After week-long recess, the House and Senate are back in session for three weeks before the August recess. The House and Senate are racing to complete year-end spending bills, infrastructure proposals, new trade deals, drug pricing reforms, surprise medical billing legislation, defense authorization and more. Bipartisan agreement was forged on the $19.1 billion disaster-aid bill passed by the Senate just before the July recess after being stalled in the House three times by a few Republican conservatives balking at the high cost of the legislation and objecting to the lack of a separate emergency spending request for President Trump’s border wall. Meanwhile Speaker Pelosi (D-CA), Majority Leader McConnell (R-KY), Appropriations Chairs and the White House have also been working on a new budget caps deal. Despite the House passing minibus legislation for most of the appropriations bills, the Senate refuses to introduce any FY2020 appropriations measures without setting these caps. Both Pelosi and Majority Leader McConnell (R-KY) aim to avoid last year’s record 35-day government shutdown. Treasury Secretary Mnuchin is meeting with congressional leaders this week and urging Congress to raise the debt ceiling before the House leaves for a six-week recess on July 26. All appear to agree that something needs to be done, but the devil is in the details, including the timing of when to act. Pelosi wants to attach a two-year budget deal that raises the caps to avoid a $126 billion cut in funding in FY2020 to the debt ceiling extension legislation, but the White House and Senate Republicans oppose this tactic. The White House has indicated it aims to keep spending levels for next fiscal year at current levels. G2G is tracking the negotiations.
House Seeks to Rein in Transit Administration on Funding Delays
House lawmakers want to keep the pressure on the Federal Transit Administration to move project money out the door with the transportation spending bill and an oversight hearing in July, providing potential clues for what they’ll want in a surface transportation policy re-write.
The Capital Investment Grant (CIG) program funds rail and bus rapid transit projects, but the administration sought to cut all transit grants in its 2018 and 2019 budget proposals except for those with full funding already in place. Congress rebuffed the cuts—not only funding the grants, but also including language in Transportation-HUD spending bills requiring money be spent within a particular time frame. The House THUD fiscal 2020 bill (H.R. 3055), offers similar language with a new twist: If appropriated transit grant funds aren’t obligated to new projects by Dec. 31, 2021, the Transportation Department would have to redistribute that money to projects already in the engineering phase. The department couldn’t ignore the deadline without consequence. The House Transportation and Infrastructure Committee will convene a CIG hearing July 16, according to a transit lobbyist and several advocacy organizations familiar with the planning.
Possible Gas-Tax Hike
The Trump administration hasn’t ruled out increasing the gas tax to help finance a $2 trillion infrastructure plan, but the idea has little support among many wary of the 2020 election. A near doubling of fuel levies wouldn’t cover the additional cost over a decade of the infrastructure package, according to an internal administration document. Officials intend to pressure Democrats to come up with funding mechanisms that don’t risk undermining growth, according to a 6-page OMB draft. The infrastructure plan the administration released last year was rejected by Democrats and others because it proposed only $200 billion in federal funds over 10 years, mostly in incentives to encourage spending by non-federal entities to reach a promised $1.5 trillion in investment. President Trump and Democrats are at a standoff over plans to restore and revamp the nation’s roads and bridges, stymied by the question of how to pay for it. One idea floated by Democrats and Trump himself months ago is to increase the 18.4-cents-a-gallon gasoline tax, which has remained unchanged since 1993. Besides changes to the fuel surcharge, Trump officials are also considering requiring states and localities to put up some of their own money to win grants for financing. The administration is also weighing a 13-year re-authorization of the federal surface transportation bill that expires in September 2020.
The House has passed 10 of its 12 spending measures for FY2020, while the Senate is waiting for a budget caps deal before introducing its bills. On June 25 the House passed its second minibus package (H.R. 3055), which includes Agriculture-FDA, Commerce-Justice-Science, Interior-Environment, Military Construction-VA, and Transportation-HUD. It passed the Financial Service-General Government bill (H.R. 3351) separately on June 26. The two outstanding bills in the House are Homeland Security and Legislative Branch, which was dropped from the first minibus package amid criticism over member pay increases.
Appropriations, Budget Caps and Debt Ceiling Extension
Negotiations between the White House and congressional leaders to raise the budget caps and lift the federal debt limit continue to inch along. However, Speaker Pelosi (D-CA) spoke with Treasury Secretary Steven Mnuchin this week, reporting it was positive. Senate Finance Chairman Shelby (R-AL) has previously said that if a budget caps deal isn’t reached by July 1, he wants the Senate to deem its own set of stand-in numbers so appropriators can mark up their bills, but McConnell wants a deal first. Government funding runs out on September 30 and without new spending bills or a stopgap measure, the government would shut down October 1.
The Senate GOP recently behind closed doors added a permanent ban on earmarked spending to their conference rules even though House Democrats and Republicans had begun discussions on how to return to earmarking bills. A moratorium on earmarks from 2011 expired in January. House Appropriations Chairwoman Nita Lowey (D-NY) said in March that earmarks wouldn't return this year, but left the door open for the future, saying when applicable, they can change rules to permit members to request earmarks.
The health committees were busy right before the July recess. On June 26, the Senate Health, Education, Labor and Pensions Committee marked up three bills: S. 1199, the Poison Center Network Enhancement Act; S. 1173, the Emergency Medical Services for Children Program Reauthorization Act; and S.1895, a measure from HELP Chairman Lamar Alexander (R-Tenn.) and ranking member Patty Murray (D-Wash.) to lower health care costs. Meanwhile in the House also on June 26, the Ways and Means Committee marked up five bills: H.R. 3417, The Beneficiary Education Tools, Telehealth, and Extenders Reauthorization Act; H.R. 3429, The HEARTS and Rural Relief Act; the Improving Chronic Care Management Act; H.R. 3414, The Opioid Workforce Act; and the Protecting Access to Information for Effective and Necessary Treatment (PATIENTS) Act.
Even the Judiciary Committee has been working on health issues. On June 27, the Senate Judiciary Committee marked up four bills: S. 1227 to require the Federal Trade Commission to study the role of intermediaries in the pharmaceutical supply chain and provide Congress with appropriate policy recommendations; S. 440 to prevent a patent owner from asserting sovereign immunity as a defense in certain actions before the U.S. Patent and Trademark Office; S. 1224 to enable the FTC to deter the filing of “sham” citizen petitions as an attempt to interfere with approval of a competing generic drug or biosimilar and facilitate the review of petitions filed to raise legitimate public health concerns; and S. 1416 to prohibit anticompetitive behaviors by drug product manufacturers.
Senate HELP Chairman Lamar Alexander (R-TN) led passage of the Lower Health Care Costs Act right before the July recess. It included Senator Tammy Baldwin’s (D-WI) bipartisan FAIR Drug Pricing Act that would require drugmakers to notify HHS of price hikes above 10 percent and justify the increases while disclosing R&D costs. A similar bipartisan bill is in the House, the SPIKE Act or H.R. 2069, which has raised Republican concerns. SPIKE isn’t quite the same as FAIR – it would require manufacturers to justify price increases that are 10 percent or $10,000 over one year, 25 percent or $25,000 over three years, or products launched at a price of $26,000 or more. While it breezed through the House Ways & Means Committee in April, SPIKE later hit a snag with Energy and Commerce Republicans who argued that the launch price benchmark in particular could deal a blow to small biotechs and medicines for rare diseases (which often are pricier than others).
Also, the Senate Finance Committee is considering several changes to Medicare, including ending the financial incentives doctors receive for administering pricier drugs under Medicare Part B and capping the out-of-pocket costs for people covered under Medicare Part D, the public health insurance program’s prescription drug benefit. Chairman Chuck Grassley (R-IA) and Senators Bill Cassidy (R-LA) and Tim Scott (R-SC) want to help states finance expensive gene therapies by permitting them to pay for them over years and creating certain quality metrics for the medicines. Capping costs for the elderly in Medicare Part D is also proving tricky as lawmakers debate who should foot the bill for billions of dollars in annual drug costs: whether to split it evenly between the government, insurers and drugmakers, or have one of those parties take on the lion’s share. If drugmakers were asked to cover half the costs of a cap—putting more than $13 billion of new costs onto the pharmaceutical industry in the first year alone and more than $200 billion in costs over 10 years—then the government and Medicare beneficiaries could save more than $200 billion over 10 years, according to a recent study.
FDA Policing the Drug Supply
Lawmakers from both parties are seeking more information about regulators’ capacity to protect the U.S. drug supply, as foreign-made generic blood-pressure pills tainted with probable carcinogens continue to be recalled. House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) and Rep. Greg Walden (R-OR) want details on the FDA’s ability to adequately inspect foreign and domestic pharmaceutical manufacturing facilities. The lawmakers are seeking specific information regarding a recall of the drug valsartan that was manufactured by Chinese firm Zhejiang Huahai Pharmaceutical Co. Ltd. They also want more details about a dispute between senior FDA staff and an inspector who visited one of the company’s plants where medication contaminated with the probable human carcinogen NDMA was first detected. The FDA began a recall of valsartan made by Zhejiang Huahai in July 2018. The company’s contaminated valsartan was sold to major drugmakers and used as an ingredient in a number of popular cardiovascular therapies. Since then, the FDA has found that other pharmaceutical companies, including Mylan NV and India’s Hetero Labs Ltd., made and sold contaminated blood-pressure drugs. The recalls have sparked a wave of lawsuits.
Medicaid Block Grants
Placing spending limits on Medicaid is illegal, a top committee Democrat said in a letter to HHS Secretary Alex Azar demanding clarity on the Trump administration’s plans. The June 27 letter from House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) comes after reports the administration might approve waivers letting some states receive their federal Medicaid money in block grants. That would place a limit on the federal money states can deploy for the low-income health-care program and give states more autonomy to determine eligibility. Medicaid has traditionally operated with an open-ended funding system, where the federal government matches different percentages of what states pay. These percentages are based off state income levels, and there is no limit on how much the federal government will match.
Opioid Crisis Fuels Medicaid Pilots
Two more states received permission from the Trump administration to use Medicaid money to fight mental and physical health problems associated with the opioid crisis. Almost half of the states have been approved for special waivers that provide federal Medicaid matching funds for new or experimental substance abuse programs, including outreach of treatment in different types of facilities. Minnesota and Nebraska are the 23rd and 24th states to be given the go-ahead from the Centers for Medicare and Medicaid Services.
The House Appropriations Committee passed the Labor-HHS bill that totals $189.9 billion on May 8, which contrasts the 12% cut proposed in President Trump’s FY2020 budget. The bill provides $99 billion for the Department of Health and Human Services (HHS) and includes significant funding increases since FY2019, i.e. NCI’s funding is increased from $5.7 billion to $6.2 billion and NCATS’ funding is increased from $806 million to $845 million. It also launches a new multi-year public health surveillance initiative and funds cybersecurity efforts. However, it cuts CMS by $3 billion from $276 billion to $273 billion in FY2020. Chairwoman DeLauro (D-CT) said she was able to accommodate 90% of the requests made by members in crafting the bill and accompanying report. G2G wrote up a summary and distributed it a few weeks, which is available here. The bill will go to the floor in June and the Senate is finalizing their version now and is expected to introduce it in June and conference negotiations should occur August-September. Details include:
• $99.4 billion for the HHS, $8.88 billion more than fiscal 2019 and $21.3 billion more than requested.
• $75.9 billion for the Education Department, $4.48 billion more than fiscal 2019 and $11.9 billion more than requested.
• $13.3 billion for the Labor Department, $1.2 billion more than fiscal 2019 and $2.4 billion more than requested.
HHS funding would include the following for various programs:
• $11.6 billion for Head Start, a $1.5 billion increase from fiscal 2019.
• $7.68 billion for the Child Care and Development Block Grant, a $2.4 billion increase.
• $5.68 billion for community health centers, which would include a $50 million increase in discretionary funding.
• $3.84 billion for substance abuse treatment, including $1.5 billion for State Opioid Response grants, at SAMHSA; at least $500 million for the NIH’s Helping to End Addiction Long-Term Initiative; and $475.6 million for CDC Opioid Overdose Prevention and Surveillance.
• $3.01 billion for the Public Health and Social Services Emergency Fund, a $377 million increase.
• $2.44 billion for the Ryan White HIV/AIDS program, a $116.4 million increase.
• $2.39 billion for Alzheimer’s disease research, $500 million for a precision medicine initiative, $411 million for the BRAIN Initiative, and $195 million for the Cancer Moonshot Initiative at the NIH.
Drug Samples for Generic Development
Recently, two House committees approved H.R. 965, the CREATES Act, which would allow generic-drug developers to sue brand-name drug makers for not selling them samples needed for testing during the FDA approval process. It also would give the FDA more flexibility to allow generic companies to use separate safety protocols than those in place for the branded drug. The generic drug maker would have to prove that the branded drug maker hasn’t delivered sufficient quantities generally within 31 days of a request. Generic drug makers could request FDA authorization to obtain a sample of a branded drug that’s subject to an FDA safety protocol, called a risk evaluation and mitigation strategy (REMS) with “elements to assure safe use” (ETASU). Some drug companies have withheld samples from generic drug makers due to being subject to such protocols. The measure would also create an affirmative defense if the branded drug company offered to sell sufficient quantities of the product on reasonable terms and the generic developer didn’t accept the offer in a specified time frame. Products not subject to a safety protocol would have to be offered within 14 days of receiving a request and accepted within 7 days. Those subject to safety protocols would have to be offered within 20 days and accepted within 10 days. The Congressional Budget Office estimated the bill would reduce the federal deficit by $3.9 billion from fiscal 2019 through 2029 by allowing earlier entry of lower-priced generic drugs, which would reduce federal spending on prescription drugs and subsidies for health insurance.
House Panel Releases Surprise Medical Bill Plan
Following the Senate HELP Committee, the House Energy and Commerce Committee recently released a bipartisan plan to protect patients from receiving pricey and unexpected medical bills, offering the first fleshed-out blueprint in the chamber to address the high-profile issue. The bill would bar providers from billing patients for the unpaid balance of bills for emergency services. Patients would pay as if the hospital used was in their health plan's network. It would also require patients be notified and give their consent before scheduled care is delivered by an out-of-network provider. Patients not told in advance would be protected from hefty bills. States would still be able to set their own payment standards for health plans they regulate. The draft bill also would provide $50 million in grants for states to create all-payer claims databases.
Pharmacists are a step closer to seamlessly switching between a biologic drug and a cheaper alternative called a biosimilar thanks to the final industry advice for drug makers the FDA released recently. Biologic drugs are some of the most expensive products on the market due to manufacturing complexity, as they’re made from living cells, and treat serious conditions like cancer. So far, there are no biosimilars available in the U.S. that are considered interchangeable. But this FDA advice could help change that and consequently could increase biosimilar utilization.
Reps. Diana DeGette (D-CO) and Tom Reed (R-NY) introduced H.R. 2668, Special Diabetes Program Reauthorization Act to continue funding a key federal diabetes research program for an additional five years and increase its annual funding from $150 million to $200 million a year. The Special Diabetes Program for Type 1 Diabetes is a decades-old federal program that’s currently providing researchers at the NIH $150 million a year to study Type 1 diabetes. Significant debate has ensued on the cost of insulin within health committees of jurisdiction over the past couple of months and furthering research on diabetes remains a bipartisan priority.
The Second Look at Drug Patents Act, which was just introduced by John Cornyn (R-TX) and Patty Murray (D-WA), would require the U.S. Patent and Trademark Office to initiate a process to reexamine the validity of patents over 30 days before they are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”) because some manufacturers use “patent evergreening” by applying for follow-on patents for disingenuous “improvements” to their original drugs to extend their period of market exclusivity. Once listed in the Orange Book it has the legal effect of blocking generic entry. The Act would require all new patents be submitted to the Official Gazette of the Patent and Trademark Office (“Gazette”) within 30 days of approval, which enables soliciting additional information about the strength of those patents and invite patent challenges. Then any patent included in the Gazette would be listed in the Orange Book on a provisional basis unless the Patent Trial Appeal Board confirms the patent to be patentable or if the patent is not challenged within a specific timeframe. The Second Look at Drug Patents Act would provide a way to prevent disingenuous “improvements” that are insubstantial, e.g. mere dosage changes to help bring generic drugs to market in a timelier fashion.
House NDAA Update
The defense authorization bill (H.R. 2500) approved by the House Armed Services Committee, would authorize $727.6 billion in discretionary spending, an almost $3 billion increase from the panel’s own calculations, according to the Congressional Budget Office. The CBO released the score for the must-pass measure with the House set to vote on it this week. More than 600 amendments were filed to that bill. The report accompanying the defense authorization bill states that the measure is “consistent with the overall national defense spending level of $733 billion projected in the fiscal 2019 Future Years Defense Program, and therefore would authorize approximately $724.9 billion in discretionary spending for the national defense programs within the committee’s jurisdiction, including approximately $69.0 billion of Overseas Contingency Operations funding.” The CBO is basing its estimate on the assumption that the bill would be enacted near the start of FY2020. H.R. 2500 would specifically authorize $727.6 billion for 2020; of that amount, $726.9 billion would be for defense programs, and $0.7 billion would be for nondefense programs. The Pentagon would be allowed to buy 90 F-35s and eight upgraded F-15 EX fighter aircraft under the $733 billion authorization bill approved by the House Armed Services Committee earlier this month. The Pentagon would be authorized to spend $633 billion in regular funds and another $69 billion in Overseas Contingency Operations money under the measure. The Energy Department would be allowed to spend $22.7 billion. The measure would also permit a 3.1% pay raise for troops.
Senate Defense Bill Passes
The Senate passed its $750 billion defense authorization measure that would boost Lockheed Martin F-35 Joint Strike Fighters and Boeing F-15 EXs, while delaying efforts to rein in President Donald Trump’s war powers amid rising tensions with Iran. The bill passed 86-8.
Senate Democrats have considered the must-pass annual defense authorization bill (S. 1790) an opportunity to resolve a long-standing fight over whether Trump and other presidents abused their power in taking the country into war. Democrats will be able to vote today on an amendment sponsored by Democratic Sens. Tom Udall (D-NM) and Tim Kaine (D-VA) that would block funds for military action against Iran without explicit authorization from Congress. The bill would allow $642.5 billion for the Defense Department’s regular budget, and $75.9 billion in war funds. The measure authorizes $23.2 billion for national security programs within the Energy Department. It also counts $8.4 billion in other defense-related activities to reach the total of $750 billion. The Trump administration requested almost $174 billion in war funds not subject to the annual cap on defense spending. The Senate measure instead would move a $97.9 billion authorization into the Pentagon’s regular budget. The bill would also authorize a 3.1% pay increase for troops. It also would offer Trump and the Pentagon a win on their efforts to build barriers along the U.S.-Mexico border by authorizing $3.6 bilion that could replace money pulled from the military’s construction budget to pay for the work.
The Pentagon would see 94 Lockheed Martin F-35 Joint Strike Fighters, a boost of 16 planes above the Pentagon request. The panel would also authorize $948 million for eight upgraded Boeing F-15 EX aircraft.
DoD Plans to Cut 18,000 Uniformed Health Positions
The Defense Department’s 2020 budget proposes the Defense Health Program reduce nearly 18,000 personnel — a 22 percent decrease compared to the size of the active duty medical force in 2019. Senior officials indicated the department intends to convert a large number of military medical billets to civilian ones so that it can redirect uniformed manpower toward more direct warfighting functions. But there are no corresponding increases for civilian staff in the 2020 budget. In fact, their numbers would shrink slightly as well. Although DoD has determined it needs the military manpower for other operational and modernization priorities, it hasn’t yet determined how it will replace the medical care that’s no longer being delivered by those military members. Defense officials say around 2,000 of their currently-authorized medical billets are already vacant. The military services plan to move the remaining roughly 16,000 into other non-medical areas over the next three-to-four years, mostly through attrition.
Opening DOD to Venture Capitalism
Long kept out of one of the Pentagon’s coveted innovation programs, small companies financed through venture capital investments would have a way to sell their technology to the military under legislation (H.R. 3014, the Small Business Act to Improve Innovation in Defense Procurement) proposed by Rep. Mac Thornberry (R-TX), Ranking on the House Services Committee. The proposal expected to be offered as an amendment to the House NDAA that is being marked up next week would create a pilot program to allow innovative companies to be eligible for the Small Business Innovation Research (SBIR) Program. In 2003, the courts ruled that companies with more than 50% venture capital ownership were ineligible for grants given under that program, effectively shutting them out of the DoD. With Congress’ help there’s a waiver that allows companies owned by domestic investors to participate but the Pentagon has never used it, essentially turning away innovative businesses with promising military and commercial technologies. Thornberry’s proposal would also increase the Pentagon’s engagement with commercial tech companies and allow for new technologies to come out of universities and defense laboratories and introduce small businesses to cybersecurity practices early on in the process. Separately, Thornberry will seek to ensure that the Pentagon enforces reforms that Congress has enacted—63 of those were authored by Thornberry when he was Chairman. He is also proposing to withhold funding if the Pentagon doesn’t make progress on key provisions, including development of a policy for defense business systems, establishment of an intellectual property policy, and the overhauling the Fourth Estate -- the moniker for defense support agencies and implementing policies for rapid prototyping and rapid fielding of weapons.
Storm Damage Impacting Military Bases
Heather Wilson, the outgoing Air Force secretary, thinks the Defense Department desperately needs Congress to quickly bankroll recovery from recent storm damage at military bases, which officials say will cost nearly $10 billion to fix. The pending $19.1 billion disaster aid supplemental bill that can aid Tyndall Air Force Base in Florida, Camp Lejeune in North Carolina and Offutt Air Force Base in Nebraska. The military services have already shifted scores of millions of dollars from other projects to address the most pressing disaster damage. Without getting at least some of the rest of the money soon, more construction, training and other activities will have to be curtailed, officials have argued. Secretary Wilson also said that readiness rates for F-22 Raptor fighter jets have been adversely affected by the Tyndall damage.
Barrett Nominated for Air Force Secretary
President Trump recently nominated an aerospace executive and former ambassador to Finland to be the next secretary of the Air Force. Barbara Barrett, 68, of Arizona, served as ambassador to Finland in 2008 during President George W. Bush's administration. She also previously served as deputy administrator of the Federal Aviation Administration and was vice chairman of the U.S. Civil Aeronautics Board. She was previously picked for this position in 2003 by President Bush but never officially considered since the AF secretary John Roche, who was to become Army secretary, had his nomination blocked in the Senate and remained at AF. Barrett, an attorney, serves on a number of boards, including for RAND Corporation, the Smithsonian Institution and the California Institute of Technology, and she's held a number of senior executive positions for Fortune 500 companies.
President Trump’s budget request for FY2020 includes approximately $134.1 billion for research and development, according to a new definition. In FY2018, the Office of Management and Budget (OMB) adopted a change to the definition of development, applying a narrower definition of “experimental development.” This change was intended to harmonize the reporting of U.S. R&D funding data with the approach used by other nations. Under the new definition of R&D (applied to both FY2018 and FY2020 figures), President Trump is requesting approximately $134.1 billion for R&D for FY2020, a decrease of $1.7 billion (1.2%) from the FY2018 level. Adjusted for inflation, the President’s FY2020 R&D request represents a decrease of 5.1% below the FY2018 level. In FY2018, eight federal agencies received 96.3% of total federal R&D funding, with the Department of Defense (DOD, 38.6%) and the Department of Health and Human Services (HHS, 27.2%) combined accounting for nearly two-thirds of all federal R&D funding. The same eight agencies account for 97.2% of the FY2020 request, with DOD accounting for 44.3% and HHS for 25.1%
STEM Opportunities Act
Recently, House Science Committee Chair Eddie Bernice Johnson (D-TX) reintroduced H.R. 2528, STEM Opportunities Act, a bill she has championed during the past three Congresses that seeks to increase the participation of underrepresented groups in STEM fields. Notably, this is the first time she has introduced the bill with Democrats in control of the House, and it is also the first time the bill has found a Republican cosponsor, Science Committee Ranking Member Frank Lucas (R-OK). The legislation would expand collection of demographic data on federal research grant applicants and promote the identification and dissemination of best practices for increasing diversity in STEM. It also emphasizes the National Science Foundation’s (NSF) role in supporting research and initiatives related to broadening participation.
The bill also instructs NSF to support research that uses the data and to back efforts to improve undergraduate STEM education and increase the diversity of faculty, including directing NSF to target grants toward computer science education within its Tribal Colleges and Universities Program. The agency is currently focusing its efforts on diversity through its INCLUDES program. To promote the use of best practices across STEM diversity efforts, the bill includes a number of directions for the White House Office of Science and Technology Policy:
• Collecting and disseminating guidance to universities and federal laboratories on addressing cultural and institutional barriers to recruiting, retaining, and advancing members of underrepresented groups in STEM positions.
• Requiring OSTP to issue guidance to agencies on providing flexibility to grantees who take on caregiver roles, such as for a newborn child or sick family member.
• Requiring agencies to implement recommendations from a 2016 report by OSTP and the Office of Personnel Management on reducing bias in grant application reviews, hiring procedures, and workforce policies.
National Artificial Intelligence Strategy
Senators unveiled a bipartisan bill recently that would create a centralized office overseeing a national artificial intelligence strategy and authorize $2.2 billion in research and development. Senators Martin Heinrich (D-NM), Rob Portman (R-OH), and Brian Schatz (D-HI) introduced the S. 1558, Artificial Intelligence Initiative Act to create a national interagency committee to develop a 10-year plan for the public and private sectors. The intention of the bill is to ensure the U.S. remains ahead in the global race to develop artificial intelligence technologies. The bill would authorize $2.2 billion from fiscal 2020 to 2024 for A.I. research, including $1.5 billion for the Energy Department, $500 million for the National Science Foundation and $200 million for the National Institute of Standards and Technology. Funding would be appropriated through separate legislation. The bill would also establish an artificial intelligence office that would coordinate research and development across federal agencies, to ensure consistency and reduce duplicity.
NSF Materials Research Decadal Survey
The latest National Academies decadal survey for materials research expressed a strong concern with the status of materials research at universities, where it observes equipment and facilities are inadequate. The survey broadly recommends federal agencies develop a “national strategy to ensure that university research groups and national laboratories have local access to develop, and continuing support for use of, state-of-the-art midscale instruments and laboratory infrastructure essential for the advancement of materials research.” As examples of the nation’s materials research infrastructure, the survey identifies materials growth and synthesis facilities, helium liquefiers and recovery systems, cryogen-free cooling systems, and advanced measurement instruments, as well as large facilities such as the light source user facilities at national laboratories. Linda Sapochak, the director of the National Science Foundation’s Division of Materials Research (DMR), was critical of the survey as she had expected it to offer a stronger sense of what research areas merit more attention. NSF and the Department of Energy initiated the survey in 2016, and this is the third
Democrats’ Tax Credit and Extender Package
House Democrats are advancing their first substantial tax package since taking control of the House. At a June 20 markup, the Ways and Means Committee approved bills to aid lower-income workers, repeal an unpopular provision in the 2017 tax overhaul, renew expired tax breaks, and provide relief to disaster victims.
The measures omit a corporate income tax rate increase Democrats have considered. The 2017 tax law (Public Law 115-97) set the rate at 21%. The package’s price tag tops $100 billion, but Ways and Means Chairman Richard Neal (D-MA) said he’s committed to finding more offsets.
Worker and Family Benefits
H.R. 3300 from Chairman Neal would expand the earned income, child, and child and dependent care tax credits, and direct payments for them to U.S. territories.
The measure would make several changes to the earned income tax credit. It would:
• Lower the minimum age to claim the credit for childless individuals to 19, instead of 25, and raise the limit to age 66, instead of 65. The maximum childless credit would be $1,464, instead of $529, according to a summary from House Ways and Means Committee Democrats. Changes would be in effect for 2019 and 2020.
• Allow individuals with children who don’t have the identification required by the credit, such as a valid Social Security number, to claim the childless credit.
• Treat individuals who are married but separated as unmarried when claiming the credit. Individuals couldn’t file joint returns and would have to meet other requirements.
• Modify the treatment of investment income when determining credit eligibility.
• Make payments to U.S. territories for a portion of the cost of their earned income tax credits.
The measure would make the full amount of the child tax credit —as much as $2,000 per child — refundable for 2019 and 2020. Currently as much as $1,400, indexed for inflation, is refundable, meaning it can be claimed on a return even if it exceeds tax liability. Refundability wouldn’t be based on the current formula that incorporates individuals’ earned income or Social Security tax payments. The credit income limit of $200,000 for individuals or $400,000 for joint filers would remain.
Retirement Savings Overhaul
Individuals would have more flexibility to save for retirement and unrelated businesses could offer joint retirement plans under H.R. 1994, the Setting Every Community Up for Retirement Enhancement Act. The measure, introduced by Chairman Richard Neal (D-MA) would allow individuals to temporarily withdraw money from their retirement accounts following a birth or adoption, and would modify contribution limits and mandatory minimum distribution requirements for older Americans. It would also allow 529 education savings accounts to be used for apprenticeship fees and student loans. Most provisions would apply to plan years beginning after Dec. 31, 2019. The rule for floor debate would automatically modify the bill with a manager’s amendment from House Ways and Means Chairman Richard Neal (D-MA).
Relative to the committee-approved bill, Neal’s amendment:
• Adds provisions to address an unintended effect of the 2017 tax overhaul (Public Law 115-97) that resulted in a tax increase on military survivor benefits and certain other income received by children.
• Removes provisions that would have allowed 529 education savings accounts to be used for homeschooling and more elementary and secondary school expenses.
• Increases penalties for failing to file retirement plan information.
Senator Sanders’ Plan toTax Stock, Bond and Derivatives Trades
Democratic presidential candidate BernieSanders (I-VT) plans to introduce legislation that would impose a tax ontrades of all stocks, bonds and derivatives in the U.S., a move he says wouldhelp curb Wall Street speculation and help finance his campaign promise toprovide tuition-free college and cut student debt. Sanders has been promoting afinancial transactions tax since his run for the Democratic nomination in 2016.The plan he’s offering would apply a 0.5% tax rate for stock trades, a 0.1%rate for bond trades, and 0.005% for derivatives transactions.