Budget Talks Stall; House Passes First Minibus Spending Package
June 20, 2019
Debate over fiscal policy remained front and center on Capitol Hill this week as top congressional leaders held a closed door meeting with Trump administration officials to discuss a potential deal that would modify the Budget Control Act’s (BCA) strict spending caps for fiscal year 2020. Participants emerged from the 90-minute meeting without an agreement in hand, with Minority Leader Kevin McCarthy (R-CA) indicating that the two sides were “further apart” due to Democrats requesting additional spending for nondefense programs. In response, Democrats denied that they’ve revised any of the terms of their original budget offer.
For their part, White House officials stated in post-meeting remarks that the administration’s number one fiscal priority is raising the debt ceiling. Although the statutory borrowing limit was technically breached in March, the Treasury Department has employed so-called “extraordinary measures” to keep the U.S. government from defaulting on its financial obligations. With the Department’s actions expected to generate enough cash to last them though late September or early October, Congress will need to pass legislation raising the debt limit in order to avoid the prospect of a government default.
Administration officials also signaled that the president is prepared to accept a simple Continuing Resolution (CR) for the 2020 budget year, a prospect that was summarily dismissed by congressional Democrats. Incidentally, it’s unclear if congressional Republicans would entertain the possibility of a stopgap funding bill, particularly in light of the fact that many in the GOP would like to see a significant increase in spending for the Department of Defense.
In the absence of a bipartisan agreement to raise the BCA caps, House Democrats have been steadily advancing the 12 annual appropriations bills for the fiscal year that begins October 1. On Wednesday, the House passed a four-bill spending package (HR 2740) without the support of a single Republican member. The minibus includes the text of the fiscal year 2020 Defense, Labor-Health and Human Services, Energy-Water, and State-Foreign Operations appropriations measures. All told, HR 2740 would spend $1 trillion, with nearly all programs covered under the legislation slated to receive a funding increase when compared to current levels of investment.
After approving HR 2740, the House began consideration of another multi-bill spending package. As of this writing, the House is in the process of debating hundreds of amendments to the legislation (HR 3055), which combines the Agriculture-FDA, Commerce-Justice-Science, Interior-Environment, Transportation-HUD, and Military Construction-VA funding bills.
It should be noted that the Trump administration has threatened to veto both HR 2740 and HR 3055. While there are a variety of reasons behind the veto threat, the administration is strongly opposed to the proposed increases in domestic discretionary spending that would be provided under the legislation.
Finally, the Senate Appropriations Committee cleared this week $4.6 billion in emergency funds requested by the Trump administration for humanitarian assistance and border security in response to the recent surge in migration at the southern border. The bipartisan legislation (S 1900), which was approved by the committee on a 30-1 vote, would provide funds for a variety of purposes, including $2.9 billion in funding for the Department of Health and Human Services to help place unaccompanied children in suitable homes.
Forest Service Looks to Overhaul NEPA Review Process
On June 13, the U.S. Forest Services (USFS) issued a proposed rule that seeks to overhaul the environmental review process required under the National Environmental Policy Act (NEPA). Among other things, the Forest Service recommends adding several new categorical exclusions (CE) and expanding several existing CEs to streamline future NEPA reviews. CEs are certain activities that agencies have determined, based on analysis and experience, to not have a significant impact on the environment; as a result, they do not require extensive NEPA analysis. According to the Forest Service, the proposed changes would provide the agency with more tools and flexibility to improve forest health and prevent future wildfires.
The proposed regulation will undergo a 60-day public comment period and a minimum 120-day Tribal consultation period. In the meantime, USFS has scheduled two informational webinars that will be held on June 25 and July 12. Additional information on the webinars, as well as background information on the rule and Frequently Asked Questions (FAQs), can be accessed here. The final rule is expected to be published in the summer of 2020.
Small Business Committee Discusses Potential Opportunities in the Cannabis Industry
On June 19, the House Small Business Committee convened an oversight hearing to examine the opportunities and challenges that the state-legal cannabis industry presents for small businesses. Due to conflicting state and federal laws, the Small Business Administration (SBA) is unable to offer loans or support to such businesses or ancillary businesses that may not be directly involved in the production or distribution of cannabis products. However, the SBA recently issued a revised policy on its loan programs to clarify that hemp-related businesses are eligible for assistance.
The panel heard testimony from several different groups, including representatives from the Minority Cannabis Business Association, the Veterans Cannabis Coalition, First Federal Bank, and the Heritage Foundation. According to three of the witnesses, small businesses operating in state-legal cannabis markets are faced with a number of challenges, with access to capital being the most significant hurdle. This is especially true for businesses owned by minorities, women, and veterans, as well as those located in rural areas. However, Paul Larkin, who testified on behalf of the Heritage Foundation, generally raised concerns about cannabis reform. He also argued that states should own and operate cannabis distribution facilities, if Congress were to ultimately legalize the drug for adult use.
For her part, Committee Chairwoman Nydia Velazquez (D-NY) announced that she is drafting legislation that would open some of SBA’s programs to areas of the country where cannabis is legal. On the other hand, Congressman Steve Chabot (R-OH), the top Republican on the panel, believes that opening this door will have a negative effect on society at large. Additional information on the hearing, including witness testimony, can be accessed here.