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Capital Thinking

Busy Week Ahead as Congress Prepares for Memorial Day Recess

Posted in General Legislative

Congress Prepares for Memorial Day Recess, Capital Thinking to Return in June

With Congress set to leave Washington at the end of the week for a week-long Memorial Day recess, lawmakers have a busy week ahead and are set to address various issues, from funding the nation’s infrastructure to investing in federal research programs to permanently extending the Research and Development (R&D) Tax Credit. Given that Congress will not be in session, Capital Thinking will not publish an update next week. We will return to our regularly-scheduled updates as Congress returns to Washington on Monday, June 1.

Senate Legislative Activity

On Monday, May 18, the Senate will convene at 2:00pm. Following any Leaders remarks, the Senate will be in a period of morning business until 3:00pm. Following the morning business, the Senate will resume consideration of H.R. 1314, with time to equally divided between the managers and their designees.  At 5:30pm, the Senate will vote on Brown SA #1242 and Lankford SA #1237, each requiring 60 votes for adoption.

House Legislative Activity

On Monday, May 18, the House will meet at 12:00pm for morning hour and at 2:00pm for legislative business, with votes postponed until 6:30pm. The following legislation will be considered under suspension of the rules:

  1. H.R. 474 – Homeless Veterans’ Reintegration Programs Reauthorization Act of 2015;
  2. H.R. 1038 – Ensuring VA Employee Accountability Act;
  3. H.R. 1313 – Service Disabled Veteran Owned Small Business Relief Act;
  4. H.R. 1382 – Boosting Rates of American Veteran Employment Act, as amended;
  5. H.R. 91 – Veteran’s I.D. Card Act, as amended;
  6. H.R. 1816 – Vulnerable Veterans Housing Reform Act of 2015, as amended;
  7. H.R. 1987 – Coast Guard Authorization Act of 2015, as amended; and
  8. S. 178– Justice for Victims of Trafficking Act of 2015

On Tuesday, May 19, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. The following legislation will be considered under suspension of the rules:

  1. H.R. 874 – American Super Computing Leadership Act;
  2. H.R. 1162 – Science Prize Competitions Act, as amended;
  3. H.R. 1119 – Research and Development Efficiency Act;
  4. H.R. 1156 – International Science and Technology Cooperation Act of 2015, as amended;
  5. H.R. 1561 – Weather Research and Forecasting Innovation Act of 2015, as amended; and
  6. H.R. 1158 – Department of Energy Laboratory Modernization and Technology Transfer Act of 2015, as amended

The House is also expected to consider:

  1. H.R. 2353 – Highway and Transportation Funding Act of 2015 (Subject to a Rule); and
  2. H.R. 2250 – Legislative Branch Appropriations Act, 2016 (Subject to a Rule)

On Wednesday, May 20, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business and is expected to consider:

  1. H.R. 880 – American Research and Competitiveness Act of 2015 (Subject to a Rule); and
  2. H.R. 1806 – America COMPETES Reauthorization Act of 2015, Rules Committee Print (Subject to a Rule)

On Thursday, May 21, the House will meet at 9:00am for legislative business, with last votes expected by 3:00pm. The House will consider H.R. 2262 – SPACE Act of 2015 (Subject to a Rule).

On Friday, May 22, no votes are expected in the House.

Senate Joins House in Appropriations Effort; Appropriations Process to Heat Up

Posted in Budget and Appropriations

Legislative Activity

Senate Joins House in Appropriations Effort

Senate Appropriators begin work on their FY 2016 spending bills this week, with subcommittee markups scheduled Tuesday for the Military Construction-Veterans Affairs and Energy-Water appropriations bills. Committee Chairman Thad Cochran (R-MS) has not publicly revealed how he apportions the mandated topline discretionary funding level of $1.07 trillion among the twelve appropriations bills (302(b) allocations); however, it is expected that the allocations will closely, if not identically, align with those designated by House Appropriations Committee Chairman Hal Rogers (R-KY). Moreover, the Senate is starting the process with the same two measures as the House, which indicates the committee chairmen are working together on their appropriations strategy. While not officially scheduled, the Senate Appropriations Committee may squeeze in a full committee markup of both bills, and the 302(b) allocations, before the Memorial Day recess.

Over in the House, a floor vote is expected as early as Tuesday on the FY 2016 Legislative Branch Appropriations Bill (H.R. 2250). On Wednesday, the Appropriations Committee will consider the $51.4 billion Commerce-Justice- Science spending bill and the Defense Subcommittee will mark up its FY 2016 bill.

Appropriations work will resume following the Memorial Day recess. Of note, House Labor-HHS-Education Appropriations Subcommittee Chairman Tom Cole (R-OK) stated he intends to produce an FY 2016 spending bill before the July Fourth recess, which would be the first subcommittee draft of the bill in two years. The Labor-HHS-Education measure has become the most contentious appropriations bill because of its funding size and Republican efforts to use the bill to advance policies against the 2010 health care law (P.L. 111-148, P.L. 111-152) and other agency regulations, as well as to include anti-abortion riders opposed by Democrats. Democrats will especially oppose the FY 2016 measure, as it will reduce spending levels by more than two percent from current spending.

Look for the Appropriations Process to Heat Up

The appropriations process will likely get more contentious this summer. White House and Congressional Democrats will continue to push Republicans to negotiate a budget deal that would replace the sequester for both defense and non-defense programs. The President quickly issued veto threats on the two FY 2016 appropriations bills passed out of the House and House Democrats have thus far shown they are willing to sustain those vetoes by voting against the bills on the floor. Typically the Military Construction-VA spending bill receives over 400 ‘yes’ votes in the House; the vote on the FY 2016 bill was 255-163. Senate Democrats, under the leadership of Minority Leader Harry Reid (D-NV) and his presumed successor, Chuck Schumer (D-NY), have indicated they intend to implement a similar strategy, challenging Majority Leader Mitch McConnell (D-KY), who needs to get the support of at least six Democrats (and the entirety of the Republican caucus) to advance legislation to the Senate floor. Moreover, as the bills and funding levels get larger, it will be difficult for Republican leaders to sustain the support of fiscal conservatives.

This Week’s Hearings:

  • Tuesday, May 19: The Senate Budget Committee will hold a hearing on oversight of the Congressional Budget Office (CBO).

FY 2016 Appropriations Subcommittee/Committee Markups

  • Tuesday, May 19: The Senate Appropriations Military Construction-VA Subcommittee will hold a markup of the FY 2016 Military Construction-VA Appropriations Bill.
  • Tuesday, May 19: The Senate Appropriations Energy-Water Development Appropriations Subcommittee will hold a markup of the FY 2016 Energy-Water Appropriations Bill.
  • Wednesday, May 20: The House Appropriations Defense Subcommittee will hold a CLOSED markup of the FY 2016 Defense Appropriations Bill.
  • Wednesday, May 20: The House Appropriations Committee will hold a markup of the FY 2016 Commerce, Justice, and Science Appropriations Bill.

National Defense Authorization Act Passes the House with Cyber Amendments

Posted in Cybersecurity

Legislative Activity

National Defense Authorization Act Passes the House with Cyber Amendments

Last week, the House passed the National Defense Authorization Act (NDAA) for FY 2016 by a 269-151 vote. During the floor debate, a number of amendments related to cybersecurity were added to the bill. Rep. Mark Walker (R-NC) offered two amendments that both were included in the final bill – one regarding how defense contractors share information on cyber threat indicators with the federal government and a second amendment related to cyber acquisition standards. In addition, Rep. Will Hurd (R-TX) also introduced a successful amendment that would allow the Department of Defense to pay for cyber certifications and training for its cyber professionals.

The Senate Armed Services Committee also marked up its NDAA bill last week. The bill is expected to be considered on the Senate floor this summer. As international relations with Russia and China continue to be contentious and concerns about terrorism continue, we expect the Senate to seek to add additional cybersecurity amendments on the Senate floor.

This Week’s Hearings:

  • Tuesday, May 19: The House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “Protecting Critical Infrastructure: How the Financial Sector Addresses Cyber Threats.”

Executive Branch Activity

ISAO Created as Part of President Obama’s February Executive Order

Last week, the Defense Security Information Exchange officially announced that it would be rebranded as the Defense Industrial Base Information Sharing and Analysis Organization (ISAO). This is the first official ISAO that has been named since President Obama issued his Executive Order in February calling for the creation of a network of ISAOs to share cyber threat information between a variety of public and private sector entities. Other groups, such as the American Bar Association and the state of Virginia, have indicated their interest in creating an ISAO as well.

The U.S. Department of Homeland Security (DHS) will hold a workshop on June 9 in Cambridge, Massachusetts to discuss ISAO engagements and how to form an ISAO. In addition, DHS is working to identify an organization that will set up and manage the ISAO Standards Organization, which is charged with drafting a set of voluntary guidelines for the creation and function of ISAOs. The Department is expected to announce the organization this summer so that it will be fully functioning by this fall.

Department of State Not Planning to Update International Strategy for Cybersecurity

At a Senate Foreign Relations Committee hearing last week, U.S. State Department Coordinator for Cyber Issues Christopher Painter indicated that the State Department does not plan to update its 2011 International Strategy for Cyberspace. Many of the Senators and witnesses at the hearing called on the Department to update the strategy given that the threat of cyber attacks from other countries has increased and changed significantly since the time that the strategy was updated. At the hearing, Painter noted that the strategy document was intended to serve as a “high-level” document so the overall goals have not changed and do not necessarily need to be updated.

FY 2016 Labor-HHS-Education Spending Bill to be Released in Coming Weeks

Posted in Education

Legislative Activity

FY 2016 Labor-Health and Human Services (HHS)-Education Appropriations

In the coming weeks, the House Appropriations Subcommittee on Labor-HHS-Education plans to release its FY 2016 appropriations bill to fund the Departments of Labor, Health and Human Services, and Education. When the draft bill is released, it will mark the first time the subcommittee has done so since FY 2013. In the past, this spending measure has been very controversial, partly due to the policy riders attached to the bill. In keeping with past years, we expect serious debate and contention over the bill as House Democrats already have expressed their displeasure with the Budget Committee only allocating $153.05 billion for the entire bill, representing a $3.7 billion cut from FY 2015. The Senate Appropriations Committee has not indicated whether it will release a Labor-HHS-Education bill this year, as it has not released or marked up any FY 2016 bills to date.

College Affordability and Innovation Act Reintroduced

Last Friday, Senators Chris Murphy (D-CT) and Brian Schatz (D-HI) and Representative Jim Himes (D-CT) reintroduced the College Affordability and Innovation Act. The legislation would tie institutions’ federal funding to demonstrated ability to meet affordability and outcomes goals by supplementing or withholding funding to institutions based on new accountability measures. In addition to implementing evaluations on college affordability, the bill also creates 1) a new evidence-based pilot program to encourage innovation and 2) a new commission to recommend minimum accountability standards for all institutions that receive Title IV dollars.

This Week’s Hearings:

  • Wednesday, May 20: The Senate Health, Education, Labor and Pensions Committee will hold a hearing at 10:00 a.m. titled “Reauthorizing the Higher Education Act: Exploring Institutional Risk-sharing.” Building upon the comments received on its risk-sharing white paper, the Committee will hear from panelists representing the American Enterprise Institute, Strayer Education, Inc., Young Invincibles, and Temple University.

Executive Branch Activity

Department of Education Recent Graduates Employment and Earnings Survey (RGEES)

As specified in regulations published last October and which will take effect on July 1, the Department of Education is required to develop an earnings survey to support gainful employment (GE) program evaluations. In a notice published last week, the Department announced that it will be collecting earnings data through a Recent Graduates Employment and Earnings Survey (RGEES) pilot test, which will “measure unit response rates and enable comparisons to earnings data collected through other surveys and in administrative records.” The RGEES pilot test results will compare “median earnings collected through the survey to median earnings for graduates from comparable programs based on a match to the Social Security Administration as part of the 2012 gainful employment informational rates.” The Department is inviting interested persons to submit comments on the proposed RGEES pilot test by July 13, 2015; it will publish the draft standards for survey administration in a future notice. The Department’s Information for Financial Aid Professionals (IFAP) website provides more detailed information on gainful employment regulations, training and resources.

Student Loan Issues

Much attention has been paid to student loan issues by policymakers in Washington, DC recently, as interest rates are set to drop, the Department of Education is expected to published new regulations on cash management of campus debit cards, and the Consumer Financial Protection Bureau (CFPB) begins to address student loan servicing issues. Specifically:

  • Interest Rates. For the first time since Congress tied student loan interest rates to the market two years ago, the annual rates will decrease by .37% for each loan category (Undergraduate Direct Loans, Graduate and professional Direct Loans, and Direct PLUS Loans) for the 2015-2016 year.
  • Cash Management Regulations. Because negotiated rulemaking committee members did not reach consensus early last year on proposed regulations relating to banks and other financial firms’ distribution of billions in grants and loans leftover after students pay their tuition and other costs, the Department decided to move forward in creating its own rules. Those rules will be officially published today and focus on debit and prepaid cards’ fees and charges, as well as checking accounts or other financial products marketed to students under an agreement with the college by financial institutions. They aim to ensure students have convenient access to their student aid dollars. Comments are due in early July.
  • CFPB Hearing. A hearing held last Thursday in Milwaukee, WI by the CFPB kicked off the bureau’s official inquiry into student loan servicing issues and the impact they have on student loan defaults. Department of Education Under Secretary Ted Mitchell, who spoke at the hearing, said servicers should aim for a 0% default rate for student borrowers and called for servicer incentives to align with that goal. He also reviewed actions currently underway at the Department as a result of President Obama’s Student Aid Bill of Rights that would simplify enrollment in income-based repayment programs, improve online financial literacy tools, and develop an integrated complaint system for borrowers. At the hearing, witnesses shared testimony about the pervasiveness of the problem with nearly 40% experiencing issues with servicers. As such, CFPB is soliciting comments to help policymakers and participants “improve borrower service, reduce defaults, develop best practices, assess consumer protections, and spur innovation.” Institutions of higher education are encouraged to submit comments, which are due by July 13. Such information will help inform implementation of executive actions under the Student Aid Bill of Rights.

DOE Considers More Offshore Wind; Congress to Address Pipelines, WOTUS and Sportsman Recreational Enhancement Act

Posted in Environment and Natural Resources

Regulatory Activity

Offshore Wind

The Department of Energy has released a request for information (RFI) to better understand challenges facing the offshore wind industry. Responses are due June 22.

Legislative Activity

Pipelines on Federal Lands

On Wednesday, May 20, the House Natural Resources Committee, Subcommittee on Energy and Mineral Resources, will hold a hearing to consider draft legislation addressing construction of natural gas pipelines on Federal land.


On Tuesday, May 19, the Senate Environment and Public Works Committee, Subcommittee on Fisheries, Water, and Wildlife, will hold a hearing regarding proposed legislation to revise the definition of “waters of the United States.”


On Thursday, May 21, the House Energy and Commerce Committee, Subcommittee on Energy and Power, will hold a hearing concerning the Administration’s Quadrennial Energy Review and related discussion drafts. Secretary Ernest Moniz of the Department of Energy will testify.

Stream Protection Rule

On Wednesday, May 20, the House Natural Resources Committee, Subcommittee on Oversight and Investigations, will hold an oversight hearing concerning the Surface Mining’s Stream Protection Rule.

Small Businesses

On Tuesday, May 19, the Senate Committee on Small Business and Entrepreneurship will hold a hearing to examine the impacts of environmental regulation on small businesses.


On Wednesday, May 20,  the Senate Commerce, Science, and Transportation Committee, Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard, will hold a hearing to examine fishery management and data collection. National Oceanic and Atmospheric Administration (NOAA) Administrator, Kathryn Sullivan, will testify.

Sportsman Recreational Enhancement Act

On Wednesday, May 20, the House Natural Resources Committee, Subcommittees on Federal Lands, will hold a joint hearing with the Subcommittee on Water, Power and Oceans to consider a discussion draft of legislation intended “to protect and enhance opportunities for recreational hunting, fishing, and shooting,” also known as the “Sportsmen’s Heritage and Recreational Enhancement Act of 2015” or the “SHARE Act.”


On Wednesday, May 20, the House Natural Resources Committee, Subcommittee on Subcommittee on Water, Power and Oceans, will hold a hearing to examine proposed legislation, the “Electricity Reliability and Forest Protection Act,” which intends to address wildfires that impact electricity delivery.

Banking Committee Set to Mark-Up Legislative Package of Financial Regulatory Reform

Posted in Financial Services

Legislative Activity

Banking Committee Set to Mark-Up Legislative Package of Financial Regulatory Reform

As we highlighted last week, this Thursday, May 21, the Senate Banking Committee is scheduled to hold a markup of Chairman Richard Shelby’s (R-AL) highly-anticipated legislative package of financial regulatory reform. Chairman Shelby last week released a draft of his legislation, which calls for broad reforms of financial regulation. The bill, over 200 pages long, includes eight titles, which address: (1) regulatory relief and consumer access to credit; (2) systemically important bank holding companies; (3) the Financial Stability Oversight Council’s (FSOC) designation process for nonbank financial companies; (4) the regulatory framework for the insurance industry; (5) oversight of the Federal Reserve; (6) improving access to capital and tailoring regulations in the financial markets; (7) the government-sponsored enterprises (GSEs); and (8) technical corrections to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). For further highlights of specific provisions, see our analysis from last week.

Prospects for the bill remain uncertain, particularly given the narrowly divided Senate and a President who is likely to veto any proposals that are perceived as paring down Dodd-Frank. However, we anticipate that Republicans will continue to push to approve legislation on various targeted financial reform issues and may use this proposal as a starting point to begin negotiations. Notably, in response to Chairman Shelby’s legislation, House Financial Services Committee Chairman Jeb Hensarling (R-TX) expressed support for the bill, stating he “hope[s] we can at least find some common ground with Democrats on providing some regulatory relief for our struggling community banking institutions.”

FHFA Making Progress on Single Security

Last Friday, the Federal Housing Finance Agency (FHFA) released An Update on the Structure of the Single Security, which details FHFA’s progress on the single mortgage-backed security (Single Security) that would be issued by the government-sponsored enterprises (GSEs). As the agency notes in the update, developing the Single Security is a key goal of FHFA’s 2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac, and finalizing the Single Security structure is a 2015 Scorecard item for the GSEs and for Common Securitization Solutions, LLC, the joint-venture between Fannie Mae and Freddie Mac that is advancing the work on the project. According to FHFA, the Single Security project is intended “to improve the overall liquidity of Fannie Mae and Freddie Mac mortgage-backed securities, and lower costs for borrowers and taxpayers.”

As FHFA Director Mel Watt noted last week, “[w]hile the Single Security remains a multi-year initiative, we believe this Update represents another significant milestone we have reached in defining the structure and processes necessary to transition successfully to a Single Security.” FHFA is presently accepting feedback on the Single Security project.

This Week’s Hearings:

  • Tuesday, May 19: The House Financial Services Subcommittee on Housing and Insurance will hold a hearing titled “The Future of Housing in America: Oversight of the Rural Housing Service.”
  • Tuesday, May 19: The House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “Protecting Critical Infrastructure: How the Financial Sector Addresses Cyber Threats.”
  • Wednesday, May 20: The House Financial Services Committee will hold a markup of the following legislation:
    • H.R. 432, the “SBIC Advisers Relief Act of 2015”;
    • H.R. 686, the “Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2015”;
    • H.R. 1334, the “Holding Company Registration Threshold Equalization Act of 2015”;
    • H.R. 1525, the “Disclosure Modernization and Simplification Act of 2015”;
    • H.R. 1675, the “Encouraging Employee Ownership Act of 2015”;
    • H.R. 1723, the “Small Company Simple Registration Act of 2015”;
    • H.R. 1847, the “Swap Data Repository and Clearinghouse Indemnification Correction Act of 2015”;
    • H.R. 1965, the “Small Company Disclosure Simplification Act”;
    • H.R. 1975, the “Securities and Exchange Commission Overpayment Credit Act”;
    • H.R. 2064, the “Improving Access to Capital for Emerging Growth Companies Act”;
    • H.R. 2354, the “Streamlining Excessive and Costly Regulations Review Act”;
    • H.R. 2356, the ‘‘Fair Access to Investment Research Act of 2015”;
    • H.R. 2357, the ‘‘Accelerating Access to Capital Act of 2015”; and
    • A resolution to name a new Republican Member of the Committee to subcommittees, and for other purposes
  • Thursday, May 21: The House Financial Services Task Force to Investigate Terrorism Financing will hold a hearing titled “A Dangerous Nexus: Terrorism, Crime, and Corruption.”
  • Thursday, May 21: The Senate Banking Committee will hold a markup of the “Financial Regulatory Improvement Act of 2015.”

Regulatory Activity

SEC to Hold Open Meeting on Registered Investment Companies, Investment Advisers

On Wednesday, May 20, the Securities and Exchange Commission (SEC) will hold an open meeting to consider: (1) whether to propose new rules and forms and amendments to current rules and forms to modernize the reporting and disclosure of information by registered investment companies; and (2) whether to propose form and rule amendments to require investment advisers to provide additional information concerning their operations, require the maintenance of performance records, and remove outdated transition provisions from rules.

21st Century Cures Act Advances to Committee Markup; HHS Issues Guidance on Preventive Services; CMS Urges Physicians to Prepare for ICD-10

Posted in Health Care

Legislative Activity

Committee on Energy and Commerce to Mark Up 21st Century Cures Act

On Tuesday, May 19, the House Committee on Energy and Commerce will begin its markup of the 21st Century Cures Act, to be continued on Wednesday, May 20. The legislation is the product of the bipartisan 21st Century Cures Initiative that was spearheaded by Committee Chairman Fred Upton (R-MI) and Rep. Diana DeGette (D-CO) this past year. The Initiative held various events and authored policy papers on topics such as innovating public health agencies, incorporating patient perspectives into the regulatory process, and modernizing medicine and medical product regulation.

The Act includes an increase of funding for the National Institutes of Health (NIH), changes to the regulatory authority of the Food and Drug Administration (FDA), and provisions focused on electronic health records, telemedicine, and drug manufacturing and development, among others. The Subcommittee on Health passed the legislation by unanimous voice vote last week, though the Committee was still working on finalizing language and determining plans to offset the bill’s costs after the markup.

While Chairman Upton has indicated he would like to consider the 21st Century Cures Act on the House floor in early summer, the Senate is unlikely to consider companion legislation this year. Rather, leaders of the Senate Committee on Health, Education, Labor, and Pensions (HELP) have acknowledged that they do not anticipate significant movement on their parallel legislation until early 2016.

This Week’s Hearings:

  • Tuesday, May 19: The House Committee on Ways and Means Subcommittee on Health will hold a hearing titled “Improving Competition in Medicare: Removing Moratoria and Expanding Access.”
  • Tuesday, May 19: The House Committee on Energy and Commerce will convene for opening statements for the markup of H.R. ___, the 21st Century Cures Act.
  • Wednesday, May 20: The House Committee on Energy and Commerce will reconvene for the markup of H.R. ___, the 21st Century Cures Act.
  • Wednesday, May 20: The House Committee on Ways and Means Subcommittee on Oversight will hold a hearing titled “Examining the Use of Administrative Actions in the Implementation of the Affordable Care Act.”
  • Wednesday, May 20: The Senate Special Committee on Aging will hold a hearing titled “Challenging the Status Quo: Solutions to the Hospital Observation Stay Crisis.”
  • Thursday, May 21: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “What Are the State Governments Doing to Combat the Opioid Abuse Epidemic?”

Regulatory Activity

HHS Issues Guidance on Preventive Services

On Monday, May 11, the Departments of Health and Human Services (HHS), Labor, and Treasury released “FAQs About Affordable Care Act Implementation (Part XXVI),” which clarifies the coverage of preventive services in non-grandfathered group health plans and plans purchased through the individual or group marketplace. This FAQ addresses topics including coverage of: genetic counseling and testing for BRCA-related cancer; FDA-approved contraceptives; sex-specific preventive services; preventive care for dependent children, including preconception and prenatal care; and colonoscopies performed pursuant to U.S. Preventive Services Task Force (USPSTF) guidelines.

This guidance was released following reports by the National Women’s Law Center and the Kaiser Family Foundation, which found that many health insurance plans had not been fully adhering to the preventive service requirements under the Affordable Care Act.

CMS Urges Doctors to Prepare for ICD-10

On Wednesday, May 13, the Centers for Medicare and Medicaid Services (CMS) Deputy Administrator Sean Cavanaugh urged physicians in small practices to prepare for the transition from the ninth edition of the International Classification of Diseases Procedure Coding System (ICD-9) to the tenth edition (ICD-10). Under current law, ICD-10 is set to become the coding system of the United States on October 1, 2015.

Cavanaugh stated that the agency is encouraged by initial testing of the ICD-10 payment system, and believes that most providers are ready for the transition. He stressed that for those that are not ready, “there’s still time and there are plenty of tools” available to assist providers.


GAO Finds Medicaid 1115 Waivers Lack Transparency

On Wednesday, May 13, the Government Accountability Office (GAO) released a report on “Medicaid Demonstrations: Approval Criteria and Documentation Need to Show How Spending Furthers Medicaid Objectives.” The report focuses on section 1115 waivers, which authorize HHS to waive certain Medicaid requirements and authorize expenditures not otherwise allowed for demonstration projects.

After reviewing section 1115 demonstrations approved by HHS between June 2012 and October 2013, GAO found that HHS’ decision-making in approving the waivers has not been clear. HHS has not issued specific criteria for making these determinations, nor do the waiver approval documents specify what approved expenditures are precisely for and how they will promote Medicaid objectives. GAO concluded that in the absence of clear criteria and documentation, the bases for HHS’ decisions “involving tens of billions of Medicaid dollars are not transparent to Congress, states, or the public.”

GAO recommended that HHS take three actions: (1) issue criteria for assessing whether section 1115 expenditure authorities are likely to promote Medicaid objectives; (2) ensure the application of these criteria is documented in all HHS’ approvals of section 1115 demonstrations; and (3) take steps to ensure that demonstration approval documentation consistently provides assurances that states will avoid duplicative spending by offsetting other federal revenues when claiming Medicaid matching funds. Although HHS largely agreed with GAO’s recommendations, HHS was silent on whether it plans to issue written guidance on the “general criteria” it uses in approving section 1115 waivers.

Immigration Provision Removed from House Defense Bill; House Committee To Consider Pending Legislation; DHS Secretary: Global Terror Threat in ‘New Phase’

Posted in Homeland Security

Legislative Activity

Immigration Provision Removed from House Defense Bill

On Friday, the House passed H.R. 1735, the National Defense Authorization Act for FY 2016, by a vote of 269 in favor and 151 against. During floor debate, the chamber narrowly approved an amendment proposed by Rep. Mo Brooks (R-AL) stripping language from H.R. 1735 that would encourage the Pentagon consider enlisting undocumented immigrants, knowing as DREAMers, into the U.S. military in exchange for a path towards legal status. Republican leadership was concerned the original provision, offered by freshman Representative Ruben Gallego (D-AZ) during the House Armed Services Committee’s markup of H.R. 1735, could threaten the entire bill after a group of Republicans threatened to oppose it over the proposal. The final vote on the Brooks amendment was 221 to 202, with 20 Republicans joining all Democrats in opposition to removing Rep. Gallego’s provision.

House Committee To Consider Pending Legislation

This week, the House Homeland Security Committee will meet to consider pending legislation, including:

  • H.R. 2200, the CBRN Intelligence and Information Sharing Act of 2015, to facilitate chemical, biological, radiological, and nuclear intelligence and information sharing within the homeland security community;
  • H.R. 1738, the Integrated Public Alert and Warning System Modernization Act of 2015, which would direct the Homeland Security Secretary to modernize and implement the national integrated public alert and warning system to disseminate homeland security information; and
  • Several bills aimed at curbing waste, fraud, and abuse at DHS.

This Week’s Hearings:

  • Tuesday, May 19: The House Judiciary Committee will host a hearing titled “Policing Strategies for the 21st Century.”
  • Tuesday, May 19: The Senate Judiciary Subcommittee on Crime and Terrorism will host a hearing titled “Body Cameras: Can Technology Increase Protection for Law Enforcement Officers and the Public?”
  • Wednesday, May 20: The House Homeland Security Committee will meet to consider pending legislation.
  • Thursday, May 21: The House Homeland Security Subcommittee on Counterterrorism and Intelligence will hold a hearing titled “Admitting Syrian Refugees: The Intelligence Void and the Emerging Homeland Security Threat.”
  • Thursday, May 21: The Senate Commerce Committee will hold a hearing to consider the nomination of Vice Admiral Peter Neffenger to serve as Administrator of the Transportation Security Administration and Assistant Secretary of at the Department of Homeland Security.

Executive Branch Activity

DHS Secretary: Global Terror Threat in ‘New Phase’

In interviews this week, Homeland Security Secretary Jeh Johnson stated that groups like ISIS are using social media to attract followers, bringing the U.S. to a new stage in its fight against global terrorism. Secretary Johnson explained that groups are using these tools to attract new fighters to join them in the Middle East or even launch attacks in the U.S. He noted that “Because of the use of the Internet, we could have little, or no, notice in advance of an independent attacker attempting to strike. And so, that’s why law enforcement at the local level needs to be ever more vigilant, and we’re constantly reminding them to do that.” Federal Bureau of Investigation Director James Comey recently warned that there may be thousands of ISIS followers in the U.S.; federal law enforcement agents are reportedly undertaking hundreds of investigations to determine who may pose a threat to the homeland.

Congress will most certainly take an increased interest in this issue, especially following the attack earlier this month on an event in Dallas, Texas, with cartoons of the Prophet Mohammed. In fact, the House Homeland Security Subcommittee on Counterterrorism and Intelligence will consider risks posed by admitting refugees from Syria in a hearing this week.

Senate to Begin Floor Debate of Its TPA Measure This Week; Congressional Committees to Focus on Nepal, Cuba, Extremism in the Middle East, and U.S. Trade Promotion Agencies

Posted in Defense, International

Trade Promotion Authority

On Tuesday, 12 May, the Senate failed, on a largely party line vote, to pass a motion to proceed to H.R. 1314, which includes Trade Promotion Authority (TPA) and Trade Adjustment Assistance (TAA). After the failed vote, negotiations between Republicans and Democrats continued in earnest to chart a way forward for the TPA-TAA bill and other pending trade legislation. On Thursday, 14 May, the Senate voted on the motion once again and passed it (65-33). Senators immediately began filing amendments for the impending floor debate.

While Senate Majority Leader Mitch McConnell (R-Kentucky) would like to pass the bill by the end of this week – when Congress is expected to recess for one week in observance of the Memorial Day holiday – Democrats are pushing for enough time to vote on amendments to the legislation. Majority Leader McConnell has affirmed that debate will include an open amendment process, which could stretch Senate floor debate until after the Memorial Day recess.

The Senate is scheduled to vote on two amendments this afternoon:

  1. Senator Sherrod Brown’s (D-Ohio) amendment to increase annual funding for the TAA program from $450 million to $575 million, and
  2. Senator James Lankford’s (R-Oklahoma) amendment that would make it an overall trade negotiating objective of the United States “to take into account conditions relating to religious freedom of any party to negotiations for a trade agreement with the United States.”

Both of these amendments will require 60 votes in order to be adopted.

The House of Representative’s floor schedule for this week does not include consideration of any trade measures. The House is expected instead to begin its consideration of TPA and other trade measures after the Memorial Day recess.

On Tuesday, 19 May, the House Foreign Affairs Subcommittee on Trade will hold a hearing titled, “Trade Promotion Agencies and U.S. Foreign Policy.” Senior leaders from the Export-Import Bank and the Overseas Private Investment Corporation are scheduled to testify.


As part of the negotiated compromise, the Senate first voted 97-1 last Thursday to pass a measure that includes reauthorization of the African Growth and Opportunity Act (AGOA), extension of the Generalized System of Preferences (GSP) program, and renewal of a Haiti trade preference program. This sets up a clear path for the bill to pass in the House of Representatives in the coming weeks.

Customs Measure

The Senate also passed H.R. 644, a customs measure, by a vote of 78-20. The fate of that bill, which contains provisions to address currency manipulation that are opposed by the Administration, remains unclear at this time. Some Senators are seeking to have H.R. 644 included as an amendment to the TPA-TAA bill to ensure its passage, particularly since the House Leadership has indicated it may not be inclined to consider the measure as passed by the Senate.

Trans-Pacific Partnership

Congress’ delayed start on the TPA debate has correspondingly slowed the momentum of concluding a Trans-Pacific Partnership (TPP) deal by the end of May. Nevertheless, TPP negotiators are in Guam to continue negotiations to narrow differences on the more controversial chapters – intellectual property (IP), state-owned enterprises (SOEs), and the environment. According to the Office of the U.S. Trade Representative (USTR), TPP negotiators will meet from 15-25 May.

National Defense Authorization Act

On Thursday, 14 May, the Senate Armed Services Committee (SASC) approved its Senate’s Fiscal Year (FY) 2016 National Defense Authorization Act (NDAA). That same day, the House began debate of its FY 2016 NDAA (H.R. 1735) and consideration of 135 amendments previously approved by the House Rules Committee. The House concluded its debate early Friday, passing its amended NDAA measure by a vote of 269-151.


Last Thursday, the House passed The Iran Nuclear Agreement Review Act (H.R. 1191) by a vote of 400-25. The Iran measure now heads to President Obama for signature. If he signs the measure, which he has indicated he will do, the bill will deny the Administration the authority to waive or suspend sanctions if at least two-thirds of lawmakers from both chambers reject the terms of the final deal negotiated between the P5+1 nations and Iran.

Russia/Ukraine Crisis

In a potential sign of progress in US-Russia relations, Secretary of State John Kerry held two separate, four-hour long meetings with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov in Sochi, Russia last week. Secretary Kerry and Minister Lavrov participated in a joint press availability following their meeting, where the two strongly affirmed that the conflict in Ukraine will only be resolved through comprehensive and full implementation of the Minsk Agreements by all the responsible parties. Secretary Kerry added that “[i]f and when Minsk is fully implemented, it is clear the U.S. and EU sanctions can begin to be rolled back.”

The White House and State Department spokespeople each said last Wednesday that Secretary Kerry used his Tuesday trip to Sochi to deliver a direct and strong message regarding the ongoing conflict in Ukraine. The State Department also noted that Secretary John Kerry told his NATO Foreign Minister colleagues at a meeting in Turkey that the United States considers this a critical moment for Russia and the separatists in eastern Ukraine to live up to their respective commitments under the Minsk Agreements.

After accompanying Secretary Kerry to Sochi and Turkey, Assistant Secretary for European and Eurasian Affairs Victoria Nuland visited Kyiv, Ukraine. She met with senior Ukrainian Government officials to discuss various bilateral and regional issues from 14-16 May.


Secretary of Defense Ashton Carter reported a U.S. Special Operations mission inside Syria had resulted in a key ISIL commander being killed during a daring raid in eastern Syria overnight Friday to Saturday

Last Thursday, reports emerged that ISIL has advanced to the gates of ancient Palmyra, raising fears the Syrian world heritage site could face destruction. This advance comes as an international conference was under way in Cairo to address the destruction already wreaked by ISIL on the ancient sites of Nimrud and Hatra in Iraq. By the weekend, it appears Palmyra was spared. Meanwhile, ISIL gained ground in Iraq, seizing control of the city of Ramadi.

On Tuesday, 19 May, the Senate Foreign Relations Committee is expected to hold a hearing titled, “The Rising Tide of Extremism in the Middle East.”


Six U.S. Marines died in a helicopter crash while supporting earthquake relief efforts in Nepal last Tuesday.

On Wednesday, 20 May, the House Foreign Affairs Subcommittee on Asia and the Pacific will hold a hearing titled, “Everest Trembled: Lessons Learned from the Nepal Earthquake Response.”


On Wednesday, 20 May, the Senate Foreign Relations Committee will hold a hearing to explore the way forward with the U.S.-Cuba relationship.

Senate Confirmation Hearing

On Wednesday, 20 May, the Senate Foreign Relations Committee will hold a confirmation hearing for the following individuals to be U.S. Ambassadors: Gregory Delawie (Kosova); Ian Kelly (Georgia); Nancy Bikoff Pettit (Latvia); and Azita Raji (Sweden).

GCC Summit

After a day-long summit last week between Gulf Cooperative Countries (GCC) and President Barack Obama, the United States said in a joint statement that it will continue to deter and confront external aggression against its allies and partners, as done during the Gulf War. The United States also affirmed it would work with the GCC countries to determine an appropriate response in the face of such aggression, including the potential use of military force.

Looking Ahead

Washington will likely focus on the following upcoming matters:

  • 21 May: President Obama will host Tunisian President Beji Caid Essebsi
  • 7-8 June: G-7 Summit in Schloss Elmau, Germany
  • 30 June: US Export-Import Bank charter expires
  • 30 June: P5+1 Talks with Iran deadline to reach a deal
  • [TBD] July: President Obama to travel to Kenya attend the Global Entrepreneurship Summit
  • 15 September: 70th Session of the UN General Assembly (UNGA) opens in New York City
  • 24 September: Pope Francis to address Congress and meet with President Obama
  • 28 September: General debate of the UNGA begins

House, Senate Set to Move on Short-Term Highway Funding Extension

Posted in Tax and Retirement

Legislative Activity

House, Senate Set to Move on Short-Term Highway Funding Extension

As tax-writers continue their push for tax reform this Congress, the focus this week will shift to providing a short-term extension of funding for the Highway Trust Fund. In the Senate, Finance Committee Chairman Orrin Hatch (R-UT) and Environmental and Public Works Committee Chairman Jim Inhofe (R-OK) appear to have coalesced around a plan to provide for an $11 billion extension of the Highway Trust Fund, which would fund the nation’s infrastructure through December 31 of this year. While exactly how their proposal would be funded remains unclear, it appears that a gas tax hike is off the table. As Representative Rosa DeLauro (D-CT) stated last week, “you cannot pass a gas tax. There isn’t going to be anyone that’s going to vote for an increase in the gas tax.” Lawmakers supporting an end of the year extension have suggested that funding the Highway Trust Fund through the end of the year will provide them sufficient time to come up with long-term funding for the program.

In a separate camp, Democrats (and some Republicans) who are skeptical of an end of the year extension will make strides this week to pass a two-month extension of the program, which would extend highway funding authority through July 31. The House-version of the proposal, which was introduced by Ways and Means Committee Chairman Paul Ryan (R-WI) and Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA), is expected to be considered on the floor this week once the House Rules Committee reviews the legislation (H.R. 2353) later today. On the Senate side, Senators Barbara Boxer (D-CA) and Tom Carper (D-DE) have introduced a similar proposal (S. 1350), which Senate Majority Leader Mitch McConnell (R-KY) has announced will be fast-tracked and is likely to receive floor consideration this week. Lawmakers pursuing this route are hoping to put pressure on lawmakers to work toward a long-term extension of the Highway Trust in the near-term.

With Highway Trust Fund funding set to expire on May 31, and lawmakers scheduled to leave Washington at the end of the week for the Memorial Day recess, this issue is likely to stay front and center throughout the week.

JCT Struggling with Dynamic Scoring

Recently, Tom Barthold, Chief of Staff, Joint Committee on Taxation (JCT) announced that the JCT is struggling with how to arrive at a point estimate, rather than a range of estimates, when required to use dynamic scoring methods to score proposed legislation. Moreover, he noted that staff is still trying to determine “what [] extra information should be [collected]” for purposes of dynamic scoring.

Regulatory Activity

TIGTA Issues Report on Improper ACA Tax Credits

Last week, the Treasury’s Inspector General for Tax Administration (TIGTA) issued a report on improper Premium Tax Credit (PTC) payments, which are offered to qualified taxpayers under the Affordable Care Act (ACA) to help them afford health insurance purchased through insurance exchanges. According to the report, “[b]ecause the IRS and the Department of Health and Human Services are responsible for the administration of the PTC, improper PTC payments can result from weaknesses in either agency’s programs. As a result, the IRS cannot effectively assess the risk of PTC improper payments, estimate the improper payment rate and dollars, or establish corrective actions to address the causes of and reduce improper PTC payments.” In response, the IRS suggested that TIGTA “mischaracterized” the agency’s efforts and underscored that they are “working jointly” with the Centers for Medicare and Medicaid Services, the Department of Health and Human Services, the Department of the Treasury, and the Office of Management and Budget on an “interagency effort to develop the definition of an improper payment” with respect to the PTC, as well as to “develop plans for assessing risks.”