September 5, 2017 - Weekly Legislative Update

What's Coming This Week 

Both the House and Senate will return to work today with some very big issues on their plates.  

As we've previously reported, Congress needs to take action to pass either a 2018 budget or a short term continuing resolution by September 30 in order to keep the government funded and avoid a shutdown.  Additionally, in July, Treasury Secretary Steven Mnuchin advised Congress that it will need to raise the debt ceiling by September 29 or risk an unprecedented and catastrophic default on U.S. debt. 

Congressional leaders spent much of their August recess strategizing how to handle these issues as well as how to move forward on the tax reform package that the Republicans are hoping to pass (or at least move substantially forward on) this fall. What they could not have predicted, however, was the unprecedented scale and destruction caused by Hurricane Harvey which we now expect to have a significant impact on the dynamics on the Hill this fall.

With aid reserves quickly being depleted by the Harvey relief effort, the Administration is expected to call for an emergency multi-billion dollar relief package that would be voted on by the House and Senate early next week.  Moreover, Secretary Mnuchin has indicated that the cost of the Harvey response could push up the deadline to raise the debt ceiling.

In light of how much needs to be accomplished, and fast, there is now a good chance that Congress will try to address (or at very least delay) its most pressing issues in one fell swoop.  Specifically, the idea here would be for Congress to pass Harvey relief, the debt ceiling increase and a continuing resolution (CR) to fund the government through December or January together as a single bill.  This approach would allow Congress to address the big economic concerns being caused by Harvey and the debt ceiling, and to delay the fights over the 2018 budget until the end of this year or the beginning of next year, with the hope of accomplishing tax reform in the interim.  Importantly for Republican leaders trying to determine how to handle the President's threat to allow a government shutdown if Congress doesn't fund the Mexican border wall, having the CR arrive on the President's desk hand in hand with the Harvey relief will make it almost impossible to veto - thereby delaying a potential showdown on this issue.  To drive this home, reports are just coming out today that the White House has signaled to Congressional leaders that the President would be prepared to sign a CR that doesn't include funding for the border wall.

As always, the devil is in the details, and the ability of Congress to pass a combined Harvy-debt-CR package, will depend on whether any members to attach additional items to the package - which could make it controversial (now that he is requesting aid for his own state, Senator Ted Cruz (R-TX) has been defending his is vote against the Hurricane Sandy relief bill a few years ago by arguing that he couldn't vote for it because it included too much unnecessary pork).

Even if the combined package is able to pass, the amount that the government will be spending on Harvey recovery may make it even harder for Republican leaders to sell the deficit hawks in their ranks on tax reform that isn't deficit neutral.  Having walked away from the original idea of the border adjustment tax (BAT), this amps up the pressure on the Republican leadership to come up with other revenue raisers to partially or fully pay for the proposed tax reform package.  Although key members, like Senate Majority Leader Mitch McConnell (R-KY) have continued to state that the aim is for tax reform to be deficit neutral, it remains anyone's guess how they might find a way to make this possible without losing too many constituents in the process (e.g., if they eliminate or limit the mortgage deduction, they could likely end up with the real estate industry as opponents). 


What We've Been Up To

TIA is in the process of drafting comments in response to the Department of Labor's Request for Information regarding the overtime exemptions to the federal Fair Labor Standards Act.  The comments on the RFI will be submitted on September 25, 2017 and we encourage members to share with us any comments they have prepared or thoughts that they have on the overtime rules.