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Home , Politico, Tom Graves

MEMO

From: CGCN Group Date: 6/19/2017

Donald Trump won the by defying just about every convention of modern presidential campaigns. He was outspent, out-organized and out-debated. And he courted controversies most politicians avoid, inviting intense media scrutiny. That scrutiny has only intensified since Trump took office, and the relentlessly negative press coverage appears to be taking a toll. But President Trump can’t be judged by the same measures applied to most of his predecessors, and his core supporters are more inclined to blame Congress and its leaders for any dysfunction in Washington.

The media continues to press its narrative that Trump, besieged by controversy, is alone responsible for Congress’s failure to send bills to his desk. But even casual observers know that’s not true; Trump is just surfing a wave of dysfunction that has balkanized both parties since the first year or two of ’s presidency. The tribalization is just as apparent in and ’s influence over the Democratic Party as it is in the occasional revolts against GOP leaders. Party leaders on both sides of the aisle have struggled to satisfy the demands of these ideological bellwethers. In this era of factional government, Trump has had the most success unifying his party.

The fact of the matter is the Republican base is sticking with Trump. Fairly or unfairly, they will blame the media, Democrats and even congressional Republicans before they abandon the president. His loyal supporters cheer every decision the media decries – see: Paris climate accord. The biggest threat to the GOP’s legislative agenda (and its congressional majorities) isn’t Trump’s approval rating but the perceived lack of support for his agenda among rank-and-file Republicans in Congress. A narrative is emerging in conservative media that Republicans on – not Trump and his self-inflicted wounds – are responsible for the president’s stalled agenda. A recent Drudge headline read: “Real ‘Resistance’: Republican Congress…”

This is a dangerous dynamic for congressional Republicans. A recent story highlighted the frustrations of grassroots conservatives in Iowa. “Republicans are letting him down,” said Mike Sipple of Ogden Iowa. "I just wish the Congress would give him more support," Grant Gardner another Cedar Rapids voter said. He wished members of Congress would get off their "hind-ends and do what they're supposed to do." Congressional Republicans need voters like Mr. Sipple to turn out in next year’s midterms. As we saw in the primaries earlier last week, Republicans could be facing an enthusiasm gap. Tomorrow’s special election in is an early test of that enthusiasm.

A loss in Georgia will inevitably prompt the Washington political class to argue that Republicans should cut ties with Trump, but the midterm elections are still a year and a half away and doing so will only exacerbate the problem. Win or lose, the Georgia special election should serve as a sobering reminder that the political environment has started to shift away from the GOP, making legislating that much harder for Republicans. However, the president remains very popular in 90 percent of GOP-held districts and cutting ties will only serve to bring the already slow-moving agenda to a halt. The fastest way to reverse this trajectory is for Republicans to coalesce and put legislation on the president’s desk.

CONGRESSIONAL AGENDA

How Congress manages the run-up to the next two recesses (July 4th and the August recesses) will be critical. The House is in session for 13 more days and the Senate is in session for 14 more days before the July 4th recess. We are beginning to see signs that Members are becoming increasingly frustrated with the lack of legislative progress on high-profile agenda items. The House Freedom Caucus has already announced their desire to work through the August recess to try to achieve tax reform and make progress on other measures.

Healthcare

In the Senate, all eyes are on healthcare. Leaders are working with CBO on scoring legislative text, although major issues still remain unresolved. Medicaid, in particular, remains a thorny issue with Senate moderates pushing for a longer phase-out period of the

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Medicaid expansion ushered in under Obamacare. Senate leaders are also grappling with how to address defunding and other abortion-related provisions included in the House-passed healthcare bill.

Notwithstanding these issues and the exceedingly narrow margin for error – just three Republican “no” votes will sink any bill – Leader McConnell continues to drive his conference toward a vote before the congressional recess in July.

Tax Reform

This past week, Ways and Means Chairman Kevin Brady announced a change to the border adjustment provision that he previously outlined in his tax reform blueprint. He argues the change reflects the feedback he has received from Members over the past few months. It consists of a five-year phase-in of the provision to allow businesses to adjust to a new domestic-based tax system. Both the retail industry and Koch Industries immediately issued statements announcing their strenuous opposition to the change. The retailers even went as far as accusing the Chairman of “threatening” tax reform.

For tax reform to have any chance of succeeding in 2017, the Administration, Senate, and House would likely need to come to an agreement on a policy in the next 60 days. This has sparked talk among some members of both the House and Senate making the case for working through the August recess. This is unlikely, but emblematic of clock management issues Members realize they are facing. From a procedural standpoint, Republicans still need to pass another budget with instructions to get the tax reform process moving. It is yet to be determined what kind of appetite there is for Republicans to pass another controversial budget even if it is simply to move the ball on tax reform forward. Complicating matters even further, the House Freedom Caucus has begun the process of laying out their own vision of what tax reform should look like, including tying it to welfare reform. Over the past few days, Members of the Senate are now talking about reviving elements of the controversial Camp Draft to generate the necessary revenue to pay for tax reform. This could actually have the effect of further dividing the business community.

Congress is running out of both time and options. With groups like the retailers and the Kochs spending tens of millions of dollars to kill the House Republican version of tax reform in the crib, and the revival of elements of the controversial Camp Draft reemerging in the Senate, the odds of tax reform happening in 2017 continue to decrease.

Banking/Financial Services

With the House passage of The Choice Act, efforts turned immediately to reform and reauthorization of the National Flood Insurance Program (NFIP). Authorization for the existing program expires at the end of September. The House released a draft proposal and moved quickly to a mark up last week. Industry sought and received significant changes to the draft before the mark up. We expect the bill to move fairly quickly to the House floor where we expect members to offer amendments to "improve" the bill. The Senate Banking professional staff is engaged in the process of writing their version of NFIP Reauthorization. Language has yet to be released. Several members of the Committee have already introduced their own versions of flood insurance reform/reauthorization. Achieving a consensus Committee product will be no easy task. The process to create a final product that can pass both chambers is likely to face fits and starts right up to the deadline. We would not rule out the possibility of a short-term extension as the deadline approaches.

The Senate Banking Committee continues to work through a process on Financial Reform/Regulatory Relief. Passage of the Choice Act meant nothing to the Senate Banking Committee. Any product produced by the Committee will need 60 votes under the current rules so Chairman Crapo is carefully laying groundwork to cultivate a process and environment where some bipartisan agreement can be reached. We do not expect to see any draft legislation soon. The Committee is likely to complete an exhaustive hearing process before they begin to try and put pen to paper on broad Financial Reform/Regulatory Relief.

Energy

The Administration is expected to continue rolling out its policy theme weeks by focusing on energy at the end of the month. We expect the Administration to focus on its commitment to regulatory and permitting reforms in the energy space as a central part of their American energy first plan. Congress will also be active in the energy space towards the end of the month. We expect that the House Energy and Commerce Committee will hold a to consider energy infrastructure permitting legislation, including a bill to streamline the permitting of natural gas pipelines, and we expect that the House Resources Committee will hold an oversight hearing on energy development issues on federal land. In the U.S. Senate, the Energy and Natural Resources Committee will be

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Foreign Policy/National Security

Due to the increased profile of security issues occurring around the world – and on the heels of broadly bipartisan Iran/Russia sanctions legislation passing the Senate -- we expect an emphasis on issues related to our national defense to play a dominant role this summer. Department of Homeland Security Reauthorization, legislation addressing cyber security concerns, as well as National Defense Authorization Act and Homeland Security and Defense Appropriations are anticipated.

Workforce Development

Workforce development is a priority both for the Congress and the White House. The White House used last week to message on workforce development. This is a priority of and others close to the President. The House is working with the White House on two key priorities – a 21st Century Career and Technical Education bill (Perkins Reauthorization), as well as items out of the Ways and Means committee designed to encourage welfare recipients to re-enter the workforce.

Infrastructure

In addition to work being done on Chairman Shuster’s infrastructure bill being worked on at the committee level, we expect the House to possibly move some standalone infrastructure bills. Those would likely include an electricity bill from the Natural Resources Committee as well as a bill related to hydropower out of the Energy and Commerce committee. It is important to note that while work is being done, infrastructure is still conceptual to most members.

FAA Reauthorization is expected to be introduced later this week, most likely Wednesday. Markup is scheduled for Tuesday, June 27. Leadership has indicated that Chairman Shuster will get floor time in July.

Appropriations

The Chairman of the House Appropriations Committee, Rodney Frelinghuysen, plans to mark up all Fiscal Year 2018 appropriations bills in full committee by the August break.

Member discussions remain ongoing regarding the process for appropriations. One plan that is gaining some momentum comes from Rep. to consider one large package of the 12 bills on the floor. An amendment process would likely coincide with consideration. The Republican Study Committee announced its support for this strategy last week.

The House and Senate will certainly clash on funding levels but we expect the House to pass more conservative measures than will be accepted by the Congress as a whole. That, of course, creates problems for the more moderate members of the Republican conference who rue the thought of taking a tough vote for the sake of taking a tough vote.

Funding for the government expires September 30 and the president is expected to make demands regarding funding for the wall. The debt ceiling, which will probably require GOP vote this time to pass, will also take up time.

ADDITIONAL ITEMS TO WATCH:

Flood insurance – scheduled to be marked up in HFSC. Leaders are pushing to move to the Floor shortly. SCHIP – Expires this Summer FDA User Fees – This Summer Debt limit – Post August Recess Fund the government – September

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