Outlook for This Week in the Nation's Capital

Partial Government Shutdown Continues With No End in Sight:  The ongoing partial government shutdown, a result of 7 of the 12 annual appropriations bills for Fiscal Year 2019 remaining unresolved due to a serious disagreement about additional funding for border security between the President and the strengthened Democratic caucus, has now stretched into its 24th day, making the longest shutdown on record.  While House Democrats again successfully passed 4 of the 7 “bipartisan” annual appropriation bills this past week, often with a handful of Republican votes, the Republican Senate is declining to take them up, due to the White House signaling it will not sign the bills without a border funding deal. The usual players in bipartisan talks, like Sen. Lindsey Graham (R-SC) are sidelined. Senate Majority Leader Mitch McConnell (R-KY) is deferring to Schumer. There's no bipartisan gang coming to save the shuttered federal departments this time it would appear, making it hard to estimate when this standoff will end or how. With federal employees now starting to miss paychecks, and food inspections and airport screening employees increasingly not showing up, the effects of the shutdown on the broader economy will start to grow significantly in the coming days and weeks.

White House:  After his nationwide address last week failed to move public opinion or Democratic leaders, the President traveled to the border to make his pitch again with a more dramatic background. He threatened to declare the flood of unaccompanied minors attempting to cross the southern border an emergency, and even floated the possibility of redirecting Military Construction or Corps of Engineers funding to building additional barriers on the border. While landowners and Members of Congress threatened to sue if he took such actions, he backed down and instead started to float the idea of using some of the unobligated emergency funding appropriated recently by Congress to FEMA to respond to recent disasters in Puerto Rico, California and Texas (which totals approximately $30 billion). While he backed off making such an announcement on Friday at the urging of Republican leaders in Congress, the option apparently remains on the board.    

Last Week in the Nation's Capital

CONGRESS

Budget & Appropriations

States, Cities Gear Up for Census with Billions of Federal Dollars at Stake:  With billions of dollars in federal money on the line, state and local governments are budgeting hundreds of millions of dollars to convince their residents to respond to next year’s Census.  Many states are budgeting far more for community outreach than they have in previous Census cycles, a reflection, some legislators said, of concern that this decade’s count is at risk of missing thousands of residents.  The stakes are so high because the decennial Census is used to determine how the federal government allocates money from hundreds of programs to state and local governments - census-driven statistics are used to dole out more than $800 billion a year through about 300 federally-run programs. (The Hill)

Tax Reform

Climate Should Factor into any Infrastructure Package: Senate Environment and Public Works ranking member Tom Carper (D-DE) said climate change policies should be considered as part of any broader tax, energy or infrastructure legislation. Carper's views echo those of Minority Leader Chuck Schumer (D-NY), who wrote in a December op-ed that any infrastructure package must include policies like permanent tax incentives for clean energy technologies and reductions in methane emissions from domestic energy production.

Health/HHS/NIH

Sanders Rolls Out Drug Pricing Bill | Klobuchar and Grassley Unveil Drug Price Bills Also:  On Thursday some of the biggest progressive names rolled out not one but three bills to target drug prices.  The bills would allow importation of cheaper drugs from Canada, allow Medicare to negotiate drug prices and would strip monopolies from drug companies if their prices are above the average price for the drug in other wealthy countries.  Also in drug pricing, Sens. Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) introduced a bill to crack down on 'pay for delay' tactics, where sometimes branded drug companies pay generic drug makers not to bring their lower cost alternatives to the market.  The Federal Trade Commission says such agreements cost consumers and taxpayers $3.5 billion in higher drug costs every year, and it's a bipartisan bill, so it might have a shot at passing Congress. (The Hill)

Energy

House Passes Bill to Reopen EPA, Interior: On Friday, the House passed legislation funding EPA and Interior through the end of the current fiscal year, though the bill is not expected to be taken up by the Senate. The bill, H.R. 266, passed 240-179. (Clark Hill Insight)

Democrats Question EPA Nominee’s Hearing Prep During Shutdown: Senate Democrats want to know how Acting EPA Administrator Andrew Wheeler can prepare for his confirmation hearing next week while his agency is unfunded. In a letter today, four members of the Environment and Public Works Committee say they are concerned that EPA employees who should not be working have been tasked with helping Wheeler, including political appointees and career staff. The letter asks EPA to name every employee that its contingency plan says will be needed for critical operations, as well as detail emails and meetings that relate to Wheeler's nomination and confirmation. The Democrats say that making furloughed employees work without authorization would violate the Antideficiency Act. (Politico)

Land Bill Returns in Senate as House Version Faces Changes: Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-AK) and the panel's outgoing ranking member, Maria Cantwell (D-WA), have reintroduced a public lands package that includes legislation to reauthorize the Land and Water Conservation Fund. The measure could run into bottlenecks in the House, where a key Democratic lawmaker is mulling changes to previous compromises. (CQ)

Pro-Pruitt Group Took Big Checks in Secret: A dark-money group supporting Scott Pruitt's confirmation as EPA administrator raised nearly a half-million dollars from at least one oil company and other donors who did not have to identify themselves, according to documents obtained by Politico. Protecting America Now, a nonprofit incorporated in Delaware the day after President Donald Trump announced Pruitt's nomination, is only now revealing basic information about itself, two years after the former Oklahoma attorney general was successfully confirmed to lead EPA and seven months after he resigned under a cloud of ethics scandals. (Politico)

Immigration

GOP Senators Pitch Immigration-Wall Deal as Shutdown Talks Stall: A pair of Republican senators introduced legislation on Friday that would pair President Trump's border funding request with a fix for an Obama-era immigration program, as lawmakers hunt for an end to the ongoing partial government shutdown. The bill from Sens. Rob Portman (R-OH) and Jerry Moran (R-KS) would include a $25 billion trust fund for border security, including fencing and physical barriers, while codifying the Deferred Action for Childhood Arrivals (DACA) program for current recipients. (The Hill)

Banking/CFPB

House Member Wants Report on Recommendations the NCUA, CFPB Haven’t Implemented: The new ranking member of the House Financial Services Committee is asking the Inspector General (IG) of the federal banking agencies, including the NCUA and CFPB, to report on recommendations the agencies have failed to implement. “In the most recent fiscal year, the IGs issued recommendations for reform with the potential to save taxpayers approximately $45.1 billion,” Rep. Patrick McHenry (R-NC), wrote in a letter to the IGs. “The savings arising from the IG community’s recommendations can only be realized, however, when the agencies implement them.” He asked the IGs to respond by Jan. 24 to a series of questions regarding the most important recommendations that the agencies have not implemented. (Credit Union Times)

Housing/HUD

House Democrats Investigate HUD's 'Failure' to Act as Shutdown Threatens Affordable Housing: House Democrats are using their new oversight authority to investigate the Department of Housing and Urban Development’s management of the shutdown, as questions mount about HUD's failure to renew low-income housing contracts for more than 1,000 properties across the country. “HUD knew for months about this impending deadline to renew the contracts, but for some reason they failed to take proper action in advance of the shutdown,” said Rep. David Price, (D-NC), the incoming chairman of the House appropriations subcommittee on transportation and housing, in a statement. (NBC News)

Cyber

House Democrats’ Election-Security Plan Already Facing Stiff Pushback: The massive anti-corruption package unveiled last Friday by the ascendant House Democrats was meant to be one of the more bipartisan provisions in H.R. 1. But some state officials and US senators view the bill as federal overreach, and distrust any federal efforts to regulate elections. Early pushback on the bill illustrates the trouble House Democrats may face when trying to sell their election security provisions as part of a broader, more polarizing package.

Shutdown Damage Accumulates for Federal Cybersecurity Work: As the government shutdown plods along, signs are piling up that federal government cybersecurity is worse for the wear. NIST has frozen a major cryptography project and more, while DHS officials are canceling planned events. Despite the shutdown, the U.S. intelligence community is launching a campaign to alert businesses to the cyber threat. Specifically, the guidance focuses on protecting industry from foreign government-backed hackers. (Politico)

Trade

Finance’s Grassley Backs Trump on NAFTA, but Not on Tariffs: The new chairman of the Senate Finance Committee said he would advise President Donald Trump to take a hard line with congressional Democrats if they push to renegotiate the proposed trade pact that would replace the 1994 North American Free Trade Agreement. While Grassley backs Trump on some of his trade policies with China, he said he would oppose any push by Trump to have Congress give the president more authority to impose tariffs on imported goods. (Roll Call)

Transportation

Dem Lawmaker Announces Plans to Propose Bill Requiring Breathalyzers in New Vehicles: Rep. Debbie Dingell (D-MI) is planning to introduce a bill next week that would require all new vehicles sold in the U.S. to come equipped with an interlocking breathalyzer device. The legislation was prompted by the deaths of Northville, Mich., residents, Issam Abbas and Rima Abbas and their three children, who were killed by a drunken driver on their way home from vacation. (The Hill)

EXECUTIVE BRANCH

Health/HHS/NIH

Trump Officials Consider Allowing Medicaid Block Grants for States:  Capping the amount of money that the federal government spends on the health insurance program for the poor through a block grant has long been a conservative goal. It was a controversial part of the ObamaCare repeal debate in 2017, with much of the public rallying against cuts to Medicaid.  After the failure of that repeal effort, the Trump administration is now considering issuing guidance to states encouraging them to apply for caps on federal Medicaid spending in exchange for additional flexibility on how they run the program, according to people familiar with the discussions.  Any move toward allowing Medicaid block grants for states is sure to provoke an outcry from congressional Democrats, who now have the power to conduct additional oversight with their majority in the House. (The Hill)

NIH Calls Out China for Violating Research Integrity: The National Institutes of Health (NIH) has warned about China’s undermining of research integrity. Among other issues at stake are the protection of intellectual property developed at U.S. institutions and the inappropriate use of U.S. academic funding.  The NIH report “Foreign Influences on Research Integrity” zeroes in on China’s Thousand Talents program, which the Chinese regime has attempted to hide since the FBI began investigating it.  “NIH is aware that some foreign entities have mounted systematic programs to influence NIH researchers and peer reviewers and take advantage of the long tradition of trust, fairness, and excellence of NIH-supported activities,” the report said. (The Epoch Times)

Space/NASA & NOAA

SpaceX Cuts Hundreds of Staff After Their Last Mission for Iridium:  SpaceX has admitted they’re letting go of 10% of their staff to save costs. With the Falcon Heavy rocket and the “Starship” interplanetary craft still under development, plans to build shuttles to get to the International Space Station underway, and aspirations of establishing a satellite-based internet network in the next few years, has SpaceX bitten off more than they can chew? COO Gwynne Shotwell revealed that about 7,000 people worked for SpaceX in late 2017, which means at least 700 people have lost their jobs. SpaceX isn’t answering questions about which departments they worked for or any details about compensation. (Tech Spot)

Space Telescopes of the Future: NASA Has 4 Ideas for Great Observatory to Fly in 2030s:  NASA still hasn't launched its new James Webb Space Telescope (JWST), a successor to the beloved and aging Hubble Space Telescope. But the agency is already preparing for an even bigger and better space observatory to eventually replace JWST.  Four teams of NASA scientists are getting ready to submit their proposals for future flagship-class astrophysics missions — the most expensive of all NASA's science missions. Of the four, only one mission concept will be selected to launch in the mid-2030s.  The four mission-concept studies were detailed here at the 233rd meeting of the American Astronomical Society last week (Jan. 6-10), even though many of the NASA scientists were furloughed due to the government shutdown and unable to attend the conference. (Space.com)

The Shutdown Is Weakening Our Understaffed Weather Service:  Although a number of NWS employees are continuing to work without pay, and forecasts are still being generated, the agency is operating at a limited capacity. All activities in at least four NWS offices—including the Phoenix, AZ office, Springfield, MO office, Tampa Bay regional office, and the Pacific northwest regional office—have been “canceled or postponed until further notice,” according to the NWS office websites.  We’re still getting weather forecasts because many meteorologists directly involved with creating weather forecasts are choosing to work without pay. However, NWS offices have been operating at such limited capacity for weeks on end, and fewer people working on validating data could affect the accuracy of the forecasts. (Motherboard)

Education

No Penalty for Western Governors:  The U.S. Department of Education on Friday released a long-awaited response to an inspector general audit, which found that one the country’s largest online universities had run afoul of federal standards.  The department’s Office of Inspector General found in 2017 that Western Governors University, which enrolls more than 83,000 students, failed to meet federal requirements for the interaction between faculty members and students. The audit said the WGU should pay back $713 million in federal student aid.  The Trump administration wasn’t expected to carry out the IG’s recommendations. The Education Department has been less interested in cracking down on colleges under Betsy DeVos, the U.S. Secretary of Education. And Western Governors has received bipartisan support from Washington policymakers, including praise from the Obama administration for its low-priced, competency-based model. (Inside Higher Ed)

Feds Seek Toss of Suit Challenging Student Visa Policy: The Trump administration asked a North Carolina federal court Thursday to toss a lawsuit filed by higher education institutions and organizations challenging a new government policy that tightens compliance requirements for student and visitor exchange visas. The Middle District of North Carolina should dismiss the case brought by The New School, the American Federation of Teachers and other schools, organizations and individuals because they lack standing and because the U.S. Department of Homeland Security has yet to enter a “final agency action” against any of the plaintiffs, according to the motion to dismiss. (Law 360)

FEC

FEC Commission Chairwoman: Government Shutdown is “Incredibly Wasteful and Unproductive”: The 2020 presidential race has begun. Super PACs and party committees are raising and spending gobs of cash. The threat of foreigners infiltrating U.S. political campaigns looms. And the agency charged with enforcing and regulating the nation’s campaign finance laws isn’t functioning — a casualty of the federal government’s partial shutdown over funding for a wall on the U.S.-Mexico border. The shutdown is now 14 days old with no end in sight. (Center for Public Integrity)

Defense

Trump Says He is Not Looking to Declare a National Emergency ‘Right Now’ for Border Wall, Urges Democrats to Vote Again on Funding: President Trump on Friday threw cold water on the idea of immediately declaring a national emergency to build a wall on the US-Mexico border, reversing days of signals that he might soon declare the emergency amid a protracted standoff with Democrats over a partial shutdown of the federal government. The president has defiantly said for days he might declare a national emergency to expedite construction of the wall — and his administration has asked agencies to begin preparations. But he has gotten sharp pushback, even from Republicans, at the notion of declaring such an emergency. His lawyers have privately warned that he could be on shaky footing with such a move, according to people familiar with the discussions. (The Washington Post)

U.S. Official says Withdrawal from Syria has Begun: After days of conflicting statements about a timeline for President Donald Trump’s decision to withdraw American forces from Syria, a US defense official said Friday the process has begun with the removal of some military cargo. The official said the movement of equipment is part of what the military calls a “deliberate withdrawal” from Syria, where some 2,000 troops have been working with a coalition of Syrian Kurdish and Arab fighters to defeat the remnants of the Islamic State group. (AP)

Pentagon Chief of Staff Kevin Sweeney Resigns: Kevin Sweeney has resigned as Pentagon chief of staff after serving the defense secretary for two years. A knowledgeable source told CNN's Jake Tapper that the White House forced Sweeney out. (CNN)

CFPB

Consumer Financial Protection Bureau Publishes Assessments of Ability-to-Repay and Mortgage Servicing Rules: The Consumer Financial Protection Bureau (Bureau) published a report under section 1022(d) of the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) assessing the effectiveness of the Bureau’s Ability to Repay and Qualified Mortgage Rule and a separate report assessing the effectiveness of the Bureau’s mortgage servicing rule issued under the Real Estate Settlement Procedures Act. The Dodd-Frank Act requires the Bureau to conduct an assessment of each significant rule or order adopted by the Bureau and to publish a report of its assessment no later than five years after the effective date of the significant rule or order. (CFPB Press Release)

DHS

Steel Slat Wall Prototype Sawed Through in DHS Test, Report Says: President Donald Trump has recently advocated for a "steel slat" barrier along the U.S.-Mexico border after earlier pushing for a concrete wall to stop the flow of migrants. But steel slats may not be the "impenetrable wall" Trump promised on the campaign trail in 2016. A report from NBC News said that during a Department of Homeland Security test, steel slats were sawed through in one of the wall prototypes that the president reviewed in March 2018. (USA Today)

Trump Says will Unveil Overhaul 'Soon' of Visa Rules for Skilled Workers 'Including a Path to Citizenship':  President Donald Trump said Friday that his administration is planning an overhaul of U.S. policies for specialty visa holders from other countries working in the United States. "H1-B holders in the United States can rest assured that changes are soon coming which will bring both simplicity and certainty to your stay, including a potential path to citizenship," Trump tweeted. (USA Today)

Trade

China Says Trade Talks with U.S. Made Progress on Forced Tech Transfers, IP Rights: China and the United States made progress on “structural issues” such as forced technology transfers and intellectual property rights in talks this week and more consultations are being arranged, China’s commerce ministry said on Thursday. The three-day talks in Beijing that wrapped up on Wednesday were the first face-to-face negotiations since President Donald Trump and his Chinese counterpart, Xi Jinping, met in Buenos Aires in December and agreed on a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods. (Reuters)

DOT/Transportation

Fiat Chrysler Expected to Pay Nearly $650 Million in Emissions Case: Fiat Chrysler Automobiles has agreed to pay nearly $650 million to settle lawsuits over its use of illegal engine-control software on diesel vehicles that produced false results on emissions tests. The settlement, which was Thursday, includes no admission of guilt by Fiat Chrysler or an EPA finding of wrongdoing. The company will pay $305 million in penalties to the federal government and to the State of California, which also brought suit. As part of the agreement, Fiat Chrysler will recall about 104,000 diesel-powered Ram 1500 trucks and Jeep Grand Cherokee sport utility vehicles from the 2014, 2015 and 2016 model years, a person briefed on the settlement said. (New York Times)

Air Traffic Controllers Union Sues Trump Administration Over Frozen Pay During Shutdown: The union representing the United States’ air traffic controllers is suing the Trump administration over pay that has been frozen as part of the partial government shutdown. It is a sign of increasing tension between federal workers and the government as the impasse edges closer to becoming the longest ever. The Federal Aviation Administration’s air traffic controllers are among the 420,000 federal employees who have been deemed essential and ordered to work without pay. The suit, filed Friday in federal court by the National Air Traffic Controllers Association, alleges the government “unlawfully deprived” thousands of its members of pay “without due process.” (CNBC)

Building Trust in Automated Vehicles is a Two-Way Street: Earlier this week at the Consumer Electronics Show in Las Vegas, a coalition of carmakers, tech companies and safety advocates announced a plan to address public fear of AVs with a new education campaign touting the benefits of automated vehicle technology. Through social media, technology demos and car dealer training, they aim to spread the facts about what AVs can and can't do. (Axios)

USDA

USDA Delays Deadline for Farmer Aid to Offset Tariff Losses: Farmers already reeling from low prices and uncertainty amid the nation’s trade dispute with China are welcoming a decision to extend a deadline for federal aid because of the partial government shutdown. Secretary of Agriculture Sonny Perdue on Tuesday announced the Agriculture Department would extend a Jan. 15 deadline for farmers to apply for payments to offset losses they had incurred due to the trade dispute, which led to new tariffs that lessened demand and lowered crop prices. About $9.5 billion in direct payments have been set aside for growers of soybeans, corn, wheat and other commodities. (AP)

Food Stamp Benefits are Guaranteed through February Despite Shutdown, USDA Says: Secretary of Agriculture Sonny Perdue said the USDA will take advantage of temporary funding to cover the cost of the Supplemental Nutrition Assistance Program for February, estimated at $4.8 billion for the approximately 38 million recipients. (CNBC)

DOJ

Rosenstein, a Frequent Trump Target, will Leave Justice Dept.: Deputy Attorney General Rod Rosenstein, the most visible Justice Department protector of special counsel Robert Mueller’s Russia investigation and a frequent target of President Donald Trump’s wrath, is expected to leave his position soon after Trump’s nominee for attorney general is confirmed. The departure creates uncertainty about the oversight of Mueller’s team as it enters what may be its final months of work. But the attorney general nominee, William Barr, moved quickly Wednesday to quell concerns that his arrival could endanger the probe, telling lawmakers during Capitol Hill visits ahead of his confirmation hearing that he has a high opinion of Mueller. (AP News)

AG Nominee Promises Recusal In Time-AT&T Merger Case: President Donald Trump’s nominee for attorney general told members of the Senate Judiciary Committee he would recuse himself from the Department of Justice’s review of the proposed AT&T-Time Warner merger if he were confirmed, Sen. Amy Klobuchar said Friday. William Barr, who served as attorney general under President George H.W. Bush, was a director at Time Warner for nearly a decade and owns stock in AT&T, according to financial disclosures reported to the committee. (Law 360)

'This Situation is Not Sustainable': FBI Agent Group Calls for Restoring DOJ Funding: The professional organization representing the country's FBI agents on Thursday called for an end to the ongoing partial government shutdown, warning that the current lapse in funds is unsustainable and could ultimately compromise national security. The FBI Agents Association, which represents nearly all active duty FBI agents, urged lawmakers in a letter to pass appropriations for the Department of Justice as soon as possible, noting that FBI agents, like over half a million other federal employees, are set to miss their first paychecks on Friday because of the shutdown. (Politico)

Labor & Workforce

Workforce Issues Loom Large for Health Care and Senior Care as 2019 Begins:  Workforce issues will continue to be a dominant challenge in the senior living industry in 2019, according to leaders of several organizations representing providers. Other challenges cited involve affordable housing, Medicare Advantage, financing and changes resulting from consumer demographics and preferences.  Major industry associations are joining together to launch an online Workforce Resource Center which has the goal of helping members more easily find specific resources related to recruitment, retention and compliance. (McKnight’s Senior Living)

Sprucing Up Job Corps on DOL’s New Year’s Resolution List:  The Labor Department will update its most expensive job training program in the new year.  The agency is looking to inject changes in the 55-year-old Job Corps program by working with several state governors to implement a new pilot curriculum for students, a senior department official told Bloomberg Law. The agency will also establish new measures to determine the success of centers involved in the $1.7 billion vocational training program.  The live-in program, which exists nationwide at more than 120 locations, helps young workers between the ages of 16 and 24. While it’s the largest job program of the DOL’s Employment and Training Administration, its complicated structure has allowed issues of safety, violence, and drug use to thrive. That has put the program in the media spotlight over the years, and has generated complaints from lawmakers and probes by the DOL’s Office of the Inspector General. (Bloomberg)

IRS

Refunds from the IRS May Go Out, but Hurdles to Complete Your Return Remain: The IRS has assured taxpayers of two key concerns during the ongoing federal government shutdown — the tax season start date and the availability of refunds — but accountants say the tax-filing season could still be painful. Last week, the tax agency said that it would kick off the income tax--filing season on Jan. 28 and taxpayers would receive the refunds they're owed, in spite of the shutdown. (CNBC)

Science

How China Could Dominate Science: China "is more than ever consumed by the pursuit of national greatness," The Economist writes in its lead editorial: "China’s landing of a spacecraft on the far side of the Moon on January 3rd, a first for any country, was a mark of its soaring ambition . . . President Xi Jinping is counting on being able to harness leading-edge research even as the Communist Party tightens its stranglehold on politics." Why it matters: "Amid the growing rivalry between China and America, many in the West fear that he will succeed." (Axios)

Environment/EPA

Just 5% of Earth's Landscape is Untouched: Humans have a greater influence on the world's landscape than previously thought, according to a comprehensive new high-resolution analysis of human modification of the planet. The map, published in the journal Global Change Biology, is meant to guide conservation strategy in the coming years. The new study finds that just 5% of the Earth’s land surface is currently unaffected by humans, far lower than a previous estimate of 19%. (Axios)

Dems Ask Why EPA is Preparing for Wheeler Confirmation During Shutdown: Senate Democrats say the Environmental Protection Agency (EPA) might be breaking the law by having employees help with Andrew Wheeler’s confirmation process to serve as the agency's administrator during the partial government shutdown. Under federal law and the EPA’s own contingency plan, just over 800 employees are allowed to work at the agency after its appropriations have lapsed. (The Hill)