March Washington D.C. Update

QUICK FIX

- Border emergency backlash: Congress this month is set to rebuke President Donald Trump's use of a national emergency declaration to build a border wall. At least four Senate Republicans have said they'll join Democrats to vote for a House-passed resolution, H.J. Res. 46 , to terminate the emergency, while others dislike the declaration but haven't decided how they'll vote. Trump has threatened to veto the measure, and Congress lacks the votes to override it. The emergency declaration also has triggered several lawsuits, so courts could put it on hold regardless of congressional action. In the meantime, the Pentagon is deploying an additional 1,000 troops to the southern border, boosting the number to about 6,000 - a move likely to draw more scrutiny from Democrats.

- Clock is ticking: The shutdown threat finally has subsided for the current fiscal year, so Congress and the Trump administration are turning their attention to fiscal 2020 - now just seven months away. The first step is Trump's budget request, which is expected to be released in two parts on March 11 and 18.

- Green new dealings: Now that battles lines have been drawn over the Green New Deal resolution, S. Res. 59 (116) , both chambers of Congress will proceed with efforts to shape climate change policy. In the Senate, Majority Leader Mitch McConnell has pledged the chamber will go on record soon about the Green New Deal - a strategy designed to see if Democrats will back the measure conservatives label a "socialist fantasy" - while Democrats are pressing Republicans to offer their own plan to address the crisis. In the House, lawmakers will continue to hold hearings on climate change topics and develop legislation.

TRADE

China talks on track: Trump could sit down with Chinese President Xi Jinping for a signing summit at the end of March if the two sides wrap up a wide-ranging trade agreement. To that end, a team of Chinese negotiators will travel to Washington for additional trade talks , Trump said in late February, although no dates have been announced. The U.S. trade representative's office said last week it would indefinitely postpone any tariff increase on hundreds of billions of dollars' worth of Chinese goods.

Up next: U.S. Trade Representative Robert Lighthizer has said he wants to begin wide-ranging trade talks in Tokyo this month. His office is also scheduled to release its annual National Trade Estimate report, an analysis that details foreign barriers to U.S. exports, by the end of the month, but that could be delayed because of the partial government shutdown earlier this year. - Megan Cassella

TAX

Zombie tax breaks: Senate Finance Committee leaders will continue their efforts to renew the large and diverse bloc of tax breaks known as extenders, after they introduced legislation, S. 617 (116) , in late February to revive them retroactively for 2018 and through 2019. The ones that have expired include a slew of benefits for renewable energy and alternative-fuel vehicles, as well as credits for railroad maintenance, entertainment productions, energy-efficient home building and business development in economically struggling areas. On the non-business side, the extenders include a tax break on mortgage insurance.

Finance Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden(D-Ore.) are leading the effort, with an eye toward the April 15 tax filing deadline, but building momentum in the House has proven difficult. Advocates also will continue making their case on Capitol Hill in the weeks ahead.

Tax season update: House tax writers will delve into the tax-filing season with a pair of hearings this month. National Taxpayer Advocate Nina Olson is scheduled to give her take on how it's going so far to the House Ways and Means Oversight Subcommittee on March 7. Treasury Secretary Steven Mnuchin is expected to testify to the full committee sometime early this month. Though a committee spokesperson described it as a "customary budget hearing," it will be Mnuchin's first appearance before the panel since Democrats took control of the House. They'll be eager to quiz him on refunds, income tax withholding tables and, just maybe, the president's tax returns.

Tax law glitches: Some GOP lawmakers will continue their attempt to fix mistakes written into the 2017 tax overhaul, HR 1 (115), including a capital investment write-off period for retailers and restaurants that was inadvertently lengthened. But as with extenders, a quick solution has proven elusive, with Democrats in no mood to help mend a law they voted against en masse - unless they see some of their tax priorities advanced as a tradeoff. - Aaron Lorenzo

FINANCIAL SERVICES

Waters wields the gavel: House Financial Services Chairwoman Maxine Waters (D-Calif.) this month will deliver on her promise of a packed scheduleof oversight hearings. First up is the Consumer Financial Protection Bureau at a March 7 hearing, the first for the agency under new director Kathy Kraninger. Waters says oversight of the powerful Obama-era agency is a top priority and recently wrote a letter to bureau employees urging them to report any efforts to undermine their work under Trump administration leadership. Kraninger has kept a low profile since taking the helm, but her predecessor, Mick Mulvaney, spent a year reining in the agency over the protests of Democrats.

Wells, Waters face off: Wells Fargo CEO Tim Sloan will testify at a March 12 hearing on the scandals that have rocked the big bank. Waters has been one of Wells Fargo's fiercest critics, calling for the lender to be broken up following revelations in 2016 that it opened millions of fake customer accounts. Others have called for Sloan's removal. His appearance will serve as a preview of the reception he and other major bank CEOs will receive at a follow-up hearing on April 10.

Whose best interest?: On March 14, a panel subcommittee will scrutinize one of the SEC's most important initiatives, the "best interest" proposal, which sets stricter restraints on potential conflicts for those offering investment advice. Some consumer advocates have criticized the rule, saying it is more industry-friendly than an Obama-era regulation thrown out last year by the courts.

Fannie-Freddie frontman: The Senate could take up the nomination of Mark Calabria to lead the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the two companies at the heart of the nation's mortgage finance market. The Banking Committee last month voted to approve Calabria - Vice President Mike Pence's chief economist - on a party-line vote. Calabria would assume the post at a critical time, as the Trump administration looks at ways to end the government's decade-long control over Fannie and Freddie.

Fed's crystal ball: The Federal Reserve's interest rate-setting committee will meet March 19 and 20, and though it's not expected to raise interest rates, central bank officials will release their projections for future rate moves for the first time since the Fed signaled it was pausing its rate hike campaign. - Mark McQuillan

ENERGY

Houston energy hubbub: Energy industry CEOs and government officials will gather in Houston starting March 11 for CERAWeek , one of the most influential energy conferences in the world. EPA Administrator Andrew Wheeler, Energy Secretary Rick Perry, the heads of Chevron and BP and other major energy players will chew over the future of the industry. This year features more sessions than previous years on carbon capture technology, electric vehicles and decarbonization, as well as several sessions on hydrogen as a fuel source. Is Big Oil starting to take the move away from fossil fuels more seriously? How concerned are companies that the ideas espoused in the Green New Deal will gain traction in and out of D.C. and lead to major policy changes? POLITICO reporters will be on the ground in Houston to report the latest. - Ben Lefebvre

EMPLOYMENT & IMMIGRATION

The other border lawsuit: A decision could come this month in the American Civil Liberties Union's effort to block the Trump administration's "remain in Mexico" policy, in which certain asylum-seekers have been sent to Mexico to await the outcome of their case in the U.S. The ACLU has argued the migrants face grave dangers in Mexico and that the policy violates federal asylum law, while the Trump administration is seeking to expand the policy. Trump has complained about the influx of asylum-seekers, and his administration has sought creative ways to decrease the flow of migrants - including the border emergency declaration.

Family separation: Another ruling is expected in the coming weeks on whether the administration will be required to reunite a broader pool of migrant families separated at the U.S.-Mexico border. The decision could keep the Trump administration embroiled in the fallout over its controversial "zero-tolerance" policy, which split apart thousands of families last spring. The administration already has reunified or discharged from care more than 2,700 children in its custody. The ACLU, which represents plaintiffs in the case, is seeking to expand reunification efforts to include families separated in the year before the judge's June reunification order.

Visa rule reviews: The White House budget office in late February began reviewing a final rule to update aspects of the EB-5 investor visa program , which allows foreigners who invest $1 million in a U.S. commercial project to apply for a green card. If the project takes places in a high-unemployment or rural area, the amount drops to $500,000. The regulation - a rare holdover from the Obama administration - would raise the investment thresholds to $1.8 million and $1.35 million, respectively, and would rework the process to determine a "targeted employment area" eligible for the lower investment amount.

The budget office also began reviewing a proposed rule that would rescind work authorization for spouses of highly skilled H-1B visas holders. Roughly 91,000 spouses have been approved to work legally under the Obama-era program, but the Trump administration wants to end it. The budget office considers the proposed rule "economically significant," which means it could remain under review for at least several weeks, and possibly longer, according to an advocate tracking the issue. - Ted Hesson

BUDGET & APPROPRIATIONS

2020 vision: The big theme of the White House's budget vision is already out of the bag: a 5 percent cut to non-defense spending and an effort to sidestep budget caps by stashing a boost in Pentagon funding within the Overseas Contingency Operations fund, which is exempt from those limits. Expect congressional spending leaders to fire back with their favorite retort: the president proposes, Congress disposes.

Even before the two parties can get into the funding details for each department and agency, they'll need to strike a compromise on overall spending caps for defense and non-defense funding. Congressional Democrats already insist the overall sum for non-defense money will need to shake out at least as high as the current deal. If the two sides can settle on numbers for those top-line caps, appropriators can divvy up funding for each of the 12 appropriations subcommittees from there and start moving legislation before the Oct. 1 start of the 2020 fiscal year.

Disaster aid: Congress could also move this month on a newly unveiled disaster aid bill, S. 572 (116), that has the president's blessing. The $13.6 billion plan includes hundreds of millions of dollars for forest restoration, wildfire management and flood mitigation work. - Jennifer Scholtes

HEALTH CARE

GOP support eroding: The drug industry may no longer be able to take congressional Republicans' support for granted after the Senate Finance Committee on Feb. 26 grilled seven company executives on their pricing practices.

The tone revealed a marked change from past debates, in which drug companies largely avoided blame from Republicans for surging health costs and warned lawmakers against imposing regulations that the industry said would threaten research on cures.

This time, GOP Sen. Bill Cassidy of Louisiana endorsed the idea of basing the price of some drugs in Medicare on the lower costs paid in government-run health systems abroad. And Sen. John Thune (R-S.D.) worried that an industry proposal to reimburse drugs based on the value they deliver to society might give manufacturers an incentive to inflate prices.

Many lawmakers still are receptive to drug company arguments that their efforts to cut prices are being thwarted by other players, such as pharmaceutical benefit managers who negotiate discounts for insurance companies. Grassley plans to call benefit managers to testify at a future Senate Finance hearing. But he indicated the Senate could act soon on narrow bipartisan bills that could lower barriers to competition from lower-cost generic drugs. He and other key Republican lawmakers aren't yet ready to commit to broader efforts, such as legislation that would have a more direct effect on how drug companies price their products. - Sarah Karlin-Smith

AGRICULTURE

Farm income numbers: USDA's Economic Research Service is set to release its farm income forecast on March 6, a report that had been scheduled to come out in February but was postponed due to the partial government shutdown. The analysis, conducted three times a year, assesses the state of the farm economy and predicts changes in net farm income. Net farm income was cut in half between 2013 and 2016 and dropped significantly between 2017 ($75.5 billion) and 2018 ($69.2 billion).

Key pesticide case: On March 26, the U.S. Court of Appeals for the 9th Circuit will rehear a case challenging the Trump EPA's decision to slow-walk a proposed ban on the insecticide chlorpyrifos, which is widely used on fruit and vegetable crops in the U.S. A federal district court ruled last year that EPA was wrong to delay the ban to allow for more research, and ordered the agency to cancel registrations of the chemical. The district court sided with advocates who point to research showing chlorpyrifos causes neurological damage in children. But the agency, which has said the science on chlorpyrifos isn't definitive, was granted its request to have a full panel of appellate judges review the case.

Farm bill almanac: An important theme to watch this month is whether USDA provides updates to its timeline for implementing provisions of the new farm bill, H.R. 2 (115). Farm-state lawmakers are pressuring USDA to ramp up its efforts after the 35-day partial government shutdown delayed early-stage work.

USDA wants to issue premium refunds under a dairy safety-net program by the end of April. Milk producers who participated in the former Margin Protection Program between 2014 and 2017 are being given two options under the law: Get 50 percent of their insurance premiums back in direct cash, or receive a 75 percent refund to use as a credit toward purchasing coverage under the revamped program, now called Dairy Margin Coverage. Farmers could get back more than $60 million in premium refunds, according to an analysis by the American Farm Bureau Federation. - Liz Crampton

CANADA

Budget (and reelection) blueprint: The increasingly embattled Trudeau government releases the final federal budget of its current term on March 19. The annual document release is the biggest policymaking event on Canada's political calendar, and this year will offer clues not only on the government's legislative agenda, but also on the themes it intends to campaign on in this fall's election. Prime Minister Justin Trudeau's government suddenly faces a tough reelection fight. It's being squeezed by a scandal over judicial interference, not to mention frustration over a lack of oil pipelines and some opposition to a new carbon tax. Two budget items to watch for: how much the Trudeau Liberals reveal about their plans to lower drug prices and what ideas they've come up with after promising new solutions to help workers prepare for the digital economy. One big budget item - C$2.05 billion over 24 years to participate in NASA's Lunar Gateway project - was announced Feb. 28. - Alexander Panetta

DEFENSE

Still no Pentagon pick: The president has yet to name a nominee to permanently replace Jim Mattis, who resigned as Defense secretary more than two months ago. Trump has indicated he's pleased with acting Defense Secretary Pat Shanahan, but the former Boeing executive's relations with Congress have begun to fray. And Senate Armed Services Chairman Jim Inhofe(R-Okla.), whose committee would need to sign off on any nominee, has suggested Shanahan won't be nominated. - Connor O'Brien

CYBERSECURITY

Biggest business risk: Banks, investment firms, securities exchanges and hospitals face the biggest risk from cyberattacks, Moody's determined in its first publication to assess digital vulnerabilities across all business sectors. If hackers carry out a crippling attack on any of these sectors, they'd each take a sizable financial hit and the effects would have "far-reaching impact on other sectors," according to the credit rating service. One key reason these industries are such attractive targets: They collectively hold about $12 trillion in rated debt. Moody's also points out that criminal hackers have better technological tools, such as access to cyber weapons developed by governments, that are capable of causing more damage on targets.

So far, the biggest corporate breaches haven't hurt targeted companies' creditworthiness, Moody's says. For example, the Equifax breach affected 143 million people and cost the company millions of dollars in related costs, but Moody's found that the "company's strong financial position and liquidity mitigated these factors." But companies' credit worthiness may take a hit if they can't defend against hackers, and "attacks could weaken the credit quality of the most-exposed entities in the coming years." - Eric Geller and Mike Farrell

TRANSPORTATION

Getting down to work: Congress is starting to dig in on an infrastructure package, with both chambers holding hearings in late February. There are signs that the House Transportation Committee, under new chairman Peter DeFazio (D-Ore.), will put out a plan sooner rather than later, though the details remain an open question. DeFazio has said he wants his bill to contain some titles that would address climate change and infrastructure resiliency. Separately, he has also suggested that he favors bringing back earmarks to grease the skids for a gas tax increase that would shore up the Highway Trust Fund. But the clock is ticking - most transportation watchers believe that any major infrastructure package must move before the end of this year, before the Beltway is consumed with election fever. - Kathryn A. Wolfe

TECHNOLOGY

Focus on diversity: The tech industry has a diversity problem, critics say. Democratic lawmakers, racial justice advocacy groups and some tech workers all have said Silicon Valley is failing minorities. That charge covers both the industry's broadly white workforce and its products: A growing body of research suggests racial bias is being built into algorithms, a simmering issue that risks exploding as technologies like artificial intelligence and facial recognition software proliferate.

These concerns will come to the fore at a House Energy and Commerce consumer protection hearing on March 6. Reps. Jan Schakowsky (D-Ill.) and Frank Pallone (D-N.J.), who respectively chair the subcommittee and full E&C panel, said in a joint statement that they want to probe the effects of racial and ethnic biases built into algorithms and emerging technologies, as well as the "need for inclusion in the sector's workforce." In the following days, South by Southwest - the Austin, Texas, mega-festival with a growing tech focus - will play host to a number of panels examining challenges and opportunities for making tech more diverse. - Kyle Daly

EDUCATION

Teacher unrest: Sacramento teachers, the latest California educators to threaten to strike this year, are expected to vote on whether to authorize a strike soon. Los Angeles, West Virginia and Denver teachers all reached a deal this year, while Oakland teachers have taken to the picket lines as negotiations continue.

Seclusion and restraint: Legislation that would make seclusion illegal in public schools, limit the use of physical restraint and bolster reporting requirements is expected to be introduced in the coming weeks, following a hearing on the issue last month.

Up soon: Higher Ed Act hearings: While no dates are scheduled, the House education committee plans to hold five hearings in the coming months on reauthorizing the Higher Education Act. Sen. Lamar Alexander (R-Tenn.) has said he wants it signed into law by the end of the year. - Bianca Quilantan

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