Government Funding Bills Stall in House and Senate: The odds of a government shutdown gradually increased over the course of this week. In the Senate, consideration of the first appropriations minibus was delayed after Sen. Ron Johnson (R-WI) objected to a procedural vote that would have allowed for swift consideration of amendments. The three-bill package includes the fiscal year (FY) 2024 funding measures for Military Construction, Veterans Affairs, and Related Agencies; Transportation, Housing and Urban Development, and Related Agencies; and Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. Sen. Johnson was joined by several Senate Republicans in requesting that the bills be separated for floor consideration; Senate Appropriations Vice Chair Susan Collins (R-ME) criticized the group for slowing the approval process. Appropriations activity in the House also stalled this week.
The conservative Freedom Caucus derailed consideration of the FY 2024 defense appropriations bill in the House, forcing Speaker Kevin McCarthy (R-CA) to pull the bill from the floor amid a standoff over topline funding levels and other polarizing issues. Speaker McCarthy was similarly forced to pull a separate appropriations bill off the floor before the August recess, indicating the two sides are no closer to compromise than before the break. Existing levels of government funding expire on Sept. 30, but House Freedom Caucus Chair Scott Perry (R-PA) maintains that there is ample time to work out a deal. The Freedom Caucus is publicly opposed to enacting a short-term continuing resolution (CR) to stave off a shutdown, instead holding out for a long-term funding package that aligns with their list of demands. While Speaker McCarthy could seek Democratic support for a stopgap funding measure, doing so would likely push conservatives to file a motion to vacate, a formal challenge that would force a perilous vote on his position as speaker. Heading into the weekend, negotiators are reportedly working on a compromise that may bundle a short-term CR with priorities like disaster relief funding and immigration reform.
Amid the turmoil around government funding, Speaker McCarthy launched an impeachment inquiry into President Joe Biden on Tuesday. He made the announcement without holding a formal vote on the floor, clashing with his past criticism of then-Speaker Nancy Pelosi’s (D-CA) decision to bypass the same step when initiating impeachment inquiries during the Trump administration.
White House Cancer Moonshot Announces New Commitments to End Cancer: On Wednesday, Sept. 13, the White House announced new actions that federal agencies are taking to advance the White House Cancer Moonshot and commitments from non-governmental organizations (NGOs) and the private sector to advance the Biden administration’s goal of reducing the cancer death rate by half over the next 25 years. One notable plan includes $240 million for the Advanced Research Projects Agency for Health (ARPA-H) to fund efforts to develop new tools to detect cancer early, produce innovative approaches to visualize cancer cells during surgery, pursue new treatment approaches and design devices that could deliver treatments directly to cancer cells. Additionally, the announcement included a new “biomedical data fabric toolbox” to pioneer prototype technologies capable of searching cancer datasets for disease detection, prevention and treatment. Other initiatives include the establishment of ARPANET-H to diversify clinical trials for underserved communities, additional cancer research on the International Space Station (ISS) in partnership with NASA’s Division for Biological and Physical Science, a $15 million program to reduce menthol and flavored tobacco usage and new sites for the Veterans Affairs (VA) National TeleOncology program. The White House also announced commitments from NGOs and the private sector, including the American Cancer Society (ACS), CVS Health, the Leukemia & Lymphoma Society (LLS), DIPG DMG Research Funding Alliance and the Focused Ultrasound Foundation (FUSF).
Expected Floor Vote Next Week on the Tri-Committee Health Care Transparency Package: On Wednesday, Sept. 13, the Congressional Budget Office (CBO) reported that House leadership is looking to schedule a vote in September on the updated health care transparency package (H.R. 5378, the Lower Costs, More Transparency Act) released by House Republicans on the Energy and Commerce, Ways and Means and Education and the Workforce committees last week. The CBO reported that it is reviewing the legislation’s potential impact on revenue and spending. It would be taken up under the suspension of rules and would require a two-thirds vote to pass. Under suspension, floor debate is limited, all floor amendments are prohibited and points of order against the bill are waived. House Energy and Commerce Committee Ranking Member Frank Pallone (D-NJ) signed onto the legislation on Friday, Sept. 8, after asking for changes related to hospital price transparency, which is now included in the updated package. The package contains several provisions from the PATIENT Act of 2023 (H.R. 3561) to promote health coverage price transparency by requiring group health plans to make personalized pricing information available. Additionally, the package includes various site-neutral provisions for Medicare payments and allows the Food and Drug Administration (FDA) to share information with generic drug manufacturers about differences in formulations compared to brand-name drugs to expedite approval. The package also codifies and expands surprise billing rules included in the No Surprises Act and would eliminate the Medicaid Disproportionate Share Hospital (DSH) cuts for FY2024 and FY2025. House Ways and Means Ranking Member Richard Neal (D-MA) and House Education and the Workforce Ranking Member Bobby Scott (D-VA) did not sign onto the updated package, raising concerns that it does not contain necessary transparency requirements for private equity ownership in the health care industry.
Year-End Tax Package: Lawmakers on both sides of the aisle have been working toward a tax deal for over a year. With key provisions of the Tax Cuts and Jobs Act of 2017 either having expired or soon expiring, lawmakers are eager to strike a deal. However, a potential package hinges on whether Democrats and Republicans can agree to an extension and expansion of the child tax credit (CTC) to balance the extension of several business-related provisions, with a focus on the research and development (R&D) amortization deduction, bonus depreciation and the net business interest deduction:
- R&D Amortization: Historically, taxpayers were permitted to deduct certain research and development (R&D) costs immediately under section 174. However, beginning in 2022, businesses must amortize R&D expenditures over five years. Lawmakers have introduced bipartisan proposals to reverse the restrictions retroactively, although those have failed to be enacted despite growing industry concerns about the impact of the amortization requirement, especially on startup enterprises.
- Accelerated Bonus Depreciation: Through 2022, taxpayers could claim the 100% bonus depreciation under section 168(k) for eligible property placed in service during the taxable year. However, starting this year, the bonus-depreciation allowance is 80%, the first step in a phase down by 20% annually until it is entirely eliminated for equipment placed in service after 2026.
- Business Interest Limitation: Through 2021, the deduction for net business interest expense under 163(j) was limited to a maximum of 30% of a taxpayer’s earnings before interest, taxes, depreciation and amortization (EBITDA). Beginning in 2022, the provision narrowed to allow the deduction based on only earnings before interest and taxes (EBIT)—not taking into account depreciation or amortization.
These three provisions were included in the Republican Ways and Means Committee’s comprehensive tax package (H.R. 3936, H.R. 3937 and H.R. 3938). While two of the three provisions have bipartisan support, Democrats in both chambers have indicated that they also want support for working families in any legislation that addresses expired business provisions—most likely an expansion of the CTC.
Lawmakers File Amendments as House Rules Begins Reviewing HAC-HS Appropriations Bill: In the coming days, the House Rules Committee is expected to consider, assess amendments and set floor debate rules for the FY24 Homeland Security appropriations bill (H.R.4367). The bill itself includes several Republican priorities, including funding for a southern border wall and increased money toward border security operations. Specifically, the package allocates $2.1 billion toward the border wall, $276 billion for border technology, and $305 million for nonintrusive inspections by border officials. The measure also funds the employment of 22,000 border patrol agents while providing no funding to programs that facilitate migrant services performed by NGOs, such as the Emergency Food and Shelter Program (EFSP) and the Shelter Services Program (SSP). It also bars funds being used to dismantle existing border barriers or from being used to transport illegal immigrants within U.S. borders. Several of these provisions, among others, were previously a part of the Secure the Border Act (H.R.2), a House-passed measure that effectively served as the GOP majority’s legislative messaging on border issues. However, some House conservatives, such as Reps. Chip Roy (R-TX) and Byron Donalds (R-FL), have been vocal about the spending package not including enough of the items included in H.R.2.
As the measure awaits review by the Rules Committee, lawmakers have offered a range of amendments, with the majority focused on immigration and border security. For example, Rep. Troy Nehls (R-TX) has offered amendments to prohibit funding of asylum claims made by migrants who passed through a prior country; another to prioritize the removal of certain illegal immigrants; a bill to increase the number of Immigration and Customs Enforcement (ICE) migrant detention beds; and a measure to block federal funds from going to so-called “sanctuary cities.”
Across the aisle, several Democrats have offered amendments to cut border wall funding and reallocate funds toward a range of other programs or initiatives. These include a measure offered by Rep. Robert Garcia (D-CA) to reallocate border wall funds for FEMA to support immigrant shelter and services; an amendment led by Rep. Delia Ramirez (D-IL) to redirect border wall funds toward SSP; an amendment by Rep. Gabe Vasquez (D-NM) to offset border wall funds for Customs and Border Patrol (CBP) facility improvements; and an amendment by Rep. Jimmy Gomez (D-CA) to redirect border wall money for the Citizenship and Integration Grant Program. Additionally, Rep. Brian Higgins (D-NY) offered two related amendments: one to reallocate border wall funds to support the U.S.-Canada Safe Third Country Agreement and another to use border wall funds to hire 1,795 CBP officers nationwide.
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