In Washington, DC, it is a mad rush to get out of town for the month-long August recess. The House is out on Friday and the Senate goes out of session one week later. Today the House will pass a 2-year budget caps and debt ceiling extension package and next week the Senate will follow suit, a good sign for the appropriations process. Below are quick updates. Thanks!
Deal is Done:
Before the six-week August recess, the House will vote today on a budget deal that would raise the cap on non-defense spending by 4% to $622 billion and the cap on defense spending by 3% to $677 billion for FY2020 and raise it for each category just 1% in FY2021. The Senate is expected to pass it next week so President Trump can sign it in August. The broad agreement, finalized Monday after weeks of negotiations between House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin, would suspend the debt ceiling until July 31, 2021, eliminating the risk that the government could miss payments as early as September. It would also cancel automatic cuts that would have reduced domestic spending by $55 billion and military spending by $71 billion compared with 2019 levels. The offsets in the deal reduce spending authority by $77 billion over 10 years, according to the Congressional Budget Office.
These increases are not as large as those provided through the last budget agreement, reached in 2017, which raised the cap on non-defense spending by 12% for FY2018 and 3% the following year. These increases are also not as large as the funding levels the House approved for various appropriations bills that assumed 6% increase so significant work will need to get done in conference committee negotiations that will soon follow the Senate’s introduction and passage of their 12 appropriations bills. Chairman Shelby (R-AL) was clear during the entire negotiations that he would not release any appropriations measures until this budget deal was complete so now he said he will introduce bills in September and move quickly to pass them through subcommittees, full committee and the full Senate. Of note, this was a bipartisan deal with both sides relatively happy as well as outside organizations – this bodes well for finalizing appropriations bills this fall.
House Democrats pushed through a comprehensive package of drug pricing and Obamacare-bolstering legislation (H.R. 987) during the first half of the year, but with the Affordable Care Act provisions included in the package, the bill died in the Senate. Senators are working on drug pricing legislation with markups happening today. Meanwhile, some Democrats are pushing to consider the bipartisan drug pricing provisions separately so they can work with the Senate to enact them. All of this is stalled until the fall.
There will be no Senate surprise billing legislation before the recess. But both leaders of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Chairman Lamar Alexander (R-TN) and top Democrat Patty Murray (D-WA), are committed to moving legislation this fall.
A bipartisan bill is on the docket this morning in the Senate Finance Committee. It would cap, for the first time ever, how much drugmakers could increase the prices of medications in the Medicare program. If a price rises by more than the inflation rate, its manufacturer would have to pay back the difference to the federal government in the form of a rebate – theoretically this would drive down prices for commercial health plans and consumers.
Cancer and 9/11 Responders:
After a lot of negative media attention directed at Congress and specifically Senate Majority Leader Mitch McConnell (R-KY) and a poignant House hearing, thanks to John Stewart and some courageous first responders, the Senate finally passed the 9/11 Victims' Fund. It would extend through at least FY2092 the September 11 victims’ fund that pays the firefighters, police officers and other emergency workers who were hurt and families of those killed as the result of the 2001 terrorist attacks or the cleanup operations. In February, the “special master” of the fund determined that it contained insufficient funding to pay all outstanding and projected claims, many of which involve cancer. Payments to victims could have been cut by at least 50% and as much as 70% if the fund wasn’t replenished in time, but now that the bill has passed both chambers, President Trump is signing it into law.
This week the House passed:
Senator Jeanne Shaheen (D-NH), joined by Susan Collins (R-ME), Tom Carper (D-DE) and Kevin Cramer (R-ND), just introduced the Insulin Price Reduction Act. It would create incentives for a reduction in the list price of insulin with a new insulin pricing model restricting the use of rebates for any product for which the manufacturer reduces the list price back to a level no higher than the price of the product in 2006. The rebate restrictions would apply in Medicare Part D and the private insurance market.
Reps. Cheri Bustos (D-IL) and Cathy McMorris Rodgers (R-WA) joined by other lawmakers introduced the Social Determinants Accelerator Act to provide $25 million for states to address high-need Medicaid patients. The bill would give planning and technical assistance grants to states trying to look broadly at social determinants for health for high-cost Medicaid beneficiaries – these include helping people access health care, housing, transportation and other benefits.
On July 10, 2019, Senators Chris Coons (D-DE) and Tom Cotton (R-AR) and Reps. Steve Stivers (R-OH) and Bill Foster (D-IL) reintroduced the STRONGER (Support Technology & Research for Our Nation’s Growth and Economic Resilience) Patents Act. This legislation, an improvement on legislation introduced last year under the same name, would reform the inter partes post-grant review process, ensure all fees paid to the Patent and Trademark Office (PTO) are used for their intended purposes, and protect patent holders and small businesses from predatory demand letters. The Biotechnology Innovation Organization (BIO) supports this bill.
The Senate confirmed Mark Esper as the next Secretary of Defense, replacing Jim Mattis, who resigned in December, and is expected to confirm General Mark Milley as the next chairman of the Joint Chiefs of Staff, who is the current Army chief of staff, on July 25. On Esper's first full day in office he briefed reporters on filling Pentagon vacancies, the budget deal and the situation in the Middle East. He noted that of 59 jobs requiring Senate confirmation, 14 of them are filled mostly by actings along with some other fully vacant positions so that is a top priority. He said, "738 is a good number," regarding the budget deal’s defense topline of $738 billion.
Saudi Arms Sales:
Trump vetoed three bipartisan measures passed by Congress intended to block arms sales to Saudi Arabia and the United Arab Emirates, stating “This resolution would weaken America’s global competitiveness and damage the important relationships we share with our allies and partners.”
On July 22, President Trump ordered the Defense Department to spur the production of a slew of rare-earth magnets used in consumer electronics, military hardware and medical research (singling out magnets made of neodymium, iron and boron and those made with samarium and cobalt) due to concerns about China restricting exports of the products. Trump invoked the 69-year-old Defense Production Act -- once used to preserve American steelmaking capacity -- to remedy what “a shortfall” in the production of the super-strong magnets made with rare-earth minerals neodymium and samarium. That law allows the president to prioritize contracts for materials, equipment and services in order to preserve or build up domestic manufacturing capabilities since this is such a niche field, many businesses haven’t made this investment. It has been invoked to compel purchases of semiconductor manufacturing equipment so companies could churn out radiation-hardened microelectronics used by the military. It has also been deployed to finance research and procurement projects in lithium ion batteries, lightweight ammunition and other technologies.
Katie Arrington, a Republican who lost in her campaign for a South Carolina House seat last year to a Democrat, Rep. Joe Cunningham after beating incumbent Rep. Mark Sanford in the primary -- a Republican who had repeatedly criticized the president – was appointed director of new Chief Information Security Office under Kevin Fahey, assistant defense secretary for acquisition. Fahey is very concerned that our adversaries are increasingly focused on using cyber to reduce the effectiveness of the DoD weapon systems, critical infrastructure and supply chain security so CISO will focus on better responding to cyber threats.
On July 23, the House passed legislation authorizing an Energy Department program that uses high-performance computing to research veterans’ health-care data under a modified version of H.R. 617 introduced by Rep. Ralph Norman (R-SC). The Energy Department would have to establish a research program using artificial intelligence and high-performance computing to help the Veterans Affairs Department identity health risks for veterans, using DNA samples from veterans. The Energy Department would be authorized to use artificial intelligence, modeling, machine learning, data analytics, and predictive analysis to develop new algorithms for disease treatment and recovery. The department also could enter into reimbursable agreements with the VA and other entities to expand the use of its research. It would require the department to carry out research to also help other agencies and private entities solve “big data” challenges and consider applications from national laboratories, universities, and multi-institutional collaborations to support both initiatives. The funding authorized would total $15 million from FY2020 through FY2023.
The Energy Department and the VA announced a similar initiative, known as MVP CHAMPION, in May 2017 and has strong bipartisan support on Capitol Hill. The VA at the time had already enrolled more than 560,000 veteran volunteers who provided DNA samples and granted access to their electronic health records. The Military Construction-VA funding for FY2019 (Public Law 115-244) included $27 million in VA research funds for the program. A report from the House Science, Space, and Technology Committee also states support for this effort. The Senate Energy and Natural Resources Committee approved similar legislation (S. 143) from Sen. Joni Ernst (R-IA) unanimously on July 16.
The Department of Agriculture is considering eliminating the Supplemental Nutrition Assistance Program (SNAP) benefits for 3.1 million people. Ohio Democrats Marcia Fudge, Tim Ryan and Sherrod Brown were vocally opposing this proposed change this week. They and many Democrats argue this rule change would kick seniors, children, working families and the disabled off SNAP and ignores the stated will of Congress because similar proposals were rejected in congressional debates over the 2014 and 2018 farm bills.
The Senate confirmed Steve Dickson, a former Delta Air Lines executive, to lead the Federal Aviation Administration (FAA) on a 52-40 vote. A Senate committee earlier advanced Dickson’s nomination on party-line vote after Democrats cited concerns on the nominee’s failure to disclose involvement in a whistleblower lawsuit. The Senate will need to take up a legislative waiver later this week to allow both Dickson and acting administrator Dan Elwell to lead the agency together.