August CEO Report
BUDGET & APPROPRIATIONS
Racing to the finish: Defying skeptics, Congress is on track to pass many - if not a majority - of its fiscal year 2019 spending bills ahead of schedule and with relatively little fanfare this year, Pro Budget and Appropriations' Sarah Ferris reports. But most on Capitol Hill are still predicting a stopgap spending bill for at least some federal agencies. And some fear that President Donald Trump will deliver an unwanted distraction ahead of the midterms by making good on his threat to shut down the government to get more money for his border wall.
Senate sets the agenda: The Senate is planning to finish its third spending bundle before Labor Day, marking nine total bills done. The upper chamber will tee up its third and likely final package, which includes Defense, S. 3159, and Labor-HHS-Education, S. 3158, the week of Aug. 13. Packaging the popular Defense bill with the largest domestic spending measure is meant toensure bipartisan support.
The House has approved six bills, albeit with a much more partisan spin. That pace is far ahead of past years, which has procedural wonks dreaming of an autumn floor schedule that bears real resemblance to "regular order" - rather than the ugly funding fight that resulted in a catch-all "omnibus" bill, H.R. 1625 (115), that enraged Trump this spring.
The first snag: Despite early progress, no bills have made it to the president's desk.The pace has been slower than expected for Congress' first "minibus,"H.R. 5895, to fund the departments of Energy and Veterans Affairs, as well as the legislative branch. Negotiators are still trying to resolve a multibillion-dollar gap to fund a popular veterans health program, which has created aparty-line split.
China, NAFTA in the crosshairs: Trade talks with China and NAFTA renegotiation talks are front and center. As the president moves closer to hitting Beijing with additional tariffs, the administration will convene public hearings from Aug. 20-23 on whether to impose a 25 percent duty on $200 billion worth of Chinese imports. The deadline for requests to appear at the hearing is Aug. 13.
The administration extended a deadline to submit final comments until Sept. 5after it decided to potentially raise the tariffs from 10 percent to 25 percent on the latest round of goods.
NAFTA talks have resumed, with negotiators seeking to reach an agreement between Mexico and the U.S. by an Aug. 25 deadline so Mexican President Enrique Peña Nieto can sign the deal before he leaves office in December. Mexican Economy Secretary Ildefonso Guajardo said he will be back in Washington Aug. 8 or 9 to continue meeting with U.S. Trade Representative Robert Lighthizer.
Around the world: Commerce Secretary Wilbur Ross has said the Trump-ordered investigation into whether imports of automobiles and parts pose a national security risk should be completed this month.
Lighthizer will also be busy with the first round of a new trade dialogue with Japan, one of the U.S.' most important trade and security allies in the region. Those talks are tentatively scheduled for Aug. 9.
Economic ministers from Southeast Asian nations will convene Aug. 26-Sept. 2for their 50th annual meeting in Singapore. Lighthizer's office has not confirmed whether he will attend the meeting, although senior U.S. trade officials usually do. - Adam Behsudi
FAA, finally: With the Senate taking a shortened recess, action on a long-delayed multiyear FAA reauthorization bill, S. 1405, is likely, assuming senators can on which amendments will get a vote. Before they left for their one-week recess, they began vetting potential amendments. How quickly senators finish that chore will in large part determine when the bill comes to the floor; they seem to be targeting the last week of August.
Driverless cars hitching a ride?: One of the potential amendments is the text of AV START, S. 1885 , the Senate's driverless car bill. Though supporters would love to see it catch a ride on the FAA bill, many consider that a tough lift because it's a major piece of safety legislation that lawmakers would have little chance to amend on the floor. Add to that, the continuing concerns from trial lawyers over forced arbitration related to driverless car incidents and it looks like a long shot. - Kathryn A. Wolfe
Opioid Rx by district: Harvard University researchers have estimated the number of opioids prescribed by doctors in each congressional district. On average, doctors wrote 77 prescriptions per 100 residents in Republican districts, and 54 prescriptions per 100 residents in Democratic districts. Much of the difference can be attributed to high prescription rates in rural areas, which tend to lean Republican.
Alabama's 4th District, represented by Republican Robert Aderholt, leads the nation with 166 opioid prescriptions per 100 residents. - Tucker Doherty
Farm bill talks could be tense: This month, House and Senate agriculture leaders will seek to reconcile the two chambers' farm bills before the current version of the sweeping law expires Sept. 30. The biggest sticking point is the House's proposed overhaul of the Supplemental Nutrition Assistance Program, commonly known as food stamps, which accounts for a vast majority of farm bill spending. The House bill would impose new work requirements on millions of able-bodied adults, but Senate leaders have indicated that policy is a nonstarter.
Senate Majority Leader Mitch McConnell has said he'd like to see a farm bill conference report ready after Labor Day, but that is an ambitious timeline, particularly given the House's six-week recess. In addition, the first formal meeting of the conference committee may not take place until the end of August.
Trade aid watch: The agriculture sector will also be keeping close tabs on planning for the $12 billion aid package to help those hurt by retaliatory tariffs. Agriculture Secretary Sonny Perdue recently said that farmers would be required to provide information about their crops and to apply for aid startingSept. 4 and that cash payments will go to soybean, sorghum, cotton, corn, wheat, dairy and hog farmers. Farmers will also be keeping an eye on another round of retaliation China just announced, threatening up to 25 percent tariffs on $60 billion worth of goods, after the Trump administration said it was considering ratcheting up tariffs on hundreds of billions in Chinese imports. - Helena Bottemiller Evich
Sinclair's moment of truth: The fate of Sinclair Broadcast Group's merger with Tribune Media will come into sharp focus on Aug. 8. That's the day when either company can walk away from their $3.9 billion deal. Or they could choose to plow forward, despite the FCC's decision to send the transaction into a lengthy administrative proceeding that's widely seen as a deal-killer . FCC Chairman Ajit Pai had problems with Sinclair's proposal for selling TV stations to get under the national media ownership limit; the company had wanted to spin off some stations to close associates, raising questions about how independent those stations would be. But Sinclair, known for its "must-run" pro-Trump segments, has one important fan: Trump himself, who tweeted criticism of the FCC for its "disgraceful" decision on the merger.
Postal report shipping soon : Trump's postal task force, led by Treasury Secretary Steven Mnuchin, is due to issue its recommendations soon for reforming the U.S. Postal Service. And many in Washington are watching for signs the report will take aim at Amazon. Trump, who conflates Amazon with one of his frequent media targets, the Jeff Bezos-owned Washington Post, has accused the e-commerce giant of ripping off USPS and treating the service like its "delivery boy." A key question is whether the task force will recommend raising shipping rates for retailers with a large volume of online sales, like Amazon. But the Postal Service's financial problems are not driven by Amazon. The agency's history of billion-dollar losses can mostly be attributed to the decline of letter mail in the Internet era and the mandatory payments the agency must make into a retiree benefits fund. - Eric Engleman
EMPLOYMENT & IMMIGRATION
Texas targets DACA: A federal judge will hear oral arguments Aug. 8 in a lawsuit brought by Texas and six other states against the Deferred Action for Childhood Arrivals program. The states argue that former President Barack Obama overstepped his authority when he created the DACA program, which provides deportation relief and the ability to work legally to undocumented immigrants brought to the U.S. as children. Texas and a larger coalition of states successfully used the same argument in a 2014 lawsuit against a broader deportation relief program for parents. And they're back before the same judge, U.S. District Judge Andrew Hanen. In a separate lawsuit, D.C.-based U.S. District Judge John Bates ordered the Trump administration to restart DACA in full, including accepting new applicants. He delayed the order untilAug. 23 to allow the government to appeal.
'Most pressing' family reunifications: The focus of a class-action lawsuit over family separations will shift this month to reuniting migrant children with deported parents or those released into the U.S. The Justice Department said during a late July court hearing that 468 separated children in federal custody had parents currently outside the U.S., likely because they were deported or agreed to be removed. U.S. District Judge Dana Sabraw called the deported and released parents "the most pressing group," now that the government has reunited more than 1,800 children with parents or sponsors.
'Public charge' proposal : A proposed rule that would make it harder for immigrants who receive most public benefits or welfare to obtain a green card could be coming this month. The Trump administration had planned the release for July, but the proposal remains under review. Experts and advocates tracking the so-called public charge regulation say it may be held up for further analysis. Washington state Gov. Jay Inslee, a Democrat, wrote an April letter to the White House budget office that questioned how the rule could be considered not "economically significant." Inslee argued it would have a chilling effect on the use of public benefits among immigrant families and exert a harmful effect on his state's economy. - Ted Hesson
Breaking the nominee logjam: The Senate Banking Committee should finally start clearing its backlog of nominees this month. The panel will likely consider six people after the Senate returns the week of Aug. 13, including Kathy Kraninger to lead the Consumer Financial Protection Bureau, Elad Roisman to serve at the SEC and Kimberly Reed to head the Export-Import Bank. Kraninger is the only one who faces a close vote. Trump tapped her to replace Mick Mulvaney, who has led the embattled agency as interim director since November. But Kraninger has no experience in consumer issues or banking. Democrats and other critics also see her nomination as a way to keep Mulvaney, her boss at the budget office, in the loop at the agency.
Crackdown on conflicts of interest: The public comment period for the SEC's proposal for brokers offering retirement investment advice ends on Aug. 7. The so-called best interest regulation, released by the agency in April, would rein in material conflicts of interest, including bonuses, sales contests and other special perks that brokers can get for recommending annuities or mutual funds that pay commissions. The top lobbying group for brokers is pressing the regulator to water down the proposal, so this fight isn't over.
Finally, a fintech charter: On the last day of July, the Office of the Comptroller of the Currency released its long-awaited, final version of a special purpose charter that would allow financial technology companies, such as online lenders, to operate as national banks. Now, the applications will start coming in. It's not clear how many fintech companies will sign up because the charter comes with provisions that some regard as onerous. These include a requirement that they draw up wind-down plans in the event they fail, a costly and painstaking process that large banks must go through. Plus, if an application is accepted, it will likely be challenged in court by state regulators. Still, a national charter would allow the fintech firms to avoid state-by-state regulations, as many bigger lenders do.
Sealing the deal: Creditors and Puerto Rican government officials will try to finalize a preliminary deal they reached late last month over part of the $9 billion owed by the commonwealth's struggling electric utility. The agreement would allow bondholders to exchange their existing debt for two new tranches of bonds backed by the semi-governmental utility. It could resolve just one piece of Puerto Rico's crippling debt problem, which is standing in the way of the island's recovery from a decadelong recession. - Mark McQuillan
The one we've been waiting for: New federal regulations on non-corporate companies known as pass-throughs are expected soon. The guidelines should offer clarity on how these companies can claim a new 20 percent deduction on their income that qualifies for the benefit, which was established by the Tax Cuts and Jobs Act, H.R. 1 . Myriad questions haven't been answered since the new law took effect at the beginning of the year, including whether pass-throughs made up of multiple entities can band together to claim the deduction. Broad aggregation would keep pass-throughs' effective tax rate closer to what corporations effectively face.
New IRS brass soon? Nominees to run the IRS - Charles Rettig to be commissioner and Michael Desmond to be general counsel - are a Senate vote away from stepping into their new roles. Both recently cleared the committee gauntlet despite Democratic votes against them, mostly due to opposition to an unrelated Treasury decision to unwind a longstanding requirement that all tax-exempt groups furnish information on donors who give more than $5,000. With the Senate in session for much of this month, Rettig and Desmond could get votes soon.
If at first you succeed... House Republicans are using their summer recess this month to test constituent interest in more tax cut legislation. Just before leaving Washington, GOP members of the Ways and Means Committee issued an outline centered on permanently extending the temporary individual tax cuts included in the Tax Cut and Jobs Act, which expire after eight years. They've said the House would vote on legislation in September, based on feedback Republicans receive during recess, although the plan is widely considered political, given that Senate Republicans lack the votes for passage.
Funding and overhauling the IRS: Both the House and Senate have passed spending legislation that includes funding for the IRS, albeit at different levels. The House would give the agency $11.6 billion for the 2019 fiscal year and the Senate would provide $11.3 billion, so the two sides are working to bridge the difference. Congress is also considering a range of bills to revise IRS operationsand tax administration, based on multiple measures that have passed the House and been introduced in the Senate. - Aaron Lorenzo
Help wanted: The Department of Homeland Security wants more help from the private sector to defend against cyberattacks, so it has launched a new center - along with a handful of other programs - to spark greater collaboration. The National Risk Management Center is meant to create something of a mind meld between business leaders and federal cyber officials and experts to identify the most pressing digital dangers and figure out the most effective path for mitigating those risks. At a Homeland Security cybersecurity summit in New York City late last month, Homeland Security Secretary Kirstjen Nielsen told an audience of officials, experts and executives that the agency is moving to counter cyber threats more vigorously because "our digital lives are in danger every single day."
Additionally, DHS is stressing that it needs information about potential cyber risks and vulnerabilities from businesses. Chris Krebs, undersecretary of the National Protection and Programs Directorate at DHS, said the feds do most of the sharing now, sending out some 3.1 million so-called threat indicators to date. But it hasn't received nearly that amount in return.
Beware the grid hackers: DHS has also been sounding the alarm about cyber threats to the nation's most critical infrastructure. In a series of briefings, department cyber experts and officials warned executives that a sophisticated Russian hacking unit known as Fancy Bear has infiltrated control systems inside American utilities in a campaign the government believes is ongoing. Despite some media reports that indicated the Fancy Bear attacks could lead to blackouts, several cybersecurity experts have been skeptical. Many have said it's unclear what sort of physical damage Fancy Bear could actually do. Still, many say, the power grid may be the next front in an ever-growing international cyber conflict. - Mike Farrell
Offshore drilling rollback: The Interior Department is finishing up plans to roll back the Obama administration's rules tightening safety measures for offshore drilling. Today marks the deadline for public comments on its proposed changes to rules regulating offshore oil and gas wells. The revision would remove many parts of the Obama-era rule, which was put in place in response to the Deepwater Horizon rig explosion in 2010 that killed 11 people and spilled millions of barrels of oil into the Gulf of Mexico. The agency is seeking to loosen requirements for third-party equipment inspectors and to reduce the amount of real-time monitoring of equipment. Industry groups have said the requirements are redundant, but environmental groups worried about another disaster have promised to fight the rollback.
Pruitt probes: Scott Pruitt may have left the EPA, but the ethics investigations are still churning, and some important reports could emerge this month. The results of probes into the former administrator's expansion of his security detail are likely to be released shortly, as will the audit of Pruitt's 2017 travel and the use of a loophole in the Safe Drinking Water Act to give raises to close aides. - Ben Lefebvre and POLITICO staff
Almost there: The final fiscal 2019 National Defense Authorization Act, H.R. 5515 (115), awaits the president's signature. The Senate cleared the legislationlast week in a blowout vote, following a similar tally in the House.
The compromise bill is the result of quick action by House and Senate Armed Services leaders to hammer out the differences in their respective versions. If signed soon by the president, as expected, it would be the first time in more than two decades the annual defense bill has become law before the Oct. 1 start of the fiscal year. Once signed, defense hawks are set to turn their attention to enacting an appropriations bill to fund defense and other national security needs before the Oct. 1 deadline. - Connor O'Brien
Next round in Harvard's admissions fight: There's another opening later this month to file briefs on either side of the admissions fight at Harvard University, which is battling a lawsuit accusing the school of discriminating against Asian-American applicants. All eyes are on the Justice Department, which previously filed a notice of interest in the case, but could still wade deeper into the fray.
No more 'gainful' rule? The Education Department in the coming weeks is expected to propose rescinding the "gainful employment" regulation that governs federal funding of for-profit schools and other career colleges. The policy, which cuts off aid to low-performing programs, was a centerpiece of the Obama administration's crackdown on for-profit education companies. - Benjamin Wermund
Secret discounts targeted: A federal rule expected to restrict or eliminate secret discounts drug companies negotiate with pharmacy benefit managers could drop this month, potentially upending the complex payment scheme for drugs in this country. While Trump has aimed his most fiery drug price rhetoric at the pharmaceutical companies, his administration's drug price plan has taken aim at the pharmacy benefit managers who negotiate rebates for insurers and employers. The administration has said this rebate system typically hasn't provided direct discounts for patients taking the drugs and has kept prices artificially high. Pfizer's CEO, who under pressure from Trump recently agreed to temporarily delay some planned price hikes, last week predicted that the rebate system would be eliminated. - Jason Millman
On the e-record: The health IT world expects crucial rules from HHS this fall that would establish data sharing requirements for electronic health records vendors and health systems. August will see two important conferences where government and private sector officials will discuss some of the issues at play.
The Office of the National Coordinator for Health IT holds a three-day summit this week, while the Centers for Medicare and Medicaid Services, in coordination with the White House's Office of American Innovation, will hold a related event Aug. 13. The latter event, billed as a Blue Button 2.0 Developers Conference, will give app-makers the opportunity to show the kind of support software they can provide to doctors, hospitals and patients. How such apps might come into play in health care will, in turn, depend partly on the regulations expected later in the year. Those rules may affect the prices or policies set by records vendors and their clients. - Arthur Allen