The Week Ahead: Sept. 25-Oct. 1, 2017

Health care vote? | Budget | Tax reform | Nominations | Alabama election | SEC | Disaster hearings | Supreme Court

Congress returns to work on lingering big issues, like tax reform and budget matters, but one of them, health care, may be taken off the table as Sen. John McCain (R-Ariz.) came out against the latest Republican health care bill, most likely dooming the effort to repeal and replace the Affordable Care Act (ObamaCare) by the end of the week of Sept. 25. An election in Alabama is the key political topic of note.

McCain said he could not “in good conscience” support the latest health-care proposal, by GOP Senators Bill Cassidy of Louisiana and Lindsey Graham of South Carolina. The measure would have given states greater control over health funding, and has been met with a torrent of criticism from doctors and insurance companies, among others. Graham issued a statement Friday in response to his longtime friend McCain’s announcement that he won’t vote for the Cassidy-Graham health care bill, which likely kills the Senate’s last attempt to repeal and replace the Affordable Care Act before its Sept. 30 deadline. “My friendship with John McCain is not based on how he votes but respect for how he’s lived his life and the person he is... I respectfully disagree with his position... We press on,” Graham said. Meanwhile, Sen. Cassidy said he is “disappointed” with McCain, but will continue to work on the bill’s passage.

Sen. Ted Cruz (R-Texas) said Sunday that he did not support the Cassidy/Graham bill and suggested that the proposal also lacks the vote of Sen. Mike Lee (R-Utah). Cruz said at the Texas Tribune festival in Austin that he and Lee had offered amendments to the Graham-Cassidy proposal that would go further to bring down ObamaCare premiums but that the changes weren’t included in the latest draft of the bill. The development means there will not be enough votes for the measure, which will likely be pulled in the coming week. It provides more evidence that Republicans are divided relative to health-care reform and cannot come up with a bill attracting enough GOP votes for passage.

Senators are facing a Sept. 30 deadline to pass the measure under rules that allow a simple majority vote. In the wake of McCain’s announcement, some Republicans began saying there was no point in even holding the vote on the Cassidy-Graham plan. Senate Majority Leader Mitch McConnell (R-Ky.) said he intended to put the bill on the floor, but he previously said he would only bring up the proposal if Republicans had 50 votes. No Democrats are expected to support the measure.

Another approach. McCain called for the leaders of the Senate Health, Education, Labor and Pensions Committee, Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) to resume talks to craft a bipartisan stabilization measure ahead of the 2018 open enrollment period. “I fear that the prospect of one last attempt at a strictly Republican bill has left the impression that their efforts cannot succeed,” McCain said. “I hope they will resume their work should this last attempt at a partisan solution fail.” Alexander said that Republicans and Democrats would not be able to reach a consensus on a bipartisan measure. Murray has put the blame on GOP leaders, saying that Democrats had offered serious concessions to Republicans to try and reach a deal.

Sens. Cassidy and Graham will face off against Sens. Bernie Sanders (I-Vt.) and Amy Klobuchar (D-Minn.) in a televised debate on health care Monday at 9 p.m. ET on CNN, the network said.

Lawmakers also need to deal with a few end-of-September deadline issues: extending the Federal Aviation Administration’s (FAA’s) ability to collect fees, and renewing the authorization for the Children’s Health Insurance Program, or CHIP.

Most look for a temporary extension of the FAA’s authority so the House and Senate can resolve differences over House Transportation and Infrastructure Committee Chairman Bill Shuster’s (R-Pa.) plan to spin off air traffic control to a non-government entity. House leaders have posted the text of a bill that would renew the authorization through March 31, 2018. Shuster’s counterpart John Thune (R-S.D.) supports an extension.

The FAA bill would include provisions designed to provide tax relief for victims of hurricanes Harvey, Irma and Maria and provisions on private flood insurance. The proposal would eliminate the requirement that personal property losses have to be more than 10% of adjusted gross income to quality for the casualty deduction. It would also give employers affected by the disaster the ability to claim a tax credit for 40% of wages — up to $6,000 per employee — paid to workers from a core disaster area. The bill would also allow qualified taxpayers to use 2016 earnings when calculating earned income tax credit or child tax credit for 2017. The measure would provide “targeted, meaningful tax relief that will make it easier for people to recover and return home,” House Ways & Means Chairman Kevin Brady (R-Texas) said in a statement, adding that it would provide help to a number of states, the Virgin Islands and Puerto Rico. Other provisions would allow penalty-free retirement account withdrawals for qualified hurricane relief expenses and allow leeway for loans from retirement plans to cover these costs.

The bill would include a provision regarding federal officers or agencies approving financial assistance or loans in an area identified by the Federal Emergency Management Agency as having special flood hazards. The provision would require the property involved in the assistance to have flood insurance through the National Flood Insurance program at least equal to the unpaid principal on a loan. The current requirement is that the insurance be equal to the lesser of the development or project cost or to the maximum limit of coverage under the NFIP. The bill would pose a similar minimum level of insurance for properties with private flood insurance. Current law does not provide for federal officers or agencies approving financial assistance to a property with private flood insurance.

As for CHIP, which covers almost 9 million children nationwide, the Senate Finance Committee has released a five-year bipartisan plan (S 1827) to reauthorize the program, but there likely will be a six-month extension, according to Sen. Roy Blunt (R-Mo.), a member of the Senate GOP leadership team and chairman of the Appropriations subcommittee that handles health programs. The Medicare access legislation in 2015 extended CHIP’s funding through fiscal 2017, which ends Sept. 30.

On tax reform, House Republicans will hold a retreat Wednesday to discuss tax-overhaul options. Ways and Means Chairman Kevin Brady (R-Texas) said party leaders plan to unveil a consensus framework this week, a timeline echoed by White House budget director Mick Mulvaney and Treasury Secretary Steven Mnuchin. In the Senate, two senior Republicans on the Budget panel, Bob Corker (Tenn.) and Pat Toomey (Pa.), said they’ve agreed to write a budget resolution that would make it procedurally easier to pass tax-cut legislation. They haven’t said which taxes or tax breaks they intend to target.

Background. Different rules govern reconciliation bills, the legislation to implement a budget resolution’s instructions about spending and revenue targets -- such as tax-law changes. Debate time is shortened and no filibuster is possible, but there are limits to what the bills can contain.

President Trump is planning to give a speech unveiling the framework in Indiana on Wednesday. Final details are expected to change substantially as it goes through the normal legislative processes in the House and Senate. Link for details of some of the possible proposals.

The House floor will consider a bill (HR 2824) that would extend the Maternal, Infant, and Early Childhood Home Visiting for five years. The measure would require grant recipients to match federal funds beginning in fiscal 2020.

To offset the cost, another bill (HR 2792) would prevent Social Security benefits from being paid to individuals with an arrest warrant for committing a felony or violating parole. Under current law, those benefits can’t be provided to individuals who flee to avoid a felony prosecution or who violate parole.

Alabama election. Sen. Luther Strange and his Republican leadership backers face an Alabama primary runoff Tuesday that has become a proxy war between Trump and conservative Sarah Palin and former White House staffer Stephen Bannon. Roy Moore, the former chief justice of the Alabama Supreme Court, is trying to unseat Strange, who was appointed in February to the seat when Jeff Sessions resigned to become attorney general.

Trump campaigned for Strange Friday in Huntsville, and will be followed Monday by Vice President Mike Pence. Strange’s backers also include the U.S. Chamber of Commerce, the National Rifle Association, and Sen. Richard Shelby (R-Ala.). Palin, the former Alaska governor and 2008 Republican vice-presidential nominee, stumped for Moore in Montgomery last Thursday. But Trump’s remarks were lukewarm at best because during Friday’s comments, Trump doubted his decision to back the sitting senator, and would support Moore if he wins, saying if Strange’s opponent wins, “I’m going to be here campaigning like hell for him.” Moore leads Strange by 9 percentage points in the RealClearPolitics polling average. “I’ll be honest, I might have made a mistake,” Trump told the crowd in Huntsville at one point during his more than 30 minutes of remarks meant to bolster Strange’s chances. Should Moore best Strange, it would likely mean more funding for more primary challengers ahead of next year’s midterm elections.

The Senate will vote Monday on William Emanuel to be a member of the National Labor Relations Board (NLRB). His confirmation would give Republicans a 3-2 majority. “Given the amount of uncertainty caused by the NLRB during the previous administration, the business community will welcome a restoration of balance on the Board,” wrote Sean P. Redmond, executive director of the U.S. Chamber of Commerce’s Workforce Freedom Initiative in June when President Donald Trump announced his intention to nominate Emanuel.

The AFL-CIO urged senators to vote against the nomination. “Emanuel has exclusively represented employers, most recently at the notorious union-busting law firm Littler Mendelson,” William Samuel, the labor federation’s government affairs director, said in a statement.

Emanuel identified 49 former clients in a financial disclosure and said he’d recuse himself for a year if any of those firms appear before the NLRB. The clients include Uber Technologies Inc., which has cases pending before the board, JPMorgan Chase Bank and MasTec Inc, the National Law Journal reported.

Securities and Exchange Commission (SEC) Chairman Jay Clayton will testify Tuesday before the Senate Banking, Housing and Urban Affairs Committee. She will be asked about last year’s hack of the SEC’s Edgar filing system. The regulator said those who breached the electronic database of market-moving corporate announcements may have profited from the stolen information.

Nominations.

• Marine General Joseph Dunford will testify Tuesday before a Senate Armed Services Committee confirmation hearing on his reappointment to be chairman of the Joint Chiefs of Staff.
• The Senate Energy and Natural Resources Committee has a Tuesday hearing to consider the nominations of Bruce Walker to be assistant secretary of energy for electricity delivery and energy reliability, and Steven Winbert go be assistant energy secretary for fossil energy.

Health care. Besides the Senate Finance panel’s Monday hearing on the Graham-Cassidy proposal, the Senate Homeland Security and Governmental Affairs will hold a hearing Tuesday on how states can reduce health-care costs through block grants.

State Department overhaul. John Sullivan, deputy secretary of state, plans to testify Tuesday before the House Foreign Affairs Committee on redesigning the State Department.

Disaster hearings:

• Wildlife management: Mitigating wildfires will be the topic at a Wednesday hearing of the Senate Environment and Public Works Committee.
• Hurricane response: The Small Business Administration’s response to this year’s hurricanes will be the topic of a Wednesday hearing by the Senate Small Business and Entrepreneurship Committee.

President Trump on Sunday issued a new ban on entry to the U.S. that applies a range of restrictions on nationals from eight countries, including new targets Chad, North Korea and Venezuela. The new restrictions, replacing his previous order that expired on Sunday, apply to five of the six countries covered by the previous travel ban—Iran, Libya, Somalia, Syria and Yemen. The African nation of Sudan was subject to the original ban but dropped under the new version. The new rules take effect on Oct. 18. Countries that were subject to an earlier version will operate under the old rules until then. The Supreme Court is reviewing the travel ban October 10. Trump’s travel ban’s 90-day review period expired Sunday.

Trade policy issues:

• Solar energy announcement. The International Trade Commission (ITC) voted 4-0 Friday that U.S. solar energy manufacturers have been injured by the volume of certain imported solar components. The ITC decision sets up a two-month review period in which the panel must recommend a remedy to President Donald Trump, with a final decision on tariffs expected in January. The commission will send President Trump recommendations for penalties known as safeguards by Nov. 13. President George W. Bush was the last president to impose industry safeguards. Suniva, the bankrupt solar panel manufacturer that brought the case to the ITC, said in a statement: “Suniva is gratified that the ITC has found that a surge of imports into the U.S. has decimated the America CSPV cell and module manufacturing industry... President Trump can remedy this injury with relief that ensures U.S. energy dominance.” Moody’s Investing Service said, The imposition of tariffs would... likely affect the pace of decarbonization in the U.S. by delaying investments in solar generation and, in turn, extending the life of some coal plants.” While the U.S. solar industry employs about 260,000 people, fewer than 2,000 are involved in making solar panels like those made by Suniva and SolarWorld. More than half of solar jobs are in installation, with another 66,000 in sales, distribution and development. About 38,000 jobs involve manufacture of inverters, racks and other products related to solar panels.
• The International Dairy Foods Association panned the Canada-EU trade deal for provisions that would keep U.S. cheese makers selling to Canada from using five cheese names Europeans claim as their own. The association said it will focus on NAFTA renegotiations to keep Mexico from imposing similar restrictions.
• NAFTA 2.0 negotiations in Canada. Canada’s chief NAFTA negotiator is downplaying expectations for major breakthroughs in the talks, which began Saturday in Ottawa and run through Sept. 27. “We’re not expecting to see anything radically new” proposed on the so-called rules of origin, one of the key contentious areas, Steve Verheul said as he entered the first day of talks in Ottawa. In particular, he said he didn’t expect specific proposals related to the auto sector. It’s too early to say how things will go in the third round, Verheul said. Link for details.
• NAFTA 2.0 talks agenda. The first day of talks included subjects such as anticorruption, the environment, small and midsize enterprises, and gender, according to a copy of the itinerary. Rules of origin will be discussed Tuesday and Wednesday. Dispute settlement is set for discussion on the final day. Other subjects of discussion include both the telecommunications sector and workers’ temporary entry rules on Monday and Tuesday; other labor provisions Tuesday and Wednesday; and agriculture Tuesday and Wednesday.

Host of Fed speakers and economic updates ahead. There are Fed officials on the schedule each day. Monday opens with New York Fed’s Dudley, Chicago Fed’s Evans and Minneapolis Fed’s Kashkari (all current voters) followed Tuesday by Evans, Cleveland Fed’s Mester (2018 voter) and Atlanta Fed’s Bostic (2018 voter). The main attention Tuesday, however, will be Fed Chairwoman Janet Yellen addressing the National Association for Business Economics in Cleveland. The list gets smaller the rest of the week with KC Fed’s George (2019 voter) Thursday and Philadelphia Fed’s Harker (current voter) on Friday.

The economic updates include the Chicago Fed National Activity Index and Dallas Fed Manufacturing Index on Monday, S&P Corelogic Case-Shiller HPI, New Home Sales, Consumer Confidence and Richmond Fed Manufacturing updates on Tuesday. Wednesday will bring the Durable Goods orders and Pending Home Sales figures while Thursday’s updates include GDP, International Trade in Goods, Jobless Claims and Kansas City Fed Manufacturing. The week closes out with Personal Income & Outlays, Chicago PMI and Consumer Sentiment readings on Friday.

USDA reports of note include the Food Price Outlook on Monday, along with Crop Progress and Grain Inspections. Thursday brings the Weekly Export Sales Report, Agricultural Prices and the quarterly Hogs and Pigs report. On Friday key reports are issued, including Grain Stocks and the Small Grains Summary.

U.S. ag-related events include:

Monday, Sept. 25
-— CropLife America annual meeting, through Wednesday, Laguna Niguel, Calif.

Tuesday, Sept. 26
-— National Academy of Sciences conference on infrastructure, through Wednesday.
-— National Association of Wheat Growers hold policy Fly-in, through Wednesday.
-— Women in Agribusiness summit, through Thursday, Minneapolis.

Wednesday, Sept. 27
-— Comment closes on proposed rule to review and revise the Waters of the United States (WOTUS) rule.
-— House Agriculture Committee hearing on the Commodity Futures Trading Commission’s agenda.

Thursday, Sept. 28
-— Ag Outlook Forum, Kansas City.
-— Senate Agriculture Committee hearing on rural development and energy programs in the farm bill.

Friday, Sept. 29
-— FDA Commissioner Scott Gottlieb speaks at the National Press Club.

International ag reports and events this week include China final August agricultural commodities imports and the Financial Times Commodities Summit Asia, in Singapore, including speakers from Cargill, Louis Dreyfus, BofAML, Olam (Monday); and the International Grains Council updates its forecasts for grain stockpiles, production, demand, trade (Thursday).

The U.S. Supreme Court returns and is expected to issue a list of new cases it will take up in this session.

Key international events include:

Monday, Sept. 25

• German Chancellor Angela Merkel holds a news conference to comment on the election results. Merkel’s conservatives won Germany’s general election Sunday, according to an exit poll for public broadcaster ARD. Merkel’s current coalition partner, the center-left Social Democrats led by Martin Schulz, came in a distant second.
• Japanese Prime Minister Shinzo Abe is expected to hold a press conference to announce a snap general election. Abe is betting that public support for his strong stance on North Korea and the lack of a coherent opposition will help his ruling coalition retain its two-thirds majority in the lower house of parliament.
• ECB President Mario Draghi speaks to European Union lawmakers at the European Parliament in Brussels.
• EU chief Brexit negotiator Michel Barnier and U.K. counterpart David Davis begin the next round of negotiations. Timing and duration in Brussels to be determined.
• Bank of Japan Governor Haruhiko Kuroda will speak at a press conference in Osaka.

Tuesday, Sept. 26

• U.K. Prime Minister Theresa May and EU President Donald Tusk meet to discuss Brexit.
• French President Emmanuel Macron is expected to make a major speech on his plans to reform the European Union. Event still to be confirmed.
• Argentina rate decision.
• Bank of Japan releases minutes of its July 19-20 policy meeting.

Wednesday, Sept. 27

• U.S. Commerce Secretary Wilbur Ross will address an American Chamber of Commerce breakfast at Hong Kong’s Grand Hyatt hotel. Later, Ross will address an American Chamber of Commerce event in Bangkok.

Thursday, Sept. 28

• The Mexican central bank Banxico publishes its policy statement.
• Deadline for Google: European Union regulators ordered Alphabet Inc. to stop promoting its own shopping search results over competitors and to make changes designed to give rivals fairer treatment. Regulators warned the company it could be fined as much as 5% of daily revenue if it fails to comply.

Friday, Sept. 29

• Data from the Japanese government will provide the latest reading on the economy. It will include inflation, unemployment, industrial production and household spending for August. The consumer prices number will draw the most attention. Inflation is rising but remains far from the Bank of Japan’s target of 2%.