. Beach, vice president for policy research at George Mason University’s Mercatus Center, is expected to get strong Republican support for his confirmation. Read more from Tyrone Richardson.

McConnell also teed up a full Senate vote for Neomi Rao’s nomination to the U.S. Court of Appeals for the District of Columbia Circuit. Rao went through the Senate Judiciary Committee on a 12-10 party-line vote last week. Democrats unanimously opposed Rao over her conservative positions on issues like regulation and executive authority, and her lack of judicial experience, Patrick L. Gregory and John Crawley report. Her college writings on sex assault and other issues also fueled their view that she’s unsuitable for this lifetime appointment. Rao has received the American Bar Association’s highest rating of “Well Qualified.”

House Overwhelmingly Backs Anti-Bigotry Bill: The House voted to condemn anti-Semitism and other forms of bigotry Thursday in a move Democrats hope will calm the controversy over remarks by freshman Ilhan Omar (D-Minn.). The resolution, adopted 407-23, denounces white supremacists and discrimination against Jews, Muslims and other groups as “hateful expressions of intolerance” contrary to American values. The wording was broadened after some Democrats opposed an earlier version to more narrowly condemn anti-Semitism. Neither version mentioned Omar by name.

“It’s not about her, it’s about these forms of hatred,” Speaker Nancy Pelosi (D-Calif.) said. Pelosi said she believed Omar “didn’t understand the full weight of her words” and added, “We’re not policing the speech of our members.” But the resolution includes wording specifically addressing a remark Omar made last week, by calling for the rejection of the “pernicious myth of dual loyalty and foreign allegiance, especially in the context of support for the United States-Israel alliance.” Read more from Anna Edgerton and Sahil Kapur.

Meanwhile, four senators seeking the Democratic presidential nomination are rallying around Omar amid the backlash. Sens. Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), Kamala Harris (D-Calif.) and Kirsten Gillibrand (D-N.Y.) denounced anti-Semitism in separate statements yesterday, while also saying Omar was being unfairly targeted by those who want to muffle criticism of Israel’s policies. Read more from Sahil Kapur.

Fix Pensions Now or Lose $500B: House Democrats working to build a case for saving underfunded corporate pension plans by passing a divisive long-term loan program have latched onto staggering forecasts that suggest failure to act now could cost taxpayers nearly $500 billion. If Congress doesn’t produce a fix for the underfunded plans—a crisis the federal insurer in charge of helping struggling defined benefit programs has warned will bankrupt it by 2025—the government stands to lose up to $240 billion over 10 years, Mariah Becker, head of research and education at the National Coordinating Committee for Multiemployer Plans, told lawmakers yesterday. Read more from Warren Rojas.

Meanwhile companies were given the green light to tackle their hefty pension obligations through a controversial method involving one-time, lump-sum payouts to retirees and beneficiaries, the Treasury Department says. That could help companies like General Electric, now struggling with a nearly $30 billion shortfall in its defined-benefit pension plan. The notice issued Wednesday says that the agency doesn’t plan to follow through on a 2015 pledge, made during the Obama administration, to formally outlaw the method. Read more from Lynnley Browning.

House Homeland Security Committee Seeks Answers On CBP Border Report: House Homeland Security Committee Chairman Bennie Thompson (D-Miss.) asked Customs and Border Protection Commissioner Kevin McAleenan about reports of a list the CBP compiled to stop, detain and search reporters, attorneys and advocates at the southern U.S. border, Ben Livesey reports. The Report “raises questions about possible misuse of CBP’s border search authority and requires oversight to ensure the protection of Americans’ legal and constitutional rights,” Thompson and Kathleen Rice, chairwoman of the Border Security Subcommittee, wrote in letter. The pair requested further information from McAleenan by March 14.

Renewable Energy Tax Incentives: Senate and House backers of new tax incentives for next-generation batteries to store booming wind and solar generation plan to unveil a bill next week, lawmakers and aides said yesterday. Backers hope that Democratic control of the House, along with increased bipartisan interest in renewable energy, bolsters the chances for a bill that didn’t gain traction in the last Congress. Read more from Dean Scott and Lydia O’Neal.

Endangered Whale Splits Parties: Sharp partisan divides emerged in a hearing yesterday on the endangered right whale, whose survival is central to a debate on offshore oil and gas drilling. To Democrats on the House Natural Resources Subcommittee on Water, Oceans, and Wildlife, the whale is being sacrificed to fossil fuel firms that want to conduct seismic tests that could injure and possibly kill the mammals. Stephen Lee has more.

FCC Scrutinized for Records Requirement: The Federal Communications Commission may be breaking a federal law requiring agency officials to retain emails, texts, and online messages, House Energy and Commerce Chairman Frank Pallone (D-N.J.) and Rep. Mike Doyle (D-Pa.) told FCC head Ajit Pai in a letter. Read more from Jon Reid.

Money and Politics

Drug Price Lobbying: The pharmaceutical industry is ramping up its Washington presence as it faces pushback from Congress and the Trump administration on how much it charges for medicine. Last year, drug companies and their trade association spent more than $206 million, the highest amount since 2009, when Congress was debating the Affordable Care Act, according to a Bloomberg Government analysis of lobbying disclosures. Major pharmaceutical industry players are bringing on still more K Street firepower this year to fight threats on multiple fronts.

Drug pricing was specifically mentioned in at least two dozen new lobbying registrations since the beginning of 2018, including hires made by drug companies, pharmacies, insurance companies and others. Dozens more lobbying hires during that same time by drug-makers list work on intellectual property, and health care or pharmaceuticals in general. Megan R. Wilson, Alex Ruoff, and Jorge Uquillas have more.

SALT Cap Not Going Anywhere: Politicians from New York, New Jersey and other high-tax states may be making a lot of noise, but the new $10,000 cap on deductions for state and local taxes, or SALT, isn’t going anywhere any time soon. Some 30 Democratic members of Congress, joined by one Republican, last month introduced a bill that would eliminate the cap on SALT deductions introduced in the 2017 tax overhaul. And New York Governor Andrew Cuomo formed a coalition of Democratic counterparts from high-tax states to push for a change. Yet their efforts are likely futile, lobbyists and tax policy experts say. Read more from Joe Light.

Around the Agencies

Mulvaney Says No Disputes With Gottlieb: The White House didn’t have any disputes with departing FDA head Scott Gottlieb before his surprise resignation this week, acting Chief of Staff Mick Mulvaney said in an interview yesterday. “His service here was greatly appreciated and he leaves on only the best of terms,’’ Mulvaney said. “I’m not aware of any policy dispute in the administration regarding Dr. Gottlieb.”

Despite Gottlieb’s departure the White House will still support a Food and Drug Administration effort to crack down on youth vaping and plans more regulations on tobacco products, senior White House officials said in an interview yesterday. Read more from Margaret Talev and Anna Edney.

Makeover of EPA’s Science Office: The EPA is consolidating several of its science and research offices in a reorganization of the agency’s scientific arm that was announced to staff yesterday. Under the restructuring, the EPA’s Office of Research and Development would combine its 13 offices into eight. The plans include merging the Office of the Science Advisor with the Office of Science Policy, which the EPA had been weighing since late 2018. Amena Saiyid and Abby Smith have more.

U.S. Pauses T-Mobile-Sprint Review: The FCC yesterday paused its review of T-Mobile’s proposed purchase of rival wireless provider Sprint, saying more time is needed to review new arguments for the deal presented by the companies. The move from the Republican-led agency created fresh turmoil for the $26.5 billion merger, which has been under review for more than eight months. Read more from Todd Shields and David McLaughlin.
Trump Said to Seek Huge Premium From Allies Hosting U.S. Troops: For years, Trump has complained that countries hosting American troops aren’t paying enough. Now he wants to get even, and then some. Under White House direction, the administration is drawing up demands that Germany, Japan and eventually any other country hosting U.S. troops pay the full price of American soldiers deployed on their soil — plus 50 percent or more for the privilege of hosting them, according to a dozen administration officials and people briefed on the matter. Read more from Nick Wadhams and Jennifer Jacobs.

EU Urges Trump to Lift Tariffs So Allies Can Cooperate on China: The European Union’s chief trade negotiator urged Trump to stop imposing tariffs on the bloc if he wants a partner to help the U.S. pressure China to abide by rules governing the global economy. In an interview in Washington, EU Trade Commissioner Cecilia Malmstrom said she and U.S. Trade Representative Robert Lighthizer have had productive meetings on how to address Chinese industrial policies and reform the World Trade Organization. While both sides agree on problems, they quarrel over the solution. Read more from Jenny Leonard and Shawn Donnan.

U.S. Hopeful for Nuclear-Free North Korea: The U.S. still believes North Korea can completely dismantle its nuclear weapons program by the end of Trump’s first term and is ready to engage in new talks after the collapse of the summit in Vietnam, a senior State Department official said yesterday. At the same time, the U.S. won’t be forced into any artificial timelines, the official said, in a nod to Trump’s remark — repeated several times — that he’s in no rush to achieve a deal. Read more from Nick Wadhams.

Huawei Seeks to Go Where Russian Firm Failed: Huawei, the Chinese telecom giant facing multiple criminal indictments in the U.S., is expanding on a Russian company’s failed legal argument to bolster its claim that American authorities have gone too far in trying to protect national security. In a federal lawsuit filed this week in Texas, Huawei claims a U.S. ban on government purchases of its equipment violates the Constitution and could kill the company. Read more from Patricia Hurtado.

Manafort Gets 47 Months: Trump’s former campaign chairman, Paul Manafort, received a 47-month sentence from U.S. District Court Judge T.S. Ellis III yesterday for financial crimes while key details about his place in the special counsel’s investigation of Russian interference in the 2016 election remain a mystery. Manafort was found guilty of eight felonies, including hiding $55 million abroad, cheating the U.S. out of more than $6 million in taxes and defrauding banks that lent him money. Read more from Laura Curtis.

Next week Manafort will be sentenced in a second case by a less forgiving judge who could add another 10 years to his term, David Voreacos and Andrew Harris report.

Trump Beats Stormy Daniels Lawsuit: Trump can’t be sued over the validity of a non-disclosure agreement with adult movie star Stormy Daniels after he said he wasn’t going to enforce the “hush” deal to keep her quiet about their purported fling. A federal judge yesterday granted Trump’s request to throw out her claim, agreeing that Trump’s promise not to enforce the agreement renders her case moot. Read more from Edvard Pettersson.

To contact the reporter on this story: Zachary Sherwood in Washington at zsherwood@bgov.com

To contact the editors responsible for this story: Loren Duggan at lduggan@bgov.com; Giuseppe Macri at gmacri@bgov.com; Brandon Lee at blee@bgov.com

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