And We're Back (At Least for Three Weeks)

Economy

And We're Back (At Least for Three Weeks)

Ed Mills, Washington Policy Analyst, notes that the federal government is set to reopen as Congress has reached a funding deal through February 8.

January 23, 2018

The federal government has reopened as Congress has reached a funding deal through February 8. Included in the deal is a two-year delay of the medical device tax and the Cadillac tax from the Affordable Care Act (ACA) and a six-year reauthorization of the Children’s Health Insurance Program (CHIP). There is no deal on immigration/border security, but there is a general agreement to tackle that issue before the February 8 deadline. This funding bill would extend the current funding beyond the President’s State of the Union Address, but is getting closer to the March deadline to prevent a breach of the debt limit. If there is no agreement on immigration/border security before February 8, the government could easily shut down once again. There is hope that this round will produce an agreement on the overall budget caps for FY18 and FY19. There is a desire to increase both defense and domestic spending as part of any budget deal.

Outline of the Deal

The federal government will be funded until February 8. No deal on immigration/border security, but there is an agreement in place to seek an agreement on immigration/border security before the next deadline. There are reports that a bipartisan agreement on immigration/border security has been reached in the Senate, but the House and the President have yet to commit to supporting the deal. It appears likely that Senate negotiators have to provide more commitment related to border security to win over the House and President. Budget caps originally negotiated in 2011 are set to restart for this fiscal year, and agreement to lift the caps for FY18 and FY19 is likely part of any long-term deal.

Healthcare

The medical device and Cadillac taxes of the ACA have been delayed for two years as part of this deal. CHIP is reauthorized for six years. Other ACA provisions sought to reestablish subsidy payments to insurance companies are not included.

Debt Limit

The Treasury has been using extraordinary measures since December to avoid a breach in the debt limit. These measures are estimated to expire in March. It seems likely a deal can be reached before this date, but a shutdown or another short-term extension in February would raise concerns about a breach of the debt limit.

Legislative and regulatory agendas are subject to change at the discretion of leadership or as dictated by events.



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