Update from Washington, D.C.
December 12, 2019
There was a flurry of activity on Capitol Hill this week as lawmakers sought to tie up a number of loose ends before Congress adjourns for the year. House Democrats, in particular, have been eager to conclude the impeachment proceedings against President Trump. Following several weeks of hearings and witness testimony into the Ukraine investigation, Trump was formally charged this week with two articles of impeachment, specifically abuse of power and obstruction of Congress. As of this writing, the Judiciary Committee was still debating the impeachment resolution (H Res 755), although there is no doubt that it will pass along party lines. The partisan rancor will continue into next week as the full chamber is expected to vote on the resolution.
In addition, the House on December 12 approved a broad drug-pricing measure (HR 3) that would allow the federal government to directly negotiate the price of drugs and biological products that lack competition from generic drugs or biosimilars. It should be noted that Democrats were able to overcome an intra-party dispute that nearly derailed one of their signature legislative efforts. The progressive wing of the caucus, while supportive of the overall goals of the bill, demanded several changes to the measure before offering their support. Following a meeting with House Democratic leaders, HR 3 was amended to their satisfaction. The revised measure would expand the number of drugs the government would negotiate and would also extend some of the price inflation caps to employer-sponsored plans.
While the Trump administration and GOP lawmakers have committed to lowering drug prices, they have expressed concern that the approach outlined in HR 3 could have harmful effects on innovation. For its part, the nonpartisan Congressional Budget Office found that the legislation would likely result in eight fewer new drugs over the next decade. While the White House has threatened to veto the bill, it may not be necessary, as Senate Majority Leader Mitch McConnell (R-KY) has made clear that HR 3 will not be considered in the upper chamber.
House Passes Agricultural Workforce Bill
Yesterday, the House of Representatives approved the Farm Workforce Modernization Act (HR 5038). The bipartisan legislation, which is sponsored by Representative Zoe Lofgren (D-CA), was cleared on a 260-165 vote and was supported by the vast majority of the California congressional delegation.
HR 5038 would establish a first-of-its-kind, merit-based visa program for the nation’s agricultural sector. Pursuant to the bill, the Department of Homeland Security (DHS) would be authorized to grant “certified agricultural worker” (CAW) status to undocumented individuals who, in turn, would be eligible to earn legal status for themselves and their dependent family members through continued agricultural employment. An individual’s CAW status would be valid for five and a half years and could be extended by DHS.
The legislation also would make reforms to the H-2A agricultural guest worker visa program, including allowing a limited number of program participants to engage in year-round work (current law caps program participation at 10 months). Furthermore, under the bill, dairy farms would be able to hire H-2A temporary workers for the first time.
In addition, HR 5038 would require DHS to establish a nationwide system for employers to verify an individual’s identity and employment authorization (known as E-Verify). Employers hiring individuals for agricultural employment would be required to use the new system.
In the area of housing, the Lofgren bill would permanently authorize the U.S. Department of Agriculture’s (USDA) Housing Preservation and Revitalization Program, which provides financing assistance for rural rental housing and off-farm labor housing projects. The legislation also would authorize USDA to provide other types of assistance to qualified individuals, including funding for insuring loans and grants for new farmworker housing.
Looking ahead, the action will shift to the Senate, where a companion bill has not yet been introduced. In the meantime, House sponsors of HR 5038 are working with key members of the upper chamber, including Senators Dianne Feinstein (D-CA) and Kamala Harris (D-CA), to develop a legislative proposal.
House Tax Panel Approves Legislation to Roll Back Cap on SALT Deduction
The House Ways and Means Committee on December 11 approved legislation (HR 5377) that would temporarily reverse the $10,000 cap on state and local tax (SALT) deductions put in place by the GOP’s signature tax reform law (PL 115-97). Specifically, HR 5377 would temporarily increase the deduction cap to $20,000 for married couples in 2019 before fully repealing it for 2020 and 2021. In 2022, the cap would revert back to $10,000. It should be noted that the cost of the House legislation would be offset by increasing the top individual tax rate to 39.6 percent (up from 37 percent), while also decreasing the income threshold for the highest tax bracket. The higher rates and new brackets would stay in effect through 2025.
As of this writing, it is unclear when the bill will be considered by the full House, although Democrats leading the effort are pushing leaders to put the measure on the floor next week. While there’s no doubt that the legislation would pass the House, it will be dead on arrival in the GOP-controlled Senate.
Senate Panel Advances SRS and PILT Legislation
Earlier today, the Senate Energy and Natural Resources Committee approved legislation (S 430) that would extend the expired Secure Rural Schools (SRS) program for an additional two years. While there has been a desire to work toward a more long-term solution, the measure would ensure that counties do not experience a lapse in funding next spring. In the absence of congressional action, the law will revert to an antiquated payment structure based on present-day timber receipts, which, in total, would result in a significant loss of funding to California’s forested counties. It should be noted that committee approval of S 430 could set the stage for identical language to be included in a potential year-end spending deal.
On a related matter, the committee also approved a bill (S 2108) that would create new monetary and population caps under the Payments-in-Lieu-of-Taxes (PILT) program. Specifically, the legislation would alter the PILT formula to benefit counties with a population under 5,000. With regard to California, a recent analysis by Headwaters Economics found that Sierra County would receive a nearly $300,000 annual increase in its PILT allocation, in those years when the program is fully funded. Another potential beneficiary is Alpine County, although as a result of the formula, they would only receive additional PILT dollars in years that SRS is not funded.
As with most formula debates in Congress, there was a protracted discussion about how this change could potentially help some areas of the country at the expense of others. In particular, Ranking Member Joe Manchin (D-WV) raised concerns about how this could potentially reduce funding to counties above the 5,000 population threshold. During committee consideration, he offered an amendment that would essentially set up a firewall that would protect counties above the threshold in those years that the program is not fully funded. However, he withdrew the amendment after Chairwoman Lisa Murkowski (R-AK) agreed to work with him on a compromise going forward.
Senators Look to Move Bipartisan Bill on Family First, TANF and DSH Cut Delays
Late last week, the bipartisan leadership of the Senate Finance Committee revised a previously introduced bill (S 2543) to include the text of the Family First Transition Act (S 2777). Sponsored by Senator Chuck Grassley (R-IA), S 2777 would provide $500 million to states and counties to assist in their implementation of last year’s federal child welfare reform law (known as the Family First Prevention Services Act). Additionally, the measure would provide an additional two years of funding for child welfare waiver counties at 90 percent of their fiscal year 2019 levels in the first year and 75 percent in year two.
S 2543, entitled the Prescription Drug Pricing Reduction and Health and Human Services Improvements Act, also would extend the Temporary Assistance for Needy Families (TANF/CalWORKs) program for three years, with some new state reporting measures. Additionally, the legislation would delay for another two years the $8 billion in annual cuts to the Medicaid Disproportionate Share Hospital Payment (DSH) program for health facilities serving low-income individuals.
Senators are hoping to move the combined package in the waning days of the current session.