September Washington DC Preview

September 3, 2019

QUICK FIX

— Shutdown scramble: When Congress returns from summer break Sept. 9, lawmakers will have just 13 working days to pass a dozen spending bills that provide updated funding levels and prevent another government shutdown at month's end. Sound unrealistic? House and Senate leaders acknowledge the heavy lift and impossible deadline, especially with major partisan pitfalls like funding for the president's border wall hanging over negotiations. To buy more time, House leaders are preparing lawmakers for a stopgap fix that would extend current funding levels until late November or early December, keeping the government open.

 

— Betting on the Fed: The Federal Reserve will make its decision on interest rates on Sept. 18, and markets are heavily counting on another cut on the heels of July's rate reduction — the first in more than a decade. The Fed has cited the negative effects of President Donald Trump's trade wars on business investment and manufacturing, along with slowing global growth, as the main focus of its deliberations. Trump has pressed the Fed to aggressively slash rates, and no matter what the central bank does this month, it's unlikely to satisfy him.

 

— Defense bill endgame: Leaders of the House and Senate Armed Services committees will launch their negotiations on a final version of the National Defense Authorization Act (H.R. 2500, S. 1790 ) when they return from the long summer recess. Republicans and Democrats in both chambers want to pass the bill before the Oct. 1 start of the new 2020 fiscal year. A two-year budget deal that boosts defense spending will help smooth the way, but lawmakers still will have to bridge several major policy differences. For instance, House Democrats are pushing to limit the president's authority to go to war with Iran, block military support in Yemen's civil war and overturn the Pentagon's more restrictive transgender troop policy — provisions most Republicans oppose.

TRADE

Uncertain detente: Talks between China and the U.S. on an agreement to end the bilateral trade war are expected in September, but no date has been announced and expectations for a deal have faded in recent months. A 15 percent tariff on about $110 billion of Chinese imports took effect Sept. 1, with duties planned on more goods at the end of the year. Trump's current 25 percent duty on about $250 billion worth of Chinese goods is expected to rise to 30 percent on Oct. 1.

 

Trade at the U.N.: Trump and Japanese Prime Minister Shinzo Abe could shake hands on a final agreement covering autos, agriculture and digital trade when they meet on the sidelines of the U.N. General Assembly meeting later this month.

 

One unknown is whether Chinese President Xi Jinping will attend the U.N. gathering since he will be busy with preparations for the 70th anniversary of the People's Republic of China on Oct. 1. However, the U.N. hopes Xi and several other world leaders will attend a climate change summit on Sept. 23. The White House has not said whether Trump will take part in that meeting.

 

Fate of North American pact: The USMCA agreement will be back in the spotlight after Congress returns. Trump's chances of winning approval of the USMCA before the end of the year could hinge on closed-door talks House Democrats and USTR Robert Lighthizer held in August over several contentious issues. — Doug Palmer

ENERGY

The PFAS problem: House and Senate negotiators are pushing to hash out a final deal on a major package dealing with toxic chemicals in communities' drinking water and food supplies in time to move it as part of the annual defense bill in September. Both chambers passed provisions relating to the ubiquitous chemicals, called PFAS, as part of their defense bills earlier this summer. The biggest legislative sticking point is whether to list some or all PFAS as hazardous for the purposes of Superfund cleanups — a move that would help prod the military and other responsible parties to clean up contaminated sites, but that many fear could also create massive new liabilities for not just chemicals manufacturers, but also farmers who spread contaminated sludge on their fields, water utilities that supplied the sludge, and fire departments that used foam containing the compounds.

 

A House Oversight and Reform Committee subpanel has called major manufacturers of the chemicals to testify on Sept. 10 about how long they knew about the health dangers. — Annie Snider and Anthony Adragna

TAX

Trump tax returns: Lawsuits over both Trump's state and federal tax returns are winding their way through federal courts. Oral arguments are scheduled for Sept. 18 for the lawsuit that Trump filed to block a New York state law that would allow House Ways and Means Chairman Richard Neal (D-Mass.) access to the president's state returns. Neal has so far shown little interest in taking New York up on that offer. The D.C.-based federal judge in that case has said he will consider whether to move the case to the Southern District of New York. Neal recently told the court in the case dealing with Trump's federal returns that a whistleblower bolstered House Democrats' argument that the returns are needed to boost oversight of the IRS's required audits of presidents. The cases are proceeding as Deutsche Bank has all but admitted that it has some of Trump's returns.

 

Unfinished business: A group of temporary tax provisions known as extenders has been expired for well over a year and a half now, with still more set to lapse at the end of this year unless Congress acts. Still, it remains to be seen if an extenders package could get attached to a broader budget or spending agreement. The Senate also has yet to dispatch with House-passed retirement security legislation that would also roll back a tax increase from Republicans' tax tax overhaul on the benefits given to survivors of soldiers who died in the line of duty. — Bernie Becker

EMPLOYMENT & IMMIGRATION

Court watch: One major legal battle to watch in September is over the "public charge" final rule, which will allow federal immigration authorities to deny green cards to immigrants who receive certain public benefits or are deemed likely to do so in the future. At least five lawsuits have been filed since the rule was issued in mid-August.

 

The Trump administration also will attempt to enforce a new detention regulation that aims to allow children to be detained with their parents beyond a current 20-day limit. The final rule institutes federal guidelines for the detention of families, but it will need the approval of Los Angeles-based U.S. District Judge Dolly Gee before it can go into effect. Gee rejected a July 2018 request to alter the settlement agreement that set the 20-day limit.

 

Another legal challenge to watch will be over Trump's ban on asylum seekers who pass through a third country en route to the U.S. The American Civil Liberties Union has asked San Francisco-based U.S. District Judge Jon Tigar to restore a nationwide injunction blocking the policy based on new evidence in the case, and he will hold a hearing on the motion Sept. 5.

 

Regional immigration deals: The Trump administration has brokered immigration deals with Mexico and Guatemala, but both agreements will be subject to further review this month.

 

After Trump threatened to slap tariffs on Mexican goods coming into the U.S., Mexico agreed in June to deploy 6,000 troops to intercept migrants traveling north. At the same time, the U.S. expanded the implementation of its "remain in Mexico" program, which forces non-Mexican asylum seekers to wait in Mexico pending the outcome of their court cases. The parties agreed to evaluate the success of the counter-migration measures after 90 days — a deadline that arrives Sept. 5. The number of migrants arrested at the U.S.-Mexico border has fallen in recent months and officials have attributed the drop to the June agreement.

 

The Trump administration also announced a deal with Guatemala in late July that would allow the U.S. to send non-Guatemalan migrants to that country if they passed through it during their journey. Acting Homeland Security Secretary Kevin McAleenan has said the agreement must clear several procedural hurdles before taking effect.

 

There could be an agreement on the horizon with Panama, too. The Washington Post reported Aug. 21 that the Trump administration was trying to broker a deal that would require that country to accept "extra-continental" asylum seekers from Asia, African and other countries. — Ted Hesson

FINANCIAL SERVICES

Housing finance overhaul: Treasury will release a highly anticipated plan to overhaul the housing finance system this month. Trump in March directed Treasury to come up with a plan to end a decade of government control of Fannie Mae and Freddie Mac , the companies behind about half of the nation's mortgages. Mark Calabria, the federal regulator who oversees Fannie and Freddie, said he expects to engage with Treasury on the way the companies will operate in the future once the report is unveiled.

 

Rewriting the rulebook: On the regulatory front, the Fed is poised to complete a major overhaul of the rulebook for large U.S. regional lenders, in line with last year's bank deregulation law, as well as one for foreign banks that would keep their requirements roughly on par with their domestic counterparts.

 

House hearings: The House Financial Services Committee will hold a slew of hearings this month, delving into student loan servicers on Sept. 10, oversight of the SEC on Sept. 24 and legislation on debt-collection practices on Sept. 26. Chairwoman Maxine Waters (D-Calif.) has also pledged to step up oversight of Facebook's plans to develop a new cryptocurrency, Libra, after meeting in August with Swiss authorities. Meanwhile, the Senate Banking Committee has scheduled a hearing for Sept. 3 on human trafficking and the financial system.

 

Key confirmations coming: The Senate will vote when it returns to confirm Thomas Feddo to a new Treasury Department post responsible for policing foreign investment and to extend the tenure of Fed Gov. Michelle Bowman. — Mark McQuillan

DATAPOINT

AI in the USA: The Center for Data Innovation analyzed and compared how the United States, the European Union and China are becoming the main competitors of global leadership in artificial intelligence technology. Although the EU leads in the number of AI research talent, the U.S. has the most AI start-ups and research and development companies, according to a new report by the nonprofit, non-partisan think tank. — Cristina Rivero

TECHNOLOGY

Eye on tech: Lawmakers are poised to continue scrutinizing the tech industry when they return to Washington next week. Silicon Valley is drawing fire from the left and right alike over a raft of issues including user privacy, online hate speech, election meddling and claims of anti-conservative bias. Capitol Hill's highest-profile venue for airing grievances this month may be an antitrust oversight hearing the Senate Judiciary Committee set for Sept. 17. Slated to testify are Justice Department antitrust chief Makan Delrahim and FTC Chairman Joe Simons, who are both heading up competition probes into tech giants. They will field questions from some of the same Senate Judiciary members who have convened their own task force dedicated to investigating concerns raised by the industry.

 

That Senate probe is met by a similar effort in the House, where Energy and Commerce antitrust subcommittee chair David Cicilline (D-R.I.) is heading up an investigation into tech competition. Separately this month, the House Homeland Security Committee will depose 8chan owner Jim Watkins behind closed doors . Racist and violent content have flourished on his site, which in recent months has hosted multiple screeds believed to be authored by mass shooters. The committee has said it plans to consider legislation to address how social media companies — including not just fringe sites like 8chan but also giants like Facebook and Twitter — handle terrorism-linked content. — Kyle Daly

EDUCATION

Congress eyes higher education bills: Bipartisan negotiations in the Senate over a sweeping revamp of federal higher education policy stalled over the summer. But as Congress returns from its August recess, all eyes will be on Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) to see if they agree to take up narrower higher education bills rather than a comprehensive rewrite of the law.

 

House Democrats, meanwhile, are expected this fall to unveil their proposal to reauthorize the Higher Education Act. House Education Chairman Bobby Scott (D-Ill.) has said he's not interested in striking a "narrow compromise" with Republicans and instead wants a sweeping overhaul of federal policy.

 

DeVos deregulatory push continues: At the Education Department, regulation-writers are up against a Nov. 1 deadline to publish a slew of higher education rules so that they can take effect next summer (rather than after the 2020 presidential election). The Trump administration kicked things off with its overhaul of regulations governing student loan forgiveness for defrauded borrowers and mandatory arbitration agreements used by colleges, which were announced Friday. Education Secretary Betsy DeVos is also looking to finalize in the coming months proposals that would ease federal requirements on college accreditors, expand protections for religious schools, and boost federal aid to competency-based education programs. — Michael Stratford

HEALTH CARE

Regulators grapple with vaping: At least 193 potential cases of lung disease in teenagers and young adults are forcing federal agencies to grapple with a vast, nearly unregulated market of nicotine- and marijuana-based vaping products.

 

Leading scientists and public health experts, including former FDA commissioners, want the CDC and FDA to step in, while congressional leaders want FDA to issue regulations to halt a growing youth vaping epidemic that has already seen one death reported.

 

State health officials, who are conducting their own investigations, are scrambling to step into the vacuum of federal regulatory limbo on e-cigarettes and marijuana products. Wisconsin and Illinois jointly developed investigative tools that other states are using while officials work toward developing a national system with the CDC. And CDC is in early-stage discussions about releasing a national alert, two state officials said. — Sarah Owermohle, Brianna Ehley, Rachel Roubein

DEFENSE

Filing out the top ranks: The Senate is set to resume its efforts to fill top Pentagon vacancies. The president's nominee to be vice chairman of the Joint Chiefs, Air Force Gen. John Hyten, awaits a final confirmation vote amid allegations by a former subordinate of sexual assault. And permanent picks for Army secretary, the Pentagon's chief management officer and chief information officer also await Senate confirmation. — Connor O'Brien

CYBERSECURITY

Rise of ransomware: The Department of Homeland Security is worried that a ransomware attack could harm voter registration databases ahead of the 2020 election. Cybersecurity and Infrastructure Security Agency Director Chris Krebs said the department is collaborating with election officials and the private sector to protect the databases, and a DHS official said in late August the program is expected to roll out in the next month.

 

Krebs also said DHS is working on an approach to address the ransomware spree facing local governments across the country. More than 70 state and local governments have suffered ransomware attacks in 2019, according to a recent report from the firm Barracuda. And businesses are also under attack: The number of ransomware attacks on businesses jumped 365 percent between the second quarter of 2018 and 2019, according to a recent report by the security firm Malwarebytes. — Tim Starks and Eric Geller

TRANSPORTATION

Moment of truth on surface bill: With the August congressional recess coming to a close, Senate Environment and Public Works Chairman John Barrasso (R-Wyo).'s promise to bring his surface transportation bill to the Senate floor this year will be put to the test. Just before the August recess, Barrasso sounded positive notes about Senate Majority Leader Mitch McConnell's willingness to carve out floor time for the bill. But with the fiscal year expiring at the end of September, that goal may end up slipping.

 

The House has yet to introduce a draft, but the current law doesn't expire until September 2020. — Kathryn A. Wolfe

CANADA

Election watch: The Canadian federal election kicks off by the middle of the month with Liberal Prime Minister Justin Trudeau fighting to stave off both a Conservative opposition seizing on scandals and left-wing parties seeking to pull away votes. Trudeau continues to face questionsover his handling of the legal case surrounding SNC-Lavalin, a major engineering firm that employs thousands of Canadians and has been accused of bribing Libyan officials.

 

The campaign period will run only five to six weeks before the Oct. 21 election date, and the Trudeau government's carbon pricing plan is expected to dominate debate. Conservatives are already attacking the prime minister, saying his policy would raise prices on consumers even though most of the tax is rebated back to them. More liberal politicians argue it isn't enough for Canada to do its part to combat climate change. The cost of living and health care policies are also expected to be major campaign issues. — Lauren Gardner

Share on Facebook
Share on Twitter
Please reload

Featured Posts