As has become customary in recent years, members of Congress face a daunting to-do list in the final weeks of 2017. Both chambers are scheduled to be in session through December 15, but the actual adjournment date for the year is likely to be pushed closer to the Christmas holiday or beyond, given the number of must-pass items on the agenda. In addition to addressing a number of key legislative items that expire in December, including government funding for Fiscal Year (FY) 2018, Republicans are aiming to pass a tax reform package, a crucial policy priority for the GOP, and send it to the President’s desk before the end of the year. While some believe a looming deadline is just what Congress needs to get things done, there is worry on Capitol Hill that the legislative pileup and long-simmering partisan battles on major budget and policy issues has created a prime opportunity for political brinksmanship to paralyze the high-stakes negotiations.

Republicans will first focus on enactment of tax reform. Following House passage of its version of a tax reform bill prior to Thanksgiving, the Senate spent last week debating its version of tax reform. The Senate passed its bill late on Friday under the reconciliation process, which allows the majority to avoid the need to obtain 60 votes to overcome a filibuster. The bill passed the Senate only with Republican support. While passage of tax reform in both chambers represents important victories for the GOP after months of without significant legislative achievements, the road to enactment remains challenging. The House is scheduled to vote on Monday, December 4 on a motion to go to conference with the Senate on the tax bill; a vote on a Democratic motion to instruct conferees is also scheduled in the House on Monday evening. The conference committee, composed of members of the committees of jurisdiction from both parties and chambers will work out the differences between the House and Senate bills. A resulting conference report must be passed by each chamber before it can be sent to the President’s desk for signature. Republicans in the Senate are eager to wrap up negotiations on the bill quickly in order to complete action on the bill before the Alabama special election of December 12, which could see the election of another Democratic vote if Doug Jones defeats Republican nominee Roy Moore; even if Moore wins, he is not seen as a reliable Republican vote, adding to the urgency to complete action before the winner of the special election can be seated.

The differences between the House and Senate bills are significant, but they were narrowed as the Senate wrapped up its debate. Still some issues may complicate the ability to reach a conference agreement that can pass both chambers. For example, a number of Republicans in the House have objected to the inclusion of the provision in the Senate bill allowing oil exploration in the Alaska National Wildlife Reserve. One major difference between the bills, the Senate’s repeal of the individual mandate of the Affordable Care Act, is likely to be accepted by House Republicans. The two bills also have some significant tax-related differences. A few examples: the House eliminates the estate tax, and the Senate does not; the House lowers the cap on the mortgage interest deduction, and the Senate does not; the House compresses the individual income tax rates to four brackets, and the Senate has seven brackets and a higher top rate; there are others as well. Despite the challenges, Republicans have thus far overcome internal disputes and challenges in each chamber. The failure to achieve any other signal legislative success, despite Republican control of all levers of power in Washington, especially their failure to repeal the Affordable Care Act after seven years of promising to do so, provides a powerful political incentive for Republicans to coalesce and pass this once-in-a-generation tax reform legislation before the year concludes. With members in both chambers already on the record with their votes, the prospects for reconciling the two bills and enacting tax reform appear strong.

While the GOP works to pass the tax reform package without any Democratic support in either chamber, Republican leaders are negotiating with Democrats on a variety of other legislative items on which they will need Democratic votes. First on the agenda will be an extension of the current continuing resolution (CR) to keep the government funded and running beyond the current December 8 deadline. Republican leaders are aiming to extend the CR to December 22. During the two weeks under a new CR, they hope to strike a deal on spending levels for the current fiscal year, which began on October 1. In recent weeks, congressional leaders have been working to reach a budget agreement on discretionary spending levels. A deal would likely lift the spending caps established by the 2011 Budget Control Act (BCA). Under the BCA, Congress may only appropriate up to $549 billion for defense programs and $516 billion for non-defense programs in FY 2018, a cut from FY 2017 levels. The Trump Administration and defense hawks on Capitol Hill are looking to boost defense spending upwards of $600 billion, but Democrats are demanding that any increase in defense spending be met with a dollar-for-dollar increase in non-defense spending. Prior to the Thanksgiving recess, it was reported that congressional leaders were working towards a two-year budget deal that would raise statutory spending caps by $180 to $200 billion in total over the next two fiscal years, but an agreement has not yet been announced. Given the attention and floor time that has been dedicated to the GOP tax reform proposal, the House and Senate do not have enough time to continue negotiating a budget agreement and pass a major appropriations bill through both chambers before the December 8 deadline, hence the need for a short-term extension of current funding until December 22.

A setback to reaching a bipartisan spending agreement occurred last week when House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer decided to skip a scheduled negotiating session with Republican leaders at the White House following a tweet in which President Trump expressed his view that an agreement was unlikely because of stark political differences between the parties. In a joint statement, the Democratic leaders said they would not attend the meeting with the President but would instead focus on discussions with their Republican counterparts in Congress. Democrats still wield significant influence in these negotiations because any eventual legislation adjusting spending caps and authorizing spending will need Democratic support, due to expected opposition from fiscal conservatives in the House and the ability of Democrats to filibuster a spending bill in the Senate, where the legislation would require a 60-vote threshold. Pressing from the other direction, House conservatives have expressed displeasure with their leadership’s plans too. The conservatives want to push the entire funding debate into 2018. Some Republicans appear less concerned about a potential government shutdown than in the past because they believe with control of the White House they now have the leading pulpit and could avoid blame if Congress fails to extend the CR. Other Republicans fear that their control of both chambers and the presidency only increases their vulnerability to being blamed for a government shutdown.

The complexity and number of issues to be resolved may mean that additional time is needed beyond December 22 to finalize the legislative text of a year-long appropriations package. One possibility would be for Congress to extend the current CR to December 22 with bipartisan support and reach a deal on top-line budget numbers by that date but then extend the CR again into 2018 in order to produce the legislative text needed to reflect the spending agreement. In any case, the next week will have Capitol Hill in a state of great suspense with the tax conference and the negotiations over the CR both taking place.

One policy matter the minority party is pursuing in any eventual budget deal is a resolution to the ongoing debate over the Deferred Action for Childhood Arrivals (DACA) program. The DACA program, established by President Obama, allowed persons who were brought to the country illegally by their parents when they were children to remain in the country and work, serve in the armed forces, or attend school. The Trump Administration announced in September that it will end the program in March 2018 because it lacked congressional authorization. The delay in terminating the program is designed to give Congress a chance to enact legislation to authorize a similar program. Speaker Ryan formed a Republican working group in the House to develop a proposal on the issue, and Senate Republicans also reportedly established a working group to draft their approach. Several DACA-related bills have been introduced in the House and Senate. While public support for DACA beneficiaries is widespread, there are sharp differences over whether and how to authorize the program by law and whether to include border security and various enhanced immigration enforcement authorities in a DACA legislative package without alienating support from either party. Speaker Ryan has repeatedly told the press that he wants to see Congress consider any DACA fix separate from the FY 2018 spending legislation, but Democrats have indicated they will withhold their support for any appropriations bill that does not include protection for DACA beneficiaries. Senate Republicans too have expressed an unwillingness to consider DACA in the context of appropriations discussions. Whether Democrats will risk a government shutdown over the issue is unclear.

Another policy issue roiling the debate is the renewal of the Children’s Health Insurance Program (CHIP), which expired at the end of September. While the program has continued to function, many states are running out of money for it, so renewal of the program is a priority before the end of this year. The popular program, which enjoys broad, bipartisan support, is a major source of healthcare coverage for children nationwide, providing insurance to more than 8 million children from low- and middle-income working families. The House passed a bill in November providing for a five-year renewal of the program, but Democrats opposed the revenue sources used by Republicans to pay for the bill. The Senate Finance Committee reported its own bipartisan bill, also a five-year renewal, in November, but the offsets to pay for the renewal have not yet been disclosed, and the full Senate has yet to take up the measure. Staff of relevant committees in both chambers reportedly worked through the Thanksgiving recess to try to come to an agreement on reauthorization, and press reports indicate a bipartisan deal could be attached to either the short-term CR or the year-long appropriations measure.

In addition to the critical task of avoiding a government shutdown, Congress is also looking to deliver a third round of disaster relief funding to communities affected by Hurricanes Harvey, Irma and Maria and by western wildfires. In November, the White House requested an additional $44 billion in emergency aid and asked that Congress consider reducing spending elsewhere in order to offset the unbudgeted amounts. The amount of the aid request and the suggestion that appropriated funds be offset were widely criticized by members of both parties on Capitol Hill. The White House has not indicated whether the suggested offsets will be necessary in order to avoid a veto threat on eventual legislation. Several members have floated the idea of including a disaster-aid package in a stopgap funding measure or omnibus appropriations measure for FY 2018, but leadership may be wary of attaching additional items to the critical spending legislation. Congress has already authorized more than $50 billion in disaster aid since October and, as the damage assessments continue, further requests for assistance can be expected into 2018.

Lawmakers are also working towards extending the authorities provided by Section 702 of the Foreign Intelligence Surveillance Act. These authorities are set to expire on December 31. The surveillance authority is considered by the intelligence community to be a pillar of U.S. counter-terrorism efforts, but many privacy and civil liberties advocates are critical of the program and have called for reforms. National security hawks and privacy advocates on Capitol Hill have been debating how to reauthorize the program, for how long to extend the surveillance authority, and what enhanced civil liberties protections can be included in a renewal. Several competing bills have been introduced in both chambers. In early November, the House Judiciary Committee reported the USA Liberty Act, which would reauthorize the program for six years while strengthening civil liberty protections, with bipartisan support. A similar bill was recently introduced in the Senate by Senator Patrick Leahy (D-VT) and Mike Lee (R-UT) that places additional restrictions on intelligence activities. In October, the Senate Intelligence Committee advanced a bill that would extend Section 702 authority through 2025 and include modest reforms. Senators Rand Paul (R-KY) and Ron Wyden (D-OR) and a bipartisan group of House lawmakers have introduced legislation, the Uniting and Strengthening America by Reforming and Improving the Government’s High-Tech Surveillance (USA RIGHTS) Act, that would add more significant privacy protections under Section 702 and maintain the sunset clause requiring congressional reauthorization every four years. Finally, the House Intelligence Committee had waded into the debate with its own bill, providing less extensive civil liberties protection than the House Judiciary Committee’s bill. The Intelligence Committee reported its version of the bill last Friday on a party-line vote. The White House has called for a permanent reauthorization of Section 702, without any additional restrictions on the surveillance authority, but has indicated support for the bill reported out of the Senate Intelligence Committee. It remains unclear which bill will advance, but the likelihood is that the renewal of the authority will be included in the full-year appropriations bill. It is also possible that Congress will be unable to resolve the disputes and will simply renew the authority for a year in the appropriations bill to allow further discussion of the issues.

Finally, we can expect the Senate to continue to process nominations through the month during legislative lulls. The nomination of Kirstjen Nielsen to be Secretary of Homeland Security is pending before the Senate on the Executive Calendar. The nomination of Alex Azar to be Secretary of Health and Human Services is also likely to be reported out of committee in coming weeks; both Cabinet nominees are likely to receive floor votes in December. The Senate is also likely to continue confirming President Trump’s judicial nominees, especially those for the courts of appeals, through the month, as well as nominees to regulatory agencies.

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Photo of Kaitlyn McClure Kaitlyn McClure

Kaitlyn McClure is a policy advisor in Covington’s Public Policy Practice, leveraging her experience in government and politics to provide strategic advisory services and support to clients with legislative matters before government agencies and Congress.

Before joining the firm, Ms. McClure was the…

Kaitlyn McClure is a policy advisor in Covington’s Public Policy Practice, leveraging her experience in government and politics to provide strategic advisory services and support to clients with legislative matters before government agencies and Congress.

Before joining the firm, Ms. McClure was the Associate Vice President of Client Relations at DDC Advocacy. Prior to working for DDC, Ms. McClure served as the strategy assistant for former presidential candidate Governor Mitt Romney. Her experience also includes working in the U.S. Senate as a legislative assistant for Republican Senators John Hoeven of North Dakota and Judd Gregg of New Hampshire.