17 December 2019 House passes fiscal 2020 spending deal On December 17, the House passed two year-end appropriations bills to keep the government open and allocate funding across the federal government for fiscal year 2020. The $1.3 trillion deal provides a total of $738 billion in fiscal 2020 funding for the military and $632 billion for non-defense departments, including $49 billion in extra funding to be applied across agencies through the end of the fiscal year. The legislation now moves to the Senate for consideration, which is expected to clear the measures for the President's signature in advance of Friday night's funding deadline. The vote on the first bill, known as the House amendment to the Senate amendment to H.R. 1158, the Consolidated Appropriations Act, 2020, was 280-138. The vote on the second bill, known as the House amendment to the Senate amendment to H.R. 1865, the Further Consolidated Appropriations Act, 2020, was 297-120. On H.R. 1158, 150 Democrats and 130 Republicans supported the bill, while 75 Democrats, 62 Republicans and one Independent voted no. On H.R. 1865, 218 Democrats and 79 Republicans supported the bill, while 112 Republicans, seven Democrats and one Independent voted no. Late Monday night, a tax package entitled the Taxpayer Certainty and Disaster Tax Relief Act of 2019 was attached to one of the bills, the Further Consolidated Appropriations Act, during the House Rules Committee's deliberations. Tax negotiations, which had intensified in recent days, yielded agreement on a handful of extensions for provisions that expired at the end of 2017 and 2018 and are set to expire at the end of 2019, however negotiators were unable to reach agreement on matters such as expansions of credits for lower-income individuals and electric vehicles and a Tax Cuts and Jobs Act (TCJA) fix for qualified improvement property (QIP). The base text of the bill also includes the SECURE Act retirement measure, repeal of Affordable Care Act (ACA) taxes, extensions to the National Flood Insurance Program (NFIP), Export-Import Bank, and the Terrorism Risk Insurance Program (TRIP), and a short-term extension to several bipartisan health care programs, among other items. The Further Consolidated Appropriations bill permanently repeals three health care taxes imposed under the Affordable Care Act (ACA) — the 40% "Cadillac tax" on employer-sponsored health plans, the 2.3% tax on medical devices, and the health insurer fee. The medical device and health insurance taxes have been intermittently implemented, while Congress preserved a moratorium on the Cadillac tax until 2022. Repeal of the health insurer fee takes effect in 2021 while repeal of the Cadillac tax and medical device tax takes effect in 2020. The bill also increases the minimum age to purchase tobacco products to 21, which has been a top priority of Senate Majority Leader Mitch McConnell (R-KY); includes two years of Medicaid funding for Puerto Rico and other U.S. territories; bars HHS from banning "silver-loading" or ending auto-enrollment in the ACA exchanges with respect to plan year 2021; funds the Patient-Centered Outcomes Research Institute (PCORI) for ten years; and extends funding for other key health care programs through May 22. The short-term extension of health care "extenders," which includes funding for bipartisan priorities like community health centers and delaying cuts to disproportionate share hospitals (DSH), is intended to create pressure for a deal on legislation to address surprise medical billing and reduce prescription drug prices, which ran out of steam in recent weeks as House and Senate negotiators were unable to reach a compromise on leading legislation. The one drug pricing measure included in the package is the bipartisan Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act (H.R. 965 / S. 340) expected to save $3.9 billion over 10 years and serve as a partial pay-for for the extenders. The CREATES Act aims to make it easier for generic manufacturers to obtain samples of brand-name drugs necessary to develop generic versions, allowing them to sue if branded manufacturers withhold their samples. The legislation also aims to make it easier for generic products to come to market when the brand-name drug is subject to the FDA-mandated safety program known as Risk Evaluation and Mitigation Strategy (REMS), giving the FDA more authority to allow generics to use comparable safety systems when REMS participation is being blocked. Tax provisions included in the Taxpayer Certainty and Disaster Relief Act of 2019, now considered part of the Further Consolidated Appropriations Act, extend the 7.5% deduction floor for medical expenses, the oil spill liability trust fund rate, and the black lung liability trust fund excise tax, all of which expired in 2018. It also extends provisions expiring at the end of 2019 through 2020: the controlled foreign corporation (CFC) look-through rule, the Work Opportunity Tax Credit, and the New Markets Tax Credit. Certain provisions related to beer, wine, and distilled spirits excise taxes would also be extended. The tax package would also repeal the requirement that the unrelated business taxation income (UBTI) of tax-exempt organizations be increased by expenses related to qualified transportation fringe benefits (the so-called "church parking tax"). It would provide tax relief for individuals and businesses in Presidentially-declared disaster areas occurring between January 1, 2018, and for a period following date of enactment of the legislation. And it would change the private foundation excise tax to a simplified tax of 1.39%. The Further Consolidated Appropriations bill also includes the House-passed Setting Every Community Up for Retirement Enhancement (SECURE) Act (H.R. 1994), which includes provisions to facilitate smaller employers banding together in multiple employer plans with lower management expenses. A fiduciary safe harbor provision in the bill sets forth standards a plan fiduciary may follow to satisfy the prudent man requirement with respect to the selection of insurers to provide a guaranteed lifetime income product as an investment option in a defined contribution plan. The bill would also require benefit statements to include a lifetime income disclosure that would convert a participant's current account balance into a monthly annuity at retirement age. It would repeal the prohibition on contributions to a traditional IRA by an individual who has reached 70 ½ and increase the required minimum distribution (RMD) age from 70 ½ to 72. The principal revenue-raising provision would curtail the tax benefits of inherited IRAs, referred to as stretch IRAs. The Gold Star/Kiddie Tax fix was also added to address the fact that the TCJA simplified the kiddie tax by applying rates applicable to trusts and estates, as high as 37%, to the net unearned income of a child. The Ways and Means Committee said the tax was intended to stop wealthy parents from sheltering income by shifting it to their children with lower tax rates, but inadvertently caused higher taxes on military survivor benefits. Discussions over possible expansion of the provision that provides pension funding relief for community newspapers continues. The Further Consolidated Appropriations Act also includes extensions for two programs set to expire on December 20, the National Flood Insurance Program (NFIP) and the Export-Import Bank, as well as the Terrorism Risk Insurance Program (TRIP), which is set to expire at the end of 2020. The NFIP is reauthorized only through September 30, 2020, giving Congress' banking committees until the end of the fiscal year to solve disagreements about affordability of premiums for homeowners and other issues. The bill reauthorizes the Ex-Im Bank for seven years, through the end of 2026. Notably, the bill would require that if Ex-Im goes through a period where it cannot muster a quorum of board members, a temporary board made up of the Treasury Secretary and other officials, with authority to approve loans, would take over until the board again has quorum, or until the end of the term of the U.S. President who is serving at the time of the quorum lapse. The bill also establishes a new "Program on China and Transformational Exports" at the Ex-Im Bank to support loan guarantees on terms that are competitive with those offered by China or other "covered countries" (defined as a country designated by the Treasury Secretary or one that is not a participant in the OECD's Arrangement on Officially Supported Export Credits). Twenty percent of the Bank's annual financing pool would be reserved for this program, which would focus on keeping pace with China's strategic lending in areas such as artificial intelligence, biotechnology, wireless communication equipment, quantum computing, renewable energy and semiconductors. The House Financial Services Committee and Senate Banking Committee would have to be notified of any loan guarantee involving China greater than $25 million. Finally, the Terrorism Risk Insurance Program would be reauthorized for seven years, through the end of 2027. Notably, the bill requires the Government Accountability Office to prepare a report on whether cyberterrorism is an appropriate risk to be covered by the TRIP, and how the program could be amended if so. The report would have to be sent to the congressional banking committees within 180 days of the start of the new reauthorization on January 1, 2021. The bill also includes two years of additional funding for the Secure Rural Schools program and the American Miners Act (S. 27), which provides pension and health benefits for retired coal miners affected by issues such as coal company bankruptcies, among other provisions.
Document ID: 2019-2221 | |||||
