Outlook for This Week in the Nation's Capital

Another Continuing Resolution. Or Two? Within days of passing the CR to reopen the government, multiple Members of Congress expressed the possibility of needing another CR to fund the government after February 8. This would be the 5th stopgap measure used to fund the government. In order to avoid the use of another CR, Congress would need to agree on the increased spending caps and then write the omnibus bill. With less than two weeks until February 8 and no deal on the caps, Congress cannot avoid another CR and there’s even been some talk of possibly a 6th CR needed before an agreement is reached.

Spending Caps. Some Senate Democrats floated the idea of decoupling DACA from spending negotiations last week. This would allow Congress to quickly reach a deal on a two-year budget cap agreement and begin work on the FY18 omnibus. However, House Democrats have not yet agreed to go along with this and there is a fear that once the caps are lifted, House Republicans will pass defense spending at the increased level and not pass bills with increased non-defense spending.

Last Week in the Nation's Capital

CONGRESS

Budget

Bill to Ban Earmarks Permanently Introduced: Senators Flake and McCaskill are co-sponsors — with a handful of others — of the Earmark Elimination Act, that would make the earmark ban permanent. In recent weeks, some people — including President Trump — are thinking about bringing earmarks back. (USA Today)

House Panel Reintroduces Defense Spending Bill: In a largely symbolic measure, the House Appropriations Committee reintroduced a bill to fund the Pentagon for fiscal 2018. The House has twice passed defense appropriations for fiscal 2018, but the Senate has not voted on a defense spending bill because Congress has yet to agree to a budget deal that would set the top-line dollar figure for defense and nondefense funding. The bill is unlikely to be enacted, but provides an opportunity to send a message as a larger deal to raise budget caps continues to be worked out. (The Hill)

Health

Senate Confirms Alex Azar as HHS Secretary: The Senate confirmed a former drug company executive as President Donald Trump's second health secretary. The 55-43 vote was largely along party lines. He previously served as general counsel and later as deputy secretary of HHS under President George W. Bush's administration. (CBS News)

Senate Finance Chairman Suggests Moving 340B Program into CMS: In a letter to Secretary Azar, Senate Finance Chairman Hatch said that HHS should consider moving the 340B program to CMS in order to improve oversight. Hatch also expressed concerns over if the Health Resources and Services Administration, the program’s current regulator, had the resources or staff necessary for oversight. (Clark Hill Insight)

CHIP Reauthorized for Six Years: As part of the spending bill to reopen the government, lawmakers voted to reauthorize the Children’s Health Insurance Program for another six years. However, funding for the nation’s community health centers, which serve one out of every dozen Americans, also technically expired Sept. 30 and has not yet been reauthorized. It’s possible that Congress might include community health centers in the next continuing resolution. (The Washington Post)

Debt Ceiling

Debt Limit Unlikely to Rise in Feb. 8 Spending Bill: Congress is unlikely to raise the U.S. debt ceiling in a stopgap spending bill lawmakers need to pass by Feb. 8, and it may get pushed off until March as part of broader budget legislation. (Bloomberg)

Immigration

Schumer Rejects Trump’s Immigration Proposal: Senate Minority Leader Chuck Schumer opposes the immigration framework released by the White House — a potentially fatal blow for the prospective legislation in the closely divided Senate. The one-page proposal released by the White House on Thursday would allow as many as 1.8 million young immigrants to become citizens, while also calling for $25 billion in spending on a border wall and security as well as sharply restricting family-based immigration and eliminating a visa lottery system. White House officials are hoping the Senate will put it up for a vote, but it appears doomed to fail. (Politico)

Executive Branch

EPA

EPA Loosens Rules on Some ‘Major’ Air Pollution Sources: William Wehrum, head of the EPA’s air office, issued regulatory guidance repealing the “once in, always in” policy, in which facilities like power plants or factories considered “major” sources of hazardous air pollutants were always regulated as such, even if the facilities’ owners took measures to reduce pollution. (The Hill)

Defense

Trump to Seek $716 Billion for Defense in 2019 Budget: President Trump will propose increasing total defense spending to $716 billion in fiscal 2019 in his budget request expected to be released in February. The funding would include $597 billion for the Defense Department’s base budget, with the rest going for its war-fighting account and to other government programs such as the Energy Department’s nuclear weapons program. The amount is a sharp increase from the $668 billion Trump proposed last year for fiscal 2018 and offered as a placeholder for fiscal 2019. (Bloomberg)

Trade

President Trump Approves Relief for U.S. Washing Machine and Solar Cell Manufacturers: President Trump approved recommendations to impose safeguard tariffs on imported large residential washing machines and imported solar cells and modules. USTR made the recommendations to the President based on consultations with the interagency Trade Policy Committee in response to findings by the independent, bipartisan U.S. International Trade Commission that increased foreign imports of washers and solar cells and modules are a substantial cause of serious injury to domestic manufacturers. (Office of the United States Trade Representative)

HHS

NIH’s New Rules Governing Human Research Go Into Effect: The National Institutes of Health adopted new, stricter rules governing research involving humans, and implemented new requirements for researchers studying human behavior. The policy affects funding applications submitted from January 25 onward for investigations that would have previously been considered basic research. They will now be considered clinical trials. The scientific community is largely opposed to the change. (The Scientist)

Transportation

Trump to Announce $1.7 Trillion Infrastructure Package at State of the Union: President Trump said last week that he plans to discuss a $1.7 trillion infrastructure package during next week's annual State of the Union address.  He revealed this timeline during a White House meeting with mayors from across the country.  The impending announcement comes after a document purporting to detail the administration's infrastructure principles leaked earlier this week. (The Hill)

Interior

Trump Nominates Former Astronaut to Lead USGS: President Trump will nominate former astronaut James Reilly to head the U.S. Geological Survey. Reilly flew three shuttle missions and previously worked as an oil and gas exploration geologist. (Clark Hill Insight)

DOJ

DOJ Demands Documents Over Sanctuary Cities: The Justice Department told 23 local governments that they must prove they are abiding by an immigration law if they want to continue receiving money under a federal crime-fighting program. If the communities refuse to respond, a Justice Department official said, the government would issue subpoenas ordering them to comply. In response, multiple mayors boycotted a meeting at the White House related to infrastructure. (NBC News)

Education

DeVos Is Sued Over Sexual Assault Guidance: Victim’s and women’s rights groups sued Education Secretary DeVos saying the rules issued last year to guide campuses on how to manage sexual assault complaints violated federal law and discriminated against accusers. (The New York Times)

Labor

Congress Looks to Make Unionizing Tribal Casinos Difficult: Congress soon may make it more difficult for labor unions to organize workers at tribal casinos by shrinking the power of the National Labor Relations Board, the main federal labor law enforcement agency.  The Tribal Labor Sovereignty Act would amend the National Labor Relations Act to explicitly state that the NLRB's enforcement powers don't extend to Native American reservations, reversing a decade-old board decision. The issue cuts across party lines because some tribes have strong pull in their home states, as does the gambling industry.  The bill passed the House last week on a bipartisan 239-173 vote with 23 Democrats joining 216 Republicans to support it. (Washington Examiner)

CFPB

CFPB Says it Will Delay New Prepaid Card Rules One Year: The CFPB says it will give the industry more flexibility on cards linked to digital wallets, such as PayPal and Google Wallet. It will also give prepaid card providers more time to investigate fraud claims before refunding money. The rules will go into effect in April 2019. (The Washington Post)

Banking/Housing

FHFA Breaks Silence on GSE/Housing Finance Reform: Federal Housing Finance Agency Director Mel Watt finally detailed his views on housing finance reform, saying in a letter to the leaders of the Senate Banking Committee that the agency believes Fannie Mae and Freddie Mac should be reincorporated as private entities and the government must provide an explicit guarantee for catastrophic losses in the secondary mortgage market.  Watt's views appear to broadly coincide with the package being developed by Chairman Mike Crapo (R-ID) and Sherrod Brown D (OH). (AmericanBanker)

NASA

ULA Increasingly Courting Commercial Customers:  United Launch Alliance has ruled the military market since its creation in 2006 as a 50-50 joint venture between Lockheed Martin and Boeing.  But a coming slow-down in the number of military launches and the rise of SpaceX is threatening that dominance, which explains why ULA is stepping up efforts to market its Atlas 5 launch vehicle to more commercial customers, citing its success in reducing costs in recent years as well as its superior record of reliability and on-time launches as providing significant value to key companies and sectors. (Space News) 

A Changing of the Guard in NASA’s Hunt for Exoplanets: Sometime later this year NASA’s Kepler spacecraft, orbiting the sun more than 150 million kilometers from the Earth, will fire its thrusters for the final time, bringing the mission to an end. But as Kepler approaches the end of its life, NASA’s next mission to search for exoplanets, NASA’s Transiting Exoplanet Survey Satellite (TESS) is gearing up for launch.  Astronomers expect that TESS will detect thousands of exoplanets, many of which will be ideal for follow-up observations by other telescopes, including the James Webb Space Telescope, to characterize them. (Space News)

IRS

Trump Picks Tax Lawyer as Next IRS Commissioner:  President Donald Trump will nominate tax lawyer Charles “Chuck” Rettig to head the IRS, multiple sources are reporting.  He’s presently with the firm Hochman, Salkin, Rettig, Toscher & Perez PC (headquartered in Beverly Hills) and is considered a tax controversy specialist, who for more than three decades has represented clients before the IRS, the Justice Department and state tax authorities.  If confirmed by the Senate, Rettig would join the agency at one of its most challenging times, as it implements a sweeping new tax law with limited resources and faces a possible restructuring by Congress. (Politico)

One Way to Play the New Tax Law: Start an LLC:  Spurred by ambiguities in the new tax law, accountants are coming up with novel strategies to help entrepreneurs slash their taxes.  Many would like to take advantage of the 20% deduction for qualified business income from so-called pass-through entities, including S corporations and limited liability companies.  Analysists at CNBC look at some of the strategies accountants are discussing to help entrepreneurs save. (CNBC)

Russia Investigation

Trump Lawyer Clarifies President Wasn’t Volunteering for Grand Jury: White House lawyer Ty Cobb clarified that President Trump is ready to meet with special counsel Robert Mueller, but will be guided by his attorneys on such a meeting. Trump told reporters earlier that he would speak with Mueller under oath. He added that he expects an interview to occur in the next two to three weeks, but said his lawyers are still determining the specifics. (The Hill)

White House

Trump Makes the Case for His “America First” Policy in Davos: President Trump made the case for his "America First" policy before an elite gathering of political and business leaders saying "America is open for business." In a closing speech at the World Economic Forum in Davos, Switzerland, Trump stressed that his administration aims to make the United States more competitive for business. He also vowed that the U.S. is committed to free and open trade, but on terms it considers fair and reciprocal. (USA Today)