Quick Hit – October 30, 2015

A Consequential Week

A bipartisan budget deal was approved in the House on Wednesday (266-167), and at 3am Friday (63-35) raising the debt ceiling until March of 2017, breaking through the 2011 Budget Control Act spending caps for defense and other spending areas.

Paul Ryan (R-WI) was elected Speaker of the House on Thursday, vowing to “change the way Congress does business”and wipe the slate clean on past ideological disagreements
The House voted overwhelmingly (313-118) on Tuesday to reauthorize the Export-Import Bank, the authorization for which expired in June. The legislation next goes on to the Senate likely to be tied to a “must-pass”piece of legislation, likely the Highway Bill which has an extension expiring in three weeks.
Tuesday, the Senate passed (74-21) major cybersecurity legislation known as the Cybersecurity Information Sharing Act (CISA), expanding the amount of information private companies can share with the government to protect against cyber attacks
The Senate approved a House motion to extend highway funding past the Oct 29 deadline for 3 additional weeks, buying time for both chambers to conference a final version of the $325B, multi-year highway bill – see why this matters to Export-Import Bank below

The House had scheduled a veto override vote of the NDAA for Nov 5th. With the budget deal now agreed, and recognition that the NDAA will need to be trimmed by $5B in order to comply, the fate of a reworked bill has not yet been determined

What it Means

The Budget
There is now a sense of certainty to government spending through the remainder of President Obama’s administration. Senior decision makers, program managers, and contracting officers can now act with more confidence in spending decisions than at any point in the past five years. Additionally, by easing the debt ceiling limit, the threat of a government shutdown has been removed until 2017.
Recall from previous Quick Hits, budgets don’t spend…but they do outline a framework of agreement from which policy and appropriations bills may flow. President Obama and Democrats wanted to see the BCA caps eliminated across all funding areas, not just defense. President Obama vetoed the National Defense Authorization Act (NDAA) to drive home the point about spending caps. Up to now, Senate Democrats had successfully kept all appropriations bills from coming to the floor for vote until the issue was addressed. The budget deal provides relief from the BCA Caps for defense and non-defense spending and allows the appropriations process to proceed. It is “offset” (paid for) by a series of largely arcane budget maneuvers: internal shifts to Social Security spending, selling of some petroleum reserves, spectrum auctions, adjustments to agriculture programs, etc. Essentially, the $38B in additional OCO funds that has been so contentious all year was broken up such that $25B was put back in the base budget, $8B of the $38B remained in OCO and $5B was cut. Considering all $38B could have been cut, this is an extraordinarily good outcome for defense in FY16. On the non-defense side, a similar $25B was added to the base budget across all departments: VA, DHS, etc.
In FY17, the base increases of defense and non-defense will be $15B; OCO increase will be $23B. This provides substantial relief from what had become crippling budget pressures across government.
What’s Next for FY16 spending bills?
The Continuing Resolution that expires December 11th provides maneuvering space for the appropriations process to resume. We should expect an Omnibus appropriations bill, with the defense bill as the driving vehicle, to be passed in early December
New Speaker
Paul Ryan was sworn in on Thursday as the new Speaker of the House, promising to usher in a new chapter of bipartisanship, cooperation, and real results. Boehner’s success in dealing with the budget before Ryan assumed the position gives Ryan some breathing room to orchestrate a message with broader appeal for his Republican caucus. The coalition of far right Republicans, The Freedom Caucus, had been a longstanding problem for Boehner, and was the driving force of Boehner’s early resignation. Most members of the caucus voted for Rep. Webster in the Republican nomination held Wednesday, but then switched to Ryan in the floor vote when it became clear Webster was not a serious contender. Still, it shows that Ryan may face some of the same issues appeasing the ultra-conservatives as Boehner did. Time will tell. In the meantime, Rep. Sam Johnson (R-TX) will temporarily assume Ryan’s former spot as powerful Chairman of the House Ways and Means (Tax Policy) Committee until a permanent replacement is selected. Reps. Brady (TX,) Nunes (CA) and Tiberi (OH) are all vying.
The Export-Import Bank
Conservatives have blocked reauthorization legislation on the Export-Import Bank since July, but after a bipartisan discharge petition it was brought to the floor. The House overwhelmingly approved the measure, and now it will move to the Senate. Majority Leader Mitch McConnell has stated that he will not pass a stand-alone bill, but likely the Ex-Im reauthorization will be tied to the upcoming “must-pass” highway bill in order to guarantee it is passed.
Cybersecurity
Another bipartisan success came out of the Senate this week with the passing of the Cybersecurity Information Sharing Act (CISA). Tech companies and staunch privacy rights advocates have lobbied against the legislation for concerns of too much individual information being shared with the federal government. The bill will move into a conference period, as the House passed complementary legislation in April, but debate over privacy terms will certainly continue. This would be a first, albeit very late, piece of cybersecurity legislation that most involved with say isn’t enough, but is an important first step.

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