Weekly Washington Outlook – December 16, 2013

U.S. Capitol

What to Watch This Week:

Congress:

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The House:

The House is in recess, returning January 7th.

The Senate:

The Senate wraps up its work for the year this week with consideration of several executive nominations, including Jeh Johnson as Secretary of the Department of Homeland Security on Monday and Janet Yellen to Chair the Federal Reserve later in the week.

On Tuesday, the Senate will vote on cloture on a motion to concur with the House-passed changes to the budget vehicle, H.J. Res. 59 and passage later in the week.  The House amended H.J. Res. 59 with the language of the Murray-Ryan bipartisan budget agreement as a means to expedite its consideration.

On Wednesday, the Senate will vote on cloture on a compromise defense authorization, H.R. 3304 which passed in the House last week.  The scaled back measure provides the Department of Defense, Department of Energy, and other agencies $625.1 billion in base and war funding for FY2014.  The bill would also require the Defense Department to address sexual assault cases and limits the transferring of detainees from Guantanamo Bay to the United States.  A vote on passage is expected later in the week.

White House:

The White House this week did not release a detailed schedule.  President Obama is expected to give a press conference at some point this week and is otherwise attending unspecified meetings.  On Friday, the President and the First Family will leave for Hawaii for the holidays. 

Also this week and beyond:

Nominations The Senate will continue its marathon consideration of executive and judicial nominees this week.  Notably, on Monday evening, Senators will vote on cloture and then immediately on confirmation for Jeh Johnson to become Secretary of the Department of Homeland Security.  Later in the week, votes are scheduled to confirm Janet Yellen for Federal Reserve Chair.  The expedited confirmation process for formerly stalled nominees was made possible by a change in the Senate rules, the “nuclear option,” allowing a majority for cloture rather than 60 votes.  This does not apply to legislation or the Supreme Court.

Budget ConferenceLast week, Senator Murray (D-Wash.) and Congressman Ryan (R-Wis.) announced a compromise budget for FY2014 and FY2015.  The negotiated budget plan provided roughly $63 billion in sequester relief spread out over two years, offset by $85 billion in savings.  The savings do not include any new revenue, but rather are drawn from a variety of sources including TSA fees and federal pension contributions.  More information. The House overwhelming passed the bipartisan measure last week and the Senate is expected to as well later this week.  Next, appropriators will use the budget as a framework to fund the federal government beyond January 15th when the most recent stopgap spending measure expires.

Farm BillFarm Bill conferees are still negotiating and are expected to continue during the holiday break.  While it is possible conferees will announce an agreement in principle by the end of this week, it is more likely that they will wait to share significant details until early January. Congressional staff has indicated that progress is being made and many of the remaining issues are more technical in nature and being worked through with the Congressional Budget Office and the Department of Agriculture.  The nutrition title has been particularly contentious given dramatically different starting points in the House and the Senate.  There has been a great deal of speculation, however, that conferees have coalesced around an approximately $8 billion cut to SNAP over 10 years.  Negotiations over some of the restrictive eligibility language relating to convicted felons and the so-called “work requirements,” remain ongoing but constructive.

Emergency Unemployment Compensation – Last week, the Council of Economic Advisors released a report on the economic benefits of extending unemployment insurance.  The authorization for Emergency Unemployment Compensation (EUC) expires December 28th and 1.3 million people will immediately stop receiving benefits.  The report estimates that failure to extend EUC will cost roughly 240,000 jobs and will lead to stagnated economic growth.  While there was an attempt to include an extension in the budget negotiations, it is increasingly likely that these benefits will lapse given the Congressional calendar and political climate.  Senate Majority Leader Reid has said the Senate will take up a retroactive extension in early January.  House Speaker Boehner last week left open the possibility that the House could act if a spending offset was identified.  There has been some discussion of using potential savings in the Farm Bill Conference to pay for the extension, but the precise details will not be known until Congress reconvenes in January.

Tax Reform – Senator Baucus (D-Mont.) recently released three discussion drafts that will be part of tax reform.  These deal with corporate tax rates, international business taxes, and then a number of administrative rules.  The Committee is accepting comments until January 17th on these.  Additional discussion drafts are expected in the coming weeks.  In the House, Speaker Boehner allegedly asked Chairman Camp in the fall to slow down on a tax overhaul; the Chairman of the Ways and Means Committee had been preparing to release a discussion draft as well.  Over the weekend, however, Congressman Ryan (R-Wis.) indicated that the Ways and Means Committee would begin advancing legislation in January.  Yet, while both chambers have been pursuing a complete tax overhaul, the appetite to extend a number of expiring tax credits, traditionally an annual legislative item for December, has diminished.  It is possible some of these will be extending retroactively in 2014, yet this remains highly uncertain.  A list of expiring credits is available here: https://www.jct.gov/publications.html?func=startdown&id=4499.

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After months of debate, both the House and Senate passed their versions of the farm bill earlier this year with notable differences, specifically around the Supplemental Nutrition Assistance Program (SNAP). […]