March CEO Report - Washington Update

March 5, 2018

Welcome to the March edition of the CEO Report, POLITICO Pro's high-level outlook on the policy issues driving the month ... and beyond.

 

BUDGET & APPROPRIATIONS

Breaking the cycle: For the fourth month in a row, another government funding deadline is on the horizon, writes Pro Budget and Appropriations' Jennifer Scholtes. But lawmakers are hoping to break the "cycle of dysfunction" this time by passing a catchall bill that updates funding levels through the end of the fiscal year, Sept. 30, rather than keeping the government idling at last year's levels for another short stint. The details of that package are still under wraps as the 12 spending subcommittees haggle over their pieces of the pie. Several of the dozen chunks of the impending "omnibus" are pretty much finished, while others are still in flux. Almost totally penned: Spending levels for science agencies and the departments of Transportation, Commerce and Justice.

Don't fret. The threat of shutdown looks low this month, since lawmakers from both sides of the aisle are desperate to finally finish a sweeping spending package so they can move onto negotiating funding levels for fiscal 2019, which begins in just seven months. It won't be a surprise, though, if leaders can't complete their work on the fiscal year 2018 omnibus by the March 23 deadline. In that case, both chambers are likely to easily pass another short patch to buy a few extra days to seal the deal.

Since the funding package is one of the only must-pass bills in the months to come, lawmakers are eyeing the measure as a vehicle for policy issues that have less momentum. That list of potential tag-alongs includes provisions aimed at stabilizing Obamacare, laying out standards for online sales taxes and a raft of stalled telecom measures.

 

TRADE

Will Trump go all the way on tariffs? March came in like a lion with President Donald Trump's announcement that he plans to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. More details - such as whether any countries will be exempted (probably not) - are expected when Trump signs the actual order sometime this week.

Targeted countries could immediately retaliate with their own tariffs on goods they import from the United States. They can also go to the World Trade Organization to challenge the U.S.'s rationale on the tariffs.

Tariffs upend NAFTA talks: The seventh round of NAFTA talks wrap up today with expected news conferences in Mexico City by U.S. Trade Representative Robert Lighthizer and his Mexican and Canadian counterparts. Those could give clues about whether talks are likely to finish this year or drag on into 2019 - even as Trump's tariff announcement scrambled NAFTA negotiations. The next round of talks is expected to be held in early April in the Washington area.

Fast track for trade deals: By the end of the month, Trump must formally notify Congress of his intention to seek a three-year extension of Trade Promotion Authority, which allows his administration to negotiate trade deals that can be sent to Congress for a straight up-or-down vote without any amendments. The notification would give Congress up to three months to approve or deny him the renewal.

On the hot seat: Lighthizer could be called to testify on Trump's trade agenda before House Ways and Means and Senate Finance committees this month. That's a regular spring ritual, but no dates have been announced yet.

Relief for free traders? The Senate also may take up the Generalized System of Preferences and the Miscellaneous Tariffs Bill as part of any spending measures. The renewal of the two programs, which cut tariffs on thousands of products imported by U.S. companies, could be a bright spot for businesses in an otherwise dismal time for free trade. - Doug Palmer

 

EMPLOYMENT & IMMIGRATION

DREAMers' deadline arrives: When Trump announced in September that he'd wind down the Deferred Action for Childhood Arrivals program, he set March 5 - today - as the deadline for Congress to take action. Congress hasn't done that. What now?

Under the administration's phase-out plan for DACA, so-called DREAMers whose enrollment expired today or before were given a final opportunity to renew in September and early October 2017. Any Dreamer whose DACA enrollment was due to expire after today - and that's most of them - would lose permission to work and become vulnerable to deportation. The Trump administration hoped that threat would move Democrats and pro-immigration Republicans to agree to new limits on legal immigration and other restrictive policies in exchange for writing DACA protections into law. But the threatdidn't work.

Judges intervene: Why didn't the March 5 deadline force a solution? Mainly because it stopped mattering much in early January after a federal judge in San Francisco ordered the Homeland Security Department to resume accepting renewal applications (halted since early October). A second federal judge in Brooklyn issued a similar order in mid-February. The Justice Department petitioned the Supreme Court to squelch the San Francisco judge's order, but the high court declined to address the matter until it works its way through the lower courts. Consequently, DACA renewals will likely continue for months, if not longer.

Living dangerously: The court injunctions mean people whose DACA enrollment expires after today can still apply to renew, contrary to Trump's original plan. But the March 5 deadline isn't completely meaningless. Some DREAMers will likely lose DACA protection while they await renewal processing, simply because DHS won't have moved fast enough. That means they'll lose DACA's work protections and will face some threat of deportation until their renewals are approved.

Zombie DACA: Another consideration is that DACA enrollees may not seek renewals in large numbers. Statistics from U.S. Citizenship and Immigration Services show that only about 11,000 people sought DACA renewals during the three weeks after the San Francisco judge's ruling. The libertarian Cato Institute estimated in September that roughly 33,000 people per month would lose DACA protections after March 5. That number is lower now, because of the judges' reprieve, but it isn't zero. For the immediate future, a sort of zombie DACA will remain in force. - Ted Hesson

 

TECHNOLOGY

Anti-sex trafficking bill on the move: A sex trafficking measure that worries Silicon Valley could become law this month. Senate Majority Leader Mitch McConnell said he plans to bring to the floor next week a bill passed by the House, H.R. 1865 , that would amend Section 230 of the Communications Decency Act to allow criminal and civil actions against websites that facilitate sex trafficking. A handful of tech titans including Facebook's Sheryl Sandberg have thrown their support behind the bill, but others say passage would expose companies like Google and Twitter to massive lawsuits and potential criminal liability for user-posted content. Sen. Ron Wyden (D-Ore.) has raised co