President Trump’s schedule (EDT):
11:45 AM: Daily intelligence briefing;
1:00 PM: Attends the Senate Republican Policy Luncheon; and
3:15 PM: Meets with House Republicans on how to pass the U.S. Mexico-Canada Agreement (USMCA).
“Trump, House Republicans Meet to Line Up Support for New NAFTA.” This morning’s CQ Roll Call article leads with:
President Donald Trump is scheduled to meet with a number of House Republicans later Tuesday [3:15 PM EDT] as the White House steps up efforts to increase support for the proposed trade agreement to replace NAFTA.
The afternoon meeting comes after Trade Representative Robert Lighthizer courted House Democrats earlier this month with closed-door meetings on the United States-Mexico-Canada Agreement (USMCA). It would replace the North American Free Trade Agreement (NAFTA) if simple majorities in the House and Senate approve it.
Kevin Brady [R-TX], ranking member on the Ways and Means Committee, said Monday night that he does not know how many GOP lawmakers have accepted the White House invitation for the session.
However, Brady said he and Vern Buchanan of Florida, the top Republican on the Ways and Means Trade Subcommittee, will discuss their outreach efforts to GOP colleagues to back the proposed trade agreement. Brady said Minority Whip Steve Scalise, R-La., also is part of their drive to solidify Republican votes for the three-way pact.
“The President is going to meet with us about his trade agenda, specifically about our effort we recently kicked off to support passage of USMCA,” said Brady of Texas. “We’ll work for the next month or so to build support for passage.”
Brady said it’s early in the process, adding that “trade votes are always challenging and require an all-in effort by the White House and an all-in effort by those who believe in more trade.”
Getting the new NAFTA through the House will require the votes of a majority of Republicans and an undetermined number of Democrats. Brady said he is concerned many Democrats may not want to give the president a victory on trade given their opposition to most of his policies.
Democrats have voiced several concerns with the proposed pact including that it doesn’t stop the outsourcing of jobs.
“There’s no good excuse for them not to back it,” Brady said, noting that Lighthizer included labor provisions in the updated NAFTA that Democrats have long sought.
In my opinion, the odds of enacting the USMCA are 67% and will hinge on how much support House Speaker Pelosi (D-CA) musters. Here’s what Mrs. Pelosi had to say about it in during her February 6th press conference:
Q: Two questions on trade, if I could one.
Speaker Pelosi. Yes, ma’am.
Q: One, I was wondering if you support the bicameral Congressional Trade Authority Act to reclaim some of the trade authority for Congress? And also, I was wondering if – what, if any, are the elements of the USMCA that are concerning to you?
Speaker Pelosi. Well, two questions.
One, first of all, I really haven’t seen that legislation, but I do support reclaiming some of Congress’s – it is Congress’s prerogative. We have given some of that authority to the President, and there is legislation here that I am familiar with that would give him even more authority, and I don’t support that.
The concerns that we have about, and hopefully they’re resolvable, because I’m optimistic always with the – what are we calling it now, U.S., Mexico, Canada – I don’t know if it has an acronym – formally known as NAFTA, but not NAFTA. The concerns center around workers’ rights, center around the environment, center around prescription drug prices. Those are some of the subjects, but the overarching issue is enforcement. You can have the best language on any subject in a bill, but if you don’t have the enforcement provisions very strongly spelled out, not as a sidebar, not as a side letter, but central to the treaty, then there’s a problem.
So, I believe that the Trade Representative has been most accommodating and being available for Members. Hopefully he’ll come to answer some questions soon. But we’ve had good rapport with Mr. Lighthizer. I believe that the committees of jurisdiction, that being the Ways and Means Committee, largely, will be having sessions with Members so that Members can see what is in the legislation, what we’d like to see in the legislation and how we can be supportive.
I have always thought that this was probably one of the easier trade agreements to come to agreement on, but, so far, we’re not there yet.
“Pot Banking Bill Goes to House Markup With Bipartisan Support.” This morning’s CQ Roll Call article leads with:
As the House Financial Services Committee takes up a pot banking bill with broad bipartisan support [at 2 PM EDT today], the legal barriers preventing state-sanctioned marijuana growers and dispensaries from accessing the financial system may soon go up in smoke.
The pot banking bill (HR 1595) is one of five scheduled for committee markup Tuesday, and with 143 co-sponsors — including 12 Republicans — it’s the one with the most support. First proposed by Rep. Ed Perlmutter, D-Colo., in 2013, this version was introduced by Perlmutter, Denny Heck, D-Wash., Warren Davidson, R-Ohio, and Steve Stivers, R-Ohio.
Stivers couched his support as a pragmatic response to the dangerous realities facing state-authorized cannabis companies under existing federal law, rather than approval of the underlying drug.
“My support for the SAFE Banking Act is not an approval of marijuana businesses. It is based on the dangers of these businesses having to store massive volumes of cash, making them prime targets for violent robberies and money laundering schemes,” Stivers said. “In addition, having banking relationships creates an auditable trail for these businesses, which is important.”
The bill would offer a regulatory safe harbor to firms providing financial services to “cannabis-related legitimate businesses.” It would also exempt such companies’ proceeds from federal money laundering laws, which effectively deputize banks and credit unions to investigate when customers make shady-looking transactions. While that is designed to insulate pot businesses and their banks from criminal prosecution, the financial institutions would still be required to file suspicious activity reports with the Treasury Department’s Financial Crimes Enforcement Network.
Stivers is expected to offer an amendment during the markup to expand the safe harbor protections from criminal prosecution to insurance companies.
The bill would also direct the Federal Financial Institutions Examination Council to develop uniform guidance and examination procedures for depository institutions working with legitimate marijuana businesses.
The sponsors have been working closely with Sens. Jeff Merkley, D-Ore., and Cory Gardner, R-Colo., on a companion bill, said Heck’s legislative director, Brendan Woodbury.
This bill has 144 House cosponsors and strong financial industry support, so the chances of enactment are high, say 80%.
Rx Pricing Talks Have Begun Between President Trump and Speaker Pelosi. This morning’s Politico Playbookleads with this scoop:
NEWS … W.H.-PELOSI TALKS … THE WHITE HOUSE has quietly been having early-stage, staff-level conversations with SPEAKER NANCY PELOSI’S staff about drug-pricing legislation, according to sources in both camps. The effort is being spearheaded on the administration’s end by the DPC’s Joe Grogan, HHS and the leg affairs shop, and on Pelosi’s end, it’s being handled by Wendell Primus, the speaker’s longtime health policy staffer.
THE POLITICS: PRESIDENT DONALD TRUMP is hungry for a domestic legislative victory, according to sources in the White House, and this is an issue Democrats and the Trump administration have some agreement on. But, of course, getting anything done will be an uphill battle, especially on an issue like drug pricing at the same time the administration is trying to wallop Obamacare. We’ve also not seen much appetite among Democrats to work with the president, and vice versa. Not to mention, the Trump administration is known for its uneven handling of complex legislative issues — especially at the principal level. (Both the White House and Pelosi’s team confirmed these talks.)
HENRY CONNELLY, Pelosi’s deputy communications director, sends us this note: “We’ve been having some staff-level discussions with the Administration about lowering prescription drug prices, but they aren’t negotiations. House Democrats promised the American people we’d take bold action to lower prescription drug prices, and that’s what we’re going to do.”
I’ve long predicted an Rx bill will be enacted this year. The only question is how watered down it will get before President Trump signs it.
“Disaster Recovery: Better Monitoring of Block Grant Funds Is Needed.” Yesterday’s 84-page Government Accountability Office report, in preparation for this morning’s 10 AM House Financial Services hearing, stated:
The 2017 hurricanes (Harvey, Irma, and Maria) caused an estimated $265 billion in damage, primarily in Texas, Florida, Puerto Rico, and the U.S. Virgin Islands. As of February 2019, Congress had provided over $35 billion to HUD for CDBG-DR grants to help communities recover. …
… As of September 2018, the four states and territories that received the most 2017 Community Development Block Grant Disaster Recovery (CDBG-DR) funds had signed grant agreements with the Department of Housing and Urban Development (HUD). Before signing the agreements, HUD certified the grantees’ financial processes and procedures. It also approved the grantees’ assessments of their capacity to carry out the recovery and of unmet needs (losses not met with insurance or other forms of assistance). Before funding begins to reach disaster victims, the grantees need to take additional steps, such as finalizing plans for individual activities. As of January 2019, Texas had drawn down about $18 million (of $5 billion) for administration and planning only, and Florida had drawn down about $1 million (of $616 million) for administration, planning, and housing activities. Puerto Rico and the U.S. Virgin Islands had not drawn down any of the $1.5 billion and $243 million, respectively, they had been allocated. …
… Without permanent statutory authority and regulations such as those that govern other disaster assistance programs, CDBG-DR appropriations require HUD to customize grant requirements for each disaster in Federal Register notices—a time-consuming process that has delayed the disbursement of funds.
Congress takes credit for rapidly voting disaster relief, but victims wait way too long before that reaches them because of the piecemeal approach Congress takes to each disaster. Nonetheless, at this morning’s hearing, you will see members of Congress blame HUD.
“Supplemental Spending for Disaster Victims Stuck in Senate.” Yesterday afternoon, CQ Roll Call reported:
Talks aimed at producing a bipartisan disaster aid bill have broken down, further stalling congressional efforts to get billions of dollars in federal assistance to states and territories that have been damaged by recent hurricanes, wildfires and other natural calamities.
Democrats blamed Senate Republican leaders for attempting to shortchange the needs of Puerto Rico and other U.S. territories. Though it wasn’t immediately clear what package the Senate would be voting on this week, Senate appropriators on both sides of the aisle negotiated through last week’s recess to achieve common ground.
Those talks appear to have been unsuccessful, judging from a blistering statement released Monday by the top Democratic appropriators in both chambers.
“Corporate Profits, Corporate Federal Tax Collections.” Yesterday’s Institute on Taxation and Economic Policy blog stated:
Data released Friday by the U.S. Treasury Department confirm that President Trump’s tax law has gutted the corporate income tax, despite claims by his supporters that the law’s corporate tax cuts would somehow pay for themselves. This should worry anyone who wants the government to function.
The new data confirm that tax collections are falling at a rate never seen during a period of economic growth. For the first five months of fiscal year 2019 (which began in October of 2018), corporate income tax net receipts are down 20 percent relative to fiscal year 2018.
This is particularly alarming because fiscal year 2018 saw the second-biggest corporate income tax downturn in recorded history. Corporate income tax collections fell by 31 percent, from $297 billion in fiscal year 2017 to $204 billion in fiscal year 2018, when the new law first came into effect.
“Distributional Effects Of Public Law 115-97,” the Tax Cuts and Jobs Act. Yesterday’s 37-page Joint Committee on Taxation pamphlet, in preparation for tomorrow’s House Ways and Means Committee hearing, shows the distributional effects of the Tax Cuts and Jobs Act by “economic income” class.
Overall, the TCJA slightly increased progressivity, but there were lots of winners and some losers in every income class. These tables show estimated change in calendar year liabilities, NOT CHANGE IN FINAL PAYMENTS, which depend upon withholding and estimated payment changes.
Will the House take up a budget resolution? Last night, CQ Roll Call reported:
House Budget Chairman John Yarmuth said he’ll decide within the next 48 hours whether to have his panel mark up a budget resolution this year. He said a markup will not occur unless it is determined the resolution will be taken up on the floor for a vote.
No wonder the Fed is “the only game in town.” Fiscal policy is out of control, and few House members want to vote for a budget resolution that can’t show balance in the coming decade. That’s an unfortunate milestone. Republicans got their tax cut at the end of 2017, and this year Democrats and Republicans are likely to unite behind defense and infrastructure spending increases that President Trump will probably go along with. I see trillion dollar deficits, 5% of GDP or more, for many years to come.
2020 Election: “The Fight Over Partisan Gerrymandering Is Moving Beyond The Supreme Court.” This morning’s FiveThirtyEight article leads with:
For the second time in less than two years, partisan gerrymandering is back in front of the Supreme Court. Last term, the court seemed like it might rule that some partisan gerrymanders are so extreme that they violate the Constitution. But instead the justices punted, issuing a narrow ruling in June that rejected the cases on procedural grounds. Today, the justices will consider a pair of cases — a new case from North Carolina and one of the cases from last term from Maryland — that could, in theory, change the way electoral maps are drawn.
But the chances that the court will create a standard for unconstitutional partisan gerrymandering seem even lower than they did last year. Justice Anthony Kennedy, who was long viewed as the swing voter on the issue, retired last summer. Now the challengers need to convince a court with a conservative majority that it can — and should — declare partisan gerrymandering unconstitutional. And that won’t be an easy task. “In general, ideologically conservative judges aren’t sympathetic to the idea that courts should get involved — they think it’s a political question,” said Daniel Tokaji, a law professor and election law expert at Ohio State University. So if the court again chooses not to rule on the constitutionality of partisan gerrymandering, where will activists take the gerrymandering fight next?
Some groups that are trying to change how redistricting is done — like the National Democratic Redistricting Committee, founded in 2017 by former Attorney General Eric Holder — have begun working on other strategies. Often, these approaches are hard to separate from partisan politics — Holder’s group, for example, is aligned with the Democrats and primarily targets gerrymandering that favors Republicans. But some Republicans, like former California Gov. Arnold Schwarzenegger, have also made the issue a priority, and reformers on both sides are aiming to take map-drawing out of the hands of state legislatures. “We’re approaching this like a jigsaw puzzle,” Holder said. “If we have the federal courts open to us, that’s a tool we’ll use. But we’ve never seen litigation as the only way to attack the problem of partisan gerrymandering.”
That means that if the Supreme Court doesn’t decide that extreme partisan gerrymandering is unconstitutional, the battle will likely shift to the states. Several strategies are already being tested, but are these alternatives to the federal courts likely to bring advocates more success?
The article concludes, “… none of these strategies is a silver bullet.” I would make two points: 1) gerrymandering is a bipartisan activity — just take a look at the Democratic Maryland and Republican North Carolina spider districts; and 2) any redrawing congressional districts won’t have much affect on the 2020 election or Democratic control of the U.S. House.
