Thursday, September 7, 2017

FEDERAL BUDGET | Trump Deal with Dems

L to R: President Trump, Mitch McConnell,
Chuck Schumer, Nancy Pelosi
An agreement between President Trump and the Democratic leadership extends government funding, increases the federal borrowing limit through Dec. 8, and provides more than $15 billion in hurricane and disaster recovery aid.

Here is commentary on the deal from Washington, D.C.-based insider Dana Chasin:


Fiscal Deal with Democrats

How did the deal come to pass -- and will it pass?  Who are the winners and losers if it does?  Will the curious coalition supporting the deal become a functional majority, since the partisan majority appears dysfunctional?  Read on.

Deal Details 

Earlier this afternoon, the Senate passed the motion to concur in the House amendment to the Senate amendment to H.R. 601 with a further amendment. That’s fancy talk for, the deal was agreed to by a vote of 80-17.  The GOP split 33-17 against and Democrat en bloc in favor, 47-0). The amended bill now goes back to the House for final approval before heading to the President’s desk.  The House may consider the vote at any time.  The President is expected to sign it.
The Senate measure, now on its way to the House, provides:

•  An extension of the statutory debt limit through December 8
•  A continuing resolution extending government operations for all 12 appropriations bills through December 8
•  FY2017 funding levels
•  $15.25 billion of disaster relief for victims of Hurricane Harvey, Irma, and other fiscal year 2017 major disasters

Omitted: new funding for the Wall. 

Winners and Losers

•  Democrats -- Democrats have won a wedge to drive their way into negotiations, but only a slim one.  Trump’s impatience and time are on their side though, and in the press conference announcing the deal, Trump hinted that he wanted to work with Pelosi to try to work on solving the question about the future of DACA beneficiaries. This is odd, seeing as only two days ago he announced the end of DACA, but Trump has been known to make a quick pivot if it will help him look like he’s accomplishing something big. 

•  Republicans -- 

The GOP has the advantage of suddenly having the weight of a government shutdown lifted off their shoulders for at least three more months, without appearing to use the Hurricane Harvey victims as pawns in an ugly floor debate over the budget. However, this means Republicans lose some of their leverage over tax reform issues because the pressure of the debt ceiling closing momentarily lifted.
 On top of this, the end-of-year legislative calendar just became utterly packed, and as Freedom Caucus Rep. David Bratt put it “Massive deals and cliffs and omnibuses that take place right before the holidays end up being very bad for conservatives…” He’s right.  While the some in the Freedom Caucus still have lingering memories of the concessions they won from Obama with the 2011 Budget Control Act (concessions that were won at the height of the Freedom Caucus’ influence), more recent end-of-year slug fests have hurt the GOP for more than they have helped. 

•  The Administration -- Trump and Ryan have never seen eye-to-eye, not since the primaries, and McConnell has fallen into ill-regard by the President as well after the Republican failure to secure the vote to repeal the ACA. Avoiding the usual processes is a sign of Trump’s impatience and also his determination to have his way to get something done, playing by the rules or not.  In doing so, Trump turned his back on Ryan and McConnell, who were pushing for an 18 month extension, and then a 6 month extension on the debt ceiling. His going rogue means that we’re finally seeing some of the infamous dealmaking here in this first bipartisan legislative act of eight-month old Trump’s term. 

At the end of the day, it’s a win for Trump. He badly needed a win-- practically any sizable win-- and he got one.  

Policy Implications

•  Debt Ceiling -- The debt ceiling has been extended. For now. A three month extension certainly means the issue isn’t going away anytime soon, and Republicans will face yet more difficulty whipping up support for an extension at the end of the year.

•  FY 18 Budget -- An extension of the FY 17 Budget means that (at best) FY 18 will be 9 months long.  This is not only a major concession, but it conjures a major question:  Are Republicans capable of producing the resolution necessary to pass their tax reform efforts? 

•  DACA -- DACA has been thrust to center stage. Not only did Sarah Huckabee Sanders speak in bluntly about the need for Congress to address the 800,000 DACA recipients left in limbo by Trump’s decision to end the Obama-era executive order, but progressive advocacy groups have pressed Democratic leaders to use their newfound leverage to aggressively press the issue. Hopefully this is good news the Dreamers as Democrats will likely push the issue now that they have some firm ground to stand on.

•  Health Care Finance -- With the reconciliation instructions for ACA repeal expired and Republican attention turned to tax reform, a last-grasp Obamacare repeal effort seems unlikely. But financing for individual health insurance markets is still needed and bipartisan efforts to address this need are underway in committee. Let's see if Democrats can use their new-found leverage to push new funding through.

•  Entitlement Reform -- A long-time goal of the Republican Party’s right wing which wanted to use the debt ceiling negotiation as a way of extracting spending cuts and entitlement reforms. This now seems dead on arrival.

Since Trump is still looking to get something big done, it seems he wants to try to get tax reform passed through reconciliation--in a Republican-majority Congress where it should be a cakewalk--this buys him some time to do that. The Congressional Parliamentarian delivered instructions to the Republicans this week that require them to use reconciliation by Sept 30th before it expires. The talk so far has implied that the Republicans want to still try to push through the ACA repeal through reconciliation this month, but Trump’s focus has completely turned to tax reform. 

With a series of speeches this month about fiscal policy (occurring in places like Missouri and North Dakota), he seems to be attempting to pick off Democrats like Heidi Heitkamp and Claire McCaskill and pressure them to supporting his agenda. But if his agenda is oppositional to that of Paul Ryan and Mitch McConnell out of spite, who is to say what might be on the table when he finally gets down to brass tacks and gives some concrete numbers in a tax reform proposal.

Analysis: Causes and Implications

This was not how this deal was supposed to shake out.  While the GOP had hatched a plan over the weekend to attach Harvey relief funding to the debt ceiling, the original plan had been to extend the ceiling by 18 months, pushing the next difficult vote past the 2018 midterms.  But Trump is certainly one to hold a grudge and he’s been trading barbs with McConnell and Ryan for months. 

On top of this, Republican leaders in Congress are perpetually stuck between the necessities of governing and intransigence on their right flank. Because the Freedom Caucus decided to play hardball with the debt ceiling, Speaker Ryan was unable to deliver a GOP majority and had to turn to Democrats for votes. Pelosi and Schumer took this leverage to the White House where Trump was all too happy to make Ryan look like an absolute fool in the process of striking a deal with the Democratic leaders.

Congressional Democrats definitely got a win here, but it’s probably a less of an emphatic one than much of the media coverage would suggest.  Yes, Democrats got three more months of an Obama-era budget, and yes, they put pressure on Republicans by showing that they can get Trump to work with them on must-pass issues.  This means they have increased leverage when it comes hot-button issues like tax reform (i.e. stopping the Republicans from passing major tax cuts), DACA legislation (i.e. making Republicans actually pass something), and address the ACA (i.e. getting more money to shore up private health insurance markets). 

But this newfound and putative leverage should not be overstated.  Republicans can’t count on Freedom Caucus votes come December, so Democrats certainly get more room to maneuver, but that doesn’t mean they’re about to play hardball with something as important as the debt limit.  What Democrats are hoping is that this new found bargaining chip will give them enough purchase to protect Obama era legislation while protecting some parity for defense and non-defense spending in the upcoming negotiations over discretionary spending.

Forecasting the Republican Struggle

At the end of the day much of the media energy about this deal simply derives from how bad this all makes the Republicans look. Tactically, the Republicans are now in the politically awkward position of having to wrangle over the debt ceiling once again all the while time keeps slipping away from a legislative agenda that is stuck in the mud. While Republicans gained some time now to focus on their tax reform efforts, they will lose time later (in December or early 2018 depending on the Treasury's extraordinary measures) when they once again have to turn their attention to the debt ceiling. Republicans will now have to have to pass a completely new budget resolution and new reconciliation instructions in order to get to simple majority vote in the Senate to move on their tax reform plans. 

Democrats are rightly cautiously optimistic that the deal will give them increased bargaining power going forward. But the real story here lies with the Republican Party. What Trump’s turn to the Democrats suggests is that Republicans have lost the ability to govern.  While the Senate killed health care reform the House has an uphill battle to pass the budget resolution that is necessary to tax reform without ceding power the Democrats.  The GOP is a party at war with itself, with little to suggest interest in or capacity for governing as majority parties generally do in a democracy.