Quick Hit – November 18, 2016

The House and Senate returned from the election break to get back to work for the first time in the new political atmosphere Both chambers remain in Republican control, giving President-elect Trump a unified government for the first two years of his term – a scenario few would have predicted going into the election.

House Republicans re-elected their existing leadership team, retaining Paul Ryan (R-WI) as the Speaker of the House. House Democrats delayed their leadership elections amid loud opposition from younger members demanding recognition from more senior members. The top three House Democrats are 76, 77 and 76 years old, respectively. Rep. Tim Ryan (D-Ohio) announced on Thursday that he will challenge Leader Pelosi. Pelosi, however, has expressed confidence in her victory over a challenger.

Senate Republicans re-elected their existing leadership team as well, retaining Mitch McConnell (R-KY) as majority leader. Senate Democrats quickly elected Chuck Schumer (D-NY) as their leader, while simultaneously elevating four additional Senators to the Democratic leadership team. There are now TEN members on the leadership team, a nod to the diverse views of the party.

Appropriations

Congress had been expected to complete the FY17 spending bills in an omnibus appropriation before Christmas. As of Wednesday, the signal from President-elect Trump, delivered to Speaker Ryan by Vice President-elect Pence, was to do a short term Continuing Resolution into March 2017. In theory, this prevents a fight with Democrats over spending levels before the end of this Congress. While a CR is never a good solution, the Trump team and Republicans generally believe better outcomes can be agreed upon in the new Congress. This is not the solution Leader McConnell supported in the Senate, but the Senate has recognized demonstrating unity with the Trump administration will be a good start.

There are many repercussions of delayed FY17 funding. This will be a more complicated CR than just a single page change of date for expiration of funds. Several programs require special consideration and will be addressed as “anomalies” to the CR.

Defense Authorizations

The National Defense Authorization Act (NDAA) for FY17 is nearly completed and will likely be ready to move to the President’s desk by early December. Relatively minor details remain, but big issues such as topline and OCO spending have been agreed. A compromise to add $9B above President Obama’s FY17 defense budget request, effectively split the difference between Senate and House proposals.

Earmarks

The House Republican caucus had clearly aligned enough votes to restore a newly formulated plan to allow a return to some level of Congressionally directed spending. Many lawmakers remain frustrated with surrendering their constitutionally derived authority to control federal spending to the Executive Branch. Speaker Ryan prevented the vote from taking place, strongly suggesting that this was not the time to vote on the issue. Look for earmarks to continue working their way back into the process as a new Congress, with renewed vigor, establishes its footing alongside a new Republican President.

FY18 Budget Outlook

A new budget is traditionally delivered from the President to Congress on the first Monday of February. Often this target date is missed in the first year of a new Presidency. It is anticipated that the FY18 budget will not be ready for delivery to Congress before early April 2017. This should allow sufficient time for a Trump administration to put some imprint on the input, as well as to be informed by any decisions of the FY17 CR.

Early indications suggest that sequestration will be quickly repealed in the new Congress. Ideally this should restore a sense of continuity in planning across government. Further, indications abound suggesting a near-term increase in national security spending across a variety of key programs.

Throughout the week on Capitol Hill, in both House and Senate offices, one could sense that change is clearly afoot. When there is change in Congress, there is opportunity, good and bad. Staying engaged in the process, thinking long-term about objectives and accepting the new realities are all part of doing business in Washington, DC.

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