Inside (the Beltway) Scoop

By | November 17, 2017

Appropriators Wait for News on A Budget Deal; FASEB Advocates to Raise the Caps; House and Senate Tax Bills Impact Universities; Trump Nominates New Health Secretary

The current “continuing resolution” (CR) that is funding government agencies expires December 8, a date that has not escaped the attention of appropriators, who are anxious for Congressional leaders to raise the fiscal year (FY) 2018 Budget Control Act (BCA) spending caps.

Speaking to reporters, House Energy and Water Appropriations Committee Chairman Mike Simpson (R-ID) said although House and Senate negotiators have had initial discussions about developing an omnibus appropriations bill to extend funding beyond December, they can’t progress until leadership agrees on how much to raise the BCA caps. “It’s leadership,” said Simpson. ”They have to come to an agreement. I don’t know when they will.”

House Defense Appropriations Subcommittee Chairman John Carter (R-TX) echoed Simpson, saying, “We need to get right on it, and we haven’t gotten our numbers.” Labor, Health and Human Services Subcommittee Chairman Tom Cole (R-OK) said if congressional leaders can reach a deal before December 8 to raise the caps, appropriators could agree to a new set of top-line spending limits and produce an omnibus bill by Christmas. Passage of an omnibus would provide federal agencies with their final budgets for FY 2018, albeit several months after the fiscal year began.

House leaders from both parties have begun discussions about raising the spending caps, but the talks “aren’t going well,” according to a spokesperson from House Minority Leader Nancy Pelosi’s (D-CA) office. Unless talks speed up soon, Congress must pass another CR in early December to avoid a government shutdown. Last week, Senate Democrats warned they will agree to a one-week CR, at most.

Given the needed 60 Senate votes to approve another CR – and the fact that Republican leaders have ruled out shutting down the government – Democrats have significant leverage. In addition, supporters of defense spending warned they are not interested in approving a CR that goes past December because of the harm to the military’s ability to plan 2018 operations.

FASEB has been advocating for Congress to adjust the spending caps and recently signed on to a letter urging House and Senate leadership to “forge a bipartisan agreement that raises the defense and non-defense discretionary budget caps and provides meaningful funding increases for our nation’s science agencies.” Several organizations in the research community, including FASEB, are also supporting a print and social media ad campaign to draw public attention to the raise the caps message. Ads appeared this week in regional editions of the Wall Street Journal and in Politico, the Weekly Standard, Washington Examiner, The Hill, Roll Call, and the Daily Caller.

One reason for so little movement on a budget agreement is Congress’s attention shifting toward tax reform. On November 9, the House Ways and Means Committee approved the “Tax Cut and Jobs Act” (HR 1), by a party line vote of 24-16. Several provisions will impact universities, including a proposed 1.4 percent tax on large private university endowment income for schools with assets of more than $250,000 per student and elimination of the deduction for student loan interest payments. Graduate students would also be affected by bill language that treats tuition waivers as taxable income. FASEB issued a statement and sent a letter to House leadership opposing the taxation of tuition waivers for graduate students serving as teaching or research assistants.

The full House of Representatives is on track to hold a final vote on the tax bill later this week. It is expected to pass without support from Democrats.

The Senate Finance Committee also took action on tax legislation this week, although the Senate bill preserves the student loan interest deduction and does not include proposals to tax graduate student tuition waivers. However, the Senate proposal includes the same 1.4 percent endowment tax in the House bill. A full Senate vote on the Finance Committee bill is not expected until the week of November 27.

The outlook for tax reform beyond November is not clear, especially given that the House and Senate will likely pass different bills. Once the Senate passes a bill, congressional leaders will either have to convince the House to adopt the Senate bill (or vice versa) or form a conference committee to reconcile the differences. Work on tax reform could dominate the December legislative agenda, further delaying decisions on the budget caps and spending bills.

The Senate may also act on approving a new Secretary of the Department of Health and Human Services (HHS). On Monday, President Donald Trump announced on Twitter that he intends to nominate Alex Azar as HHS Secretary, replacing Tom Price, MD, who resigned in September. Azar was a senior executive at Eli Lilly until January and previously served as a deputy secretary under HHS Secretary Michael Leavitt in the George W. Bush administration. He has a law degree and clerked for Supreme Court Justice Antonin Scalia.