Pardon Our Dust
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BILL OF THE WEEK: American Health Care Act
It’s all about healthcare this week. On March 23, the House is expected totake up consideration of the American Health Care Act (“AHCA”) — theGOP’s “repeal and replace” legislation for Obamacare. House Speaker PaulRyan is facing his first big leadership test — it remains to be seenwhether he can keep House Republicans in line and united to pass the AHCA.With nearly every Democrat set to vote against the bill, there is littleroom for error on the Republican side. At this writing, it is stilluncertain whether House Republican leaders have the necessary votes. Staytuned to our tax policy team’s alerts this week…it’s going to be a closeone!
Legislative Landscape
Godfather Style Quid Pro Quo. The House Rules Committee, with the support of President Donald Trump,released a “manager’s amendment”— a package of modifications designed toattract the support of various factions of House Republicans — namely, theHouse Freedom Caucus. The manager’s amendment includes:
- Various technical changes to conform with the reconciliation instructions and address other drafting issues.
- Repeals all of Obamacare’s taxes in 2017 instead of 2018 and moving the repeal of the Cadillac tax from 2025 to 2026.
- Eliminates states’ ability to offer Medicaid to otherwise-ineligible individuals above 133% of the federal poverty level after Dec. 31, 2017.
- Limits the enhanced 90% FMAP to Medicaid expansion states that already cover able-bodied adults as of March 1, 2017. Any new state that expands Medicaid to cover able-bodied adults up to 133% FPL would receive that state’s regular FMAP – an average of 57%.
- Allows states that have expanded Medicaid by Dec. 31, 2019 to keep their enhanced FMAP (90%) for individuals who were enrolled in the program as of this date and do not have a break in eligibility for more than one month after that date.
- Increases the Medical Care Consumer Price Index by +1 for the elderly and the disabled.
- Allows states to choose a block grant instead of the per capita cap.
- Provides states the option of instituting a work requirement for able-bodied adults receiving coverage under Medicaid.
- Sets up a fund to establish additional financial assistance for individuals aged 50 to 64 who would have seen their premiums spike under the original bill.
House leadership and the administration hope that these concessions will …
Next Up for the AHCA. A House Rules Committee markup of the AHCA is scheduled for March 22 at10:00 a.m. A subsequent floor vote is expected on Thursday. Provided theHouse passes the bill, it will likely move to the Senate later this month.
The Senate is expected to make several changes to the bill, includingboosting financial assistance for individuals 50 to 64 years of age. In theend, both chambers will have to work together to resolve any differencesbetween their respective bills. During a March 20 rally, Trump predictedthat the bill will “go back and forth” in Congress, noting that the endresult would be “great.”
In addition to the AHCA, additional legislation is expected since certainitems cannot be included in a reconciliation bill. This will likely addressassociation health plans as well as the ability to purchase insuranceacross state lines.
Let’s Talk About Tax. With the AHCA hogging the limelight, there have been little newdevelopments on the tax reform front. President Donald Trump’s proposedbudget for fiscal year 2018 did not reveal much about where theadministration stands on tax reform — namely, the controversial borderadjustment tax (BAT).
As opposition to the BAT grows, the Senate has started to look formodifications and alternatives. Some senators are revisiting …
This is How Rumors Get Started. Although tax reform appears to have taken a backseat to the healthcaredebate, Republicans on the House Ways and Means Committee are still meetingtwice a week behind closed doors to nail down the details on other aspectsof the GOP’s tax reform blueprint. One Republican on the tax-writing paneltold McGuireWoods’ tax policy team that members are close to reachingconsensus on …
REGULATORY WORLD
Skinny Budget, Starving IRS. President Donald Trump has proposed a $239 million cut from fiscal year2017 for the Internal Revenue Service, according to the “skinny budget”released on March 16. In the past seven years, the IRS budget has shrunk by$900 million — nearly 20 percent. In the past, IRS Commissioner JohnKoskinen has warned that further cuts to the agency will make itincreasingly difficult for the IRS to serve taxpayers and to increasecybersecurity measures. In addition to cuts for the IRS, the budgetproposes to …
Justice Department Argues Against CFPB in its Brief. On March 17, the Justice Department argued that the president should beallowed to fire the Consumer Financial Protection Bureau’s independentdirector. The Justice Department’s brief was filed with the U.S. Court ofAppeals in Washington D.C. as part of the PHH Corporation case.
Earlier this year, on Feb. 16, the CFPB won a much-needed reprieve as theD.C. Circuitvacated a three-judge panel ruling from October 2016 giving the White Housethe power to remove its independent director at will. The D.C. Court ofAppeals will now …
ROAD WORK AHEAD
Trump’s “Skinny Budget” Puts DOT on a Diet. Despite President Trump’s oft-repeated commitment to invest in America’sinfrastructure, his recently-released budget for fiscal year 2018 (“FY2018”) actually proposes to reduce federal funding for transportationinfrastructure. Specifically, the president requests $16.2 billion for theDepartment of Transportation’s discretionary budget, a $2.4 billion or 13percent decrease from FY 2017’s annualized amount. Cuts would includetermination of Amtrak’s long distance train service, limiting funding formajor transit investments, eliminating the Essential Air Service (EAS) andzeroing out the TIGER discretionary grant program, which has been extremelypopular among Democrats and some Republicans since it was established inthe American Recovering and Reinvestment Act of 2009.
While much of Trump’s $1 trillion infrastructure plan is still a mystery,if this budget proposal is an indicator, the president will likely expectthe private sector to pick up the tab. In his budget, Trump signaled apreference for private-sector leadership by expressing support for shiftingair traffic control responsibilities from the Federal AviationAdministration (FAA) to an independent, non-governmental organization(which some consider “privatization”). Trump’s support for such a move is asurprise to many people, including House Transportation and InfrastructureCommittee Chairman Bill Shuster (R-PA). Is privatizing air traffic controljust the first of several steps to be taken by the president in his attemptto privatize the nation’s transportation system? Time will tell.
Meanwhile, in other aviation-related news…the proposed elimination of the EAS program has prompted somehead-scratching. While conservatives continually make the case of doingaway with this subsidy for commercial air service to remote and ruralairports, Transportation Secretary Elaine Chao acknowledged the importanceof continuing the EAS program during her confirmation hearing. For aprogram that only receives roughly $250 million annually, the savings itwould provide for the overall budget are more …
Up in the Air This Week:The Senate Commerce Committee will hold a hearing on Thursday, March 23 regarding “FAA Reauthorization: Perspectives on ImprovingAirport Infrastructure and Aviation Manufacturing.” The hearing willexamine airport infrastructure issues, regulatory certification processesat the FAA, and reforms aimed at improving U.S. competitiveness in theglobal marketplace for aviation products and manufacturing.
Senate Commerce and its counterpart in the House – the Transportation andInfrastructure Committee – will be tasked with reauthorizing FAA programs(or passing another extension) before the current extension expires at theend of September. A live feed of the hearing will be available on thecommittee’swebsitestarting at 10:00 am EDT.
COMMANDER-IN-TWEET
LINE ITEMS
- Rep. Jim Renacci (R-OH), a member of the House Ways and Means Committee, will soon announce his run for governor of Ohio.
LOOKING AHEAD
Congressional Activity
Tuesday, 3/21
House Financial Services Committee
Financial Institutions and Consumer Credit Subcommittee hearing on “Endingthe De Novo Drought: Examining the Application Process for De NovoFinancial Institutions.”House Financial Services Committee
Oversight and Investigations Subcommittee hearing on “The Bureau ofConsumer Financial Protection’s Unconstitutional Design.”House Education Committee
Higher Education and Workforce Development Subcommittee hearing on”Improving Federal Student Aid to Better Meet the Needs of Students.”
Wednesday, 3/22
House Judiciary Committee
Markup of H.R. 1393, the Mobile Workforce State Income Tax Simplification Act.House Financial Services Committee
Monetary Policy and Trade Subcommittee hearing on “Examining Results andAccountability at the World Bank.”House Financial Services Committee
Capital Markets, Securities and Investments Subcommittee hearing on “TheJOBS Act at Five: Examining Its Impact and Ensuring the Competitiveness ofthe U.S. Capital Markets.”
Thursday, 3/23
Senate Commerce Committee
Full committee hearing on “FAA Reauthorization: Perspectives on ImprovingAirport Infrastructure and Aviation Manufacturing.”House Judiciary Committee
Regulatory Reform, Commercial and Antitrust Law Subcommittee hearing on the”Financial Institution Bankruptcy Act of 2017.”
Other Activity
Monday, 3/20
American Bankers Association
2017 Government Relations Summit, March 20-22.
Tuesday, 3/21
Aspen Institute
Discussion on “Building Good Jobs into America’s InfrastructureInvestments.”George Washington University
Discussion on “The AHCA (American Health Care Act): Understanding theCurrent Health Care Proposal,” focusing on “tax credits, mandate/penalties,Medicaid, and high-income ACA taxes.”
For listings of all the week’s tax and financial services happenings, read below to find out how you can become a subscriber.
The McGuireWoods’ Tax & Financial Services Policy Group assists clients in understanding how the latest legislative and regulatory proposals anddecisions may impact their business and industry. To learn more about how our team can help you monitor, analyze, and navigate all relevant legislativeand regulatory developments, please contact any of our attorneys and consultants below at (202) 857-1700. For more information on how to subscribe toour weeklyTax Policy Update and tax news alerts, please contact Radha Mohan, rmohan@mwcllc.com, (202) 857-2944.
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