President could sign tax reform bill Friday; House passes $81 billion disaster aid bill

The Senate on December 22, 2017, by a vote of 66-32, cleared for the President's signature a four-week continuing resolution, or "CR" (HR 1370), providing appropriations at fiscal 2017 levels to keep the government operating until January 19, 2018. Earlier Thursday, the House passed the CR by a vote of 231-188. Republican leaders effectively punted several politically difficult issues to next year, in order to pass a bill with little Democratic support and allow members to return home for the holidays. The measure includes funding through March 31 for the expired Children's Health Insurance Program (CHIP) and a four-week authorization of surveillance powers under the Foreign Intelligence Surveillance Act (FISA); waives "pay as you go" (or PayGo) rules that otherwise would have triggered cuts to entitlement programs because of enactment of the tax reform overhaul, the Tax Cuts and Jobs Act (HR 1); and includes funds for certain other programs.

Importantly, one outcome of Congress' waiver of the PayGo rules is that President Trump could sign the Tax Cuts and Jobs Act at the White House on Friday, December 22. Previously, in the absence of the PayGo waiver, the White House had said a signing ceremony would be held in early January.

Before voting to clear the CR, the Senate also voted 91-8 to waive a budget point of order raised against the CR by Sen. Rand Paul (R-KY), who opposed waiving the "Pay As You Go" rules. Earlier, during the House's vote on HR 1370, 14 Democrats supported the bill and 16 Republicans voted against it.

Attached with this alert please find PDFs with the legislative text of HR 1370 (25 pages); a 2-page staff summary of HR 1370; and a 5-page summary from the House Appropriations Committee of provisions included in a separate $81 billion disaster assistance supplemental spending bill (HR 4667), which the House passed Thursday afternoon by a vote of 251-169.

House GOP leaders abandoned a previous plan they had prepared for the CR, in which disaster assistance would have been attached to the bill and the CR would have boosted spending for defense programs for the rest of FY 2017, while limiting all other programs to a four-week extension at status-quo levels. The CR did not include a package of measures drafted by House Ways and Means Committee that would delay a number of taxes associated with the Affordable Care Act, nor does it include any extensions for the so-called "tax extenders," a group of tax incentives that expired at the end of calendar 2016. Supporters had hoped that both packages would be included in end-of-year vehicles.

HR 1370, the FY 2017 continuing resolution (CR), would:

— Fund the government through January 2018 at fiscal 2017 levels.

— Waive "Pay As You Go" rules that would otherwise impose billions of dollars in cuts next year to Medicare and other entitlement programs, triggered by enactment of the Tax Cuts and Jobs Act (HR 1), which Congress sent to the President earlier this week. According to both the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), the tax reform bill will increase the on-budget deficit by $135.2 billion in FY 2018, triggering automatic "sequestration" cuts to entitlement programs in early 2018 if the PayGo waiver was not passed.

— Provide $2.85 billion to keep the CHIP program funded through March 31. Funding for the program, which covers 9 million low-income children whose families earn too much to qualify for Medicaid, expired at the end of September.

— Provide funding for community health centers and other health programs by cutting the Affordable Care Act's prevention and public health fund by $750 million.

— Extend the government's spying powers under FISA through January 19, 2018.

— Provide $2.1 billion in mandatory funds to extend the Veterans Choice Program, which allows veterans to seek medical services outside the Veterans Affairs Department. The program was expected to run out of money in three to five weeks.

— Provide emergency funds to certain defense programs, including: 1) repair of the Navy destroyers USS John McCain and USS Fitzgerald, which were damaged in separate collisions earlier this year; 2) $3.7 billion for missile defense procurement, research and operations; and 3) $200 million to build a missile interceptor field in Alaska.

— Extend funding through January 19 for "anomalies" and program extensions from the current CR, including the National Flood Insurance Program (NFIP).

House Democrats had said they would not support another funding extension without an agreement on overall budget levels for defense and non-defense spending for the rest of fiscal 2017. They also objected to the fact that the CR did not address the immigration status of "DREAMers" under the Deferred Action for Childhood Arrivals (DACA) program, which was rescinded by President Trump earlier this year; the absence of long-term funding for CHIP; and the treatment of Puerto Rico and the U.S. Virgin Islands in the disaster supplemental bill. Appropriations Committee Ranking Member Nita Lowey (D-NY) called the bill "an epic failure of governing" because of the elements that were not included.

For his part, House Speaker Paul Ryan (R-WI) said in a statement, "Today, the House responsibly voted to continue the government operations and fulfill basic obligations — including funding the Children's Health Insurance Program and providing resources for hurricane and wildfire ravaged states. It's disappointing that House Democrats overwhelmingly voted against these measures. I hope that they will return in the New Year willing to work with us to complete our work, most importantly to adequately provide for our men and women in uniform."

ACA stabilization items postponed. On December 20, 2017, Sen. Susan Collins (R-ME) and Senate HELP Committee Chairman Lamar Alexander (R-TN) said they had agreed not to include in the CR a package of measures intended to stabilize the ACA's health insurance exchanges, such as funding for cost-sharing subsidies paid by insurers. Collins previously had insisted that Congress act on those measures before the end of the year as part of an agreement with the Senate GOP leadership for her support on the tax reform bill. "There is every reason to believe that these important provisions can and will be delivered as part of a bipartisan agreement. And Majority Leader [Mitch] McConnell [R-KY] has told us that he will uphold his commitment to schedule and support the legislation," Collins and Alexander said. "Rather than considering a broad year-end funding agreement as we expected, it has become clear that Congress will only be able to pass another short-term extension to prevent a government shutdown and to continue a few essential programs. For this reason, we have asked Sen. McConnell not to offer this week our legislation." The two senators said they will ask for the package to be included in an omnibus spending bill in January.

Sen. Collins also said that House Speaker Paul Ryan (R-WI) had offered her assurances that the House would act on a separate bill Collins has offered with Sen. Bill Nelson (D-FL), which would provide reinsurance funding to help insurers cover high-risk enrollees in the exchanges. A senior White House official told reporters, "We believe that we will work with the House to get those [bills] passed. We think that we will be in a more comfortable place in January to get that passed … The president is grateful for the opportunity to work with Sen. Collins on this, and he is committed to following through on our agreement."

Tax provisions in disaster aid bill. The $81 billion disaster supplemental bill (HR 4667) that the House passed immediately after its vote on the CR included a number of tax provisions. Among others, these would:

— Allow individuals in California affected by wildfires to take temporary withdrawals or loans from their retirement accounts without penalty, and give them additional time to repay loans that were already outstanding

— Allow people to recontribute withdrawals they had taken out for homes in the wildfire areas if they did not ultimately buy or build them

— Make it easier for people in wildfire areas to use the earned income tax credit (EITC)

— Lift the limit on charitable deductions for donations to wildfire relief

— Provide an employee retention credit to businesses affected by the wildfires

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ATTACHMENTS

Text of H.R. 1370

Section-by-section summary of H.R. 1370

Summary of H.R. 4667