McDonald Hopkins Government Strategies Advisory: This Week in Washington -- January 30, 2015


Obama to preview budget at democratic retreat

First the Republicans held their Congressional retreat and now Democrats are following suit this weekend. Congressional Democrats will huddle in Philadelphia over the weekend to plan their legislative strategy for the coming year.

President Obama will address the retreat and is expected to strike a defiant tone, calling on Congress to roll back sequestration cuts and jab Republicans for threatening funding for the Department of Homeland Security (DHS).

Obama plans to use the party retreat to preview his budget proposal, which will be released Monday. While the plan has no chance of making its way through a GOP-controlled Congress, it's a vehicle for Democrats to outline clear policy priorities—which many leaders believe the party failed to do during the 2014 midterms.

The White House jumped on a quote this week from Republican Rep. Mario Diaz-Balart that it wouldn't be "the end of the world" if DHS funding lapsed.

Obama wasn't alone in challenging Republicans to pony up the funding. "Republicans' willingness to put their political security ahead of national security is a disgrace," Rep. Ben Ray Lujan, the newly named head of the Democratic Congressional Campaign Committee, told reporters at the House Democrats' retreat. "The American people deserve better."

The White House has threatened to veto a GOP plan that extends DHS funding while reversing Obama's executive actions to protect illegal immigrants from deportation. Republicans have said they don't want the department to shut down, but they strongly believe that Obama's executive actions are illegal and should be blocked by Congress.

Meanwhile, Obama will call for an end to sequestration, the automatic and indiscriminate budget cuts that went into effect in 2013, slashing expenditures for almost every federal agency.

Even before its release, Obama's proposal drew praise from Democrats on the Hill. "Arbitrary cuts through sequestration never made sense, and House Democrats have consistently supported replacing them with a smarter, more balanced approach to long-term deficit reduction," Budget Committee ranking member Chris Van Hollen said in a statement.

Senate to wade into immigration fight

The Senate will wade into the most recent immigration battle as early as next week. With Republicans in both chambers unsure how far to push against Obama's executive action to defer deportations for undocumented young adults and parents of legal U.S. residents, the Senate will take up a House-passed funding bill for the Department of Homeland Security, with controversial immigration provisions attached. GOP leaders said it is planned as soon as it wraps up its fourth week on the Keystone XL pipeline.

The announcement comes as the House has delayed action, for now, on a separate border-security bill that some conservatives say isn't harsh enough. Depending on how long the House stays stalled on its border-security bill, the legislation being debated in the Senate could be the only immigration game in town.

Senate leaders hope the Keystone debate will finish soon, although they failed in their first attempt to cut off debate Monday evening, falling short of the 60 votes needed to get to final passage. But several members were absent for that vote, and the floor managers expect that with more votes on amendments, the month-long Keystone debate will finish this week.

The testy DHS legislation will be next, up against a February 27 deadline when the funding for the agency runs out. The leaders' announcement gives the Senate three weeks of floor time to focus on the president's actions, taking a few days off for the Presidents Day holiday. The House-passed funding bill that the Senate will debate includes language to stop the administration's executive action to defer deportations, a benefit that could reach some 4 million unauthorized immigrants. Obama has threatened to veto the bill because of that language.

Many conservatives, both inside and outside the Senate, will be watching Republican leaders closely as some fear the leadership will cave too quickly and move a clean DHS funding bill rather than taking a stand against Obama.

It is unclear how the Republican protest in the Senate will play out because DHS funding is at risk. Blunt said he hopes the GOP can attract six Democrats to support the Republican bill, but that is unlikely. Most of the Democrats who have been sympathetic to the GOP's views on immigration were unseated in the November elections.

Attorney general confirmation hearings begin

This week, the Senate Judiciary Committee began confirmation hearings for Loretta Lynch – President Obama’s choice to succeed Eric Holder as U.S. attorney general. As expected, Lynch’s confirmation hearings are providing a forum for Senate Republicans to vent about President Obama’s executive action on immigration reform.

Indeed, the first question from Senate Judiciary Committee Chairman Chuck Grassley (R-IA), was whether Lynch believed Obama has the legal authority to stop deportations for millions of undocumented immigrants. Her answer was a measured, roundabout yes.

Lynch is looking to offer a fresh start to a GOP-controlled Congress, casting herself as an alternative to Eric Holder, whose liberal policies and outspoken personality have led to dramatic clashes with Republicans, culminating in him being the first DOJ head to be held in contempt of Congress. "I look forward to fostering a new and improved relationship with this committee, the United States Senate, and the entire United States Congress—a relationship based on mutual respect and constitutional balance," she said during her opening remarks.

If confirmed, Lynch's top priorities, she said, would be strengthening relationships between the public and law enforcement, investigating and prosecuting terrorists, and enhancing the nation's defenses against cyber-attacks.

Lynch currently serves as the U.S. attorney in Brooklyn. If confirmed, she would be the first black female attorney general.

Keystone moves forward in the Senate

The debate over the Keystone XL pipeline may feel like it has been going on forever here in Washington, but the bill has actually taken another critical step forward in the legislative process. On Thursday, by a vote of 62 to 35, the Senate voted to end debate on the bill. The 62 yes votes on cloture are a high-water mark for Keystone in the Senate. Indeed, nine Democrats voted with Republicans to end debate. Those nine Democrats were: Michael Bennet of Colorado, Thomas R. Carper of Delaware, Bob Casey of Pennsylvania, Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Joe Manchin III, Claire McCaskill of Missouri, Jon Tester of Montana, and Mark Warner of Virginia.

Prior to the vote, senators narrowly defeated an amendment by Richard M. Burr (R-NC) that would permanently reauthorize the Land and Water Conservation Fund, which is set to expire at the end of fiscal 2015.

Some senators had hoped to use the reauthorization as an opportunity to make structural changes to federal land management, but the Senate rejected that idea too by a 47 to 51 vote.

After clearing the procedural cloture hurdle, the Senate voted 62 to 36 to finally approve construction of the Keystone XL pipeline. The same nine Democrats who voted for cloture joined 53 Republicans in favor of green-lighting TransCanada's $8 billion pipeline to bring crude oil from Canadian oil sands to refineries along the Gulf Coast.

The tally is five votes short of what's needed to overcome a threatened veto from Obama, who says Congress should not circumvent his administration's ongoing, six-year review of the project.

Thursday's vote capped nearly a full month of Senate debate over the pipeline and a suite of proposed amendments in the Senate's widest-ranging battle over energy policy in years. Lawmakers agreed to amendments including an affirmation that climate change is real and not a hoax, and a pared-back version of energy-efficiency legislation sponsored by Republican Sen. Rob Portman of Ohio and Democratic Sen. Jeanne Shaheen of New Hampshire.

HHS proposes new Medicare reimbursement policies

The Health and Human Services (HHS) Department laid down an ambitious plan for changing the way Medicare pays healthcare providers, and officials hope the changes will spread throughout the healthcare system.

By 2018, HHS wants half of all Medicare payments to flow through specific reimbursement programs that pay doctors based on the health outcomes they achieve with their patients, rather than for the procedures they performed. And it wants 90 percent of all Medicare payments to be tied in some way to outcomes. It's the first time Medicare has set specific targets for how much of its spending should be tied to value, and it's a major step toward reforms that could save the country billions of dollars.

There are two big levers for cost control in healthcare. The first is via direct cuts in payments for certain services; it's easier and, for lawmakers, it's familiar. The Affordable Care Act (ACA) has slowed the growth in Medicare spending mostly by making blunt cuts in the program's payments to doctors, hospitals, and insurance companies. Likewise, Congress frequently cuts a percentage point or two from one sector or another—often to pay for another sector's pay bump.

But the move by HHS is a step toward a different cost-control mechanism: initiatives to better coordinate patients' care, reducing their need for multiple procedures and thereby cutting costs while improving quality.

Similar changes are also a priority for congressional Republicans interested in entitlement reform, and for liberal healthcare advocates who see quality improvement as a way to keep the focus on patients, not simply federal spending.

There is broad bipartisan support for major changes to the healthcare delivery system. There's a bipartisan plan in Congress to replace Medicare's existing payment formula and move the system toward more coordinated, efficient care (lawmakers just can't agree on how to pay for it). Moving away from the existing fee-for-service system poses some financial risk to providers, whose business models are based on the reimbursements they get for each service they provide.

Obama floats proposal to allow drilling in Atlantic

The Obama administration floated plans this week to allow the auction of oil-and-gas drilling rights in federal waters off the coasts of North and South Carolina, Georgia, and Virginia.

The move to open East Coast waters to drilling rigs comes five years after the administration, in the wake of the 2010 BP oil spill, backed away from an earlier proposal to lease tracts in the Atlantic.

But Interior Secretary Sally Jewell said that tougher regulations and oversight since the Deepwater Horizon disaster have improved safety. Interior issued industry safety requirements after the fatal BP catastrophe that dumped several millions of oil barrels into the Gulf of Mexico. And an upcoming regulation will set new standards for subsea "blowout preventers," the kind of equipment designed to halt runaway wells that failed in the BP accident.

But Interior is nonetheless moving slowly on allowing East Coast development. The new proposal does not envision a lease sale occurring there until 2021. Jewell said more information is needed first about the resource potential and spill response capability.

The plan also requires that any drilling would be at least 50 miles from the coast, which the department said would minimize conflicts with Defense Department activities, renewable-energy development, fishing, and wildlife habitat.

Interior's proposed Atlantic Coast leasing is part of a wider plan released Tuesday for selling drilling rights in the Gulf of Mexico, where U.S. offshore development is now centered, and off Alaska's coast in the period between 2017 and 2022.

The timing of the potential Atlantic Coast sale means it would be a long time before any oil or natural gas would be produced there. The period between auctions for offshore drilling rights and energy production can easily span a decade as companies devise drilling plans, seek regulators' permission to conduct exploratory drilling for subsea oil, and various other steps.

Congressional bans on East Coast drilling lapsed in 2008, but the Obama administration has kept the region off-limits by declining to offer leases there.

At the same time, the White House is also moving to put nearly 10 million acres of Arctic waters off Alaska's coast permanently off-limits to oil-and-gas development.

Transportation in focus

The battle over paying for the Highway bill begins

The battle over how to pay for the Highway bill is getting underway in DC. Transportation Secretary Anthony Foxx said the White House is preparing to unveil a new and improved version of last year’s four-year, $302 billion transportation bill. Foxx pulled no punches, urging Democrats and Republicans in both chambers to work together to produce a long-term bill, saying “to hell with politics.” Senator David Vitter (R-LA), Chairman of the Environment and Public Works Committee’s Transportation and Infrastructure subcommittee, said there were three ways to fix the Highway Trust Fund – which teeters on insolvency:

  1. To increase the gas tax;
  2. To use revenue from a repatriation tax, or;
  3. To increase domestic energy production.

Vitter went as far as to say that he believed an 18.4 cent/gallon gas tax increase was possible as long as it was paired with middle-class tax cuts as offsets. Vitter isn’t the first Republican to raise the possibility of increasing the gas tax, and the increased chatter among Republicans is leading to increased saber rattling by opponents of the effort.

A coalition of 50 conservative groups, including Americans for Tax Reform, the Club for Growth and Americans for Prosperity, sent a letter to Congress unequivocally opposing any increase in the federal gas tax.

As we discussed in Transportation in Focus last week, a proposal by Senators Rand Paul (R-KY) and Barbara Boxer (D-CA) is in the works to use repatriation as a funding source. This week, Environment and Public Works Chairman Jim Inhofe (R-OK) said that the legislation could be a legitimate player in the search for a funding stream.



Minnesota 2nd Congressional District: St. Jude Medical Inc. executive Angela Craig (D-MN) will step down from her post ahead of a run for Congress, challenging Rep. John Kline (R-MN).

New York 11th Congressional District: State Assemblyman Michael Cusick (D-NY), his party's assumed front-runner, will not run in the special election for former Rep. Michael Grimm's (R-NY) seat. New York City Councilman Vincent Gentile (D-NY), from Brooklyn, is likely to be the party's second pick for the position.

North Carolina 2nd Congressional District: Rep. Renee Ellmers (R-NC) could face a primary challenge from Chatham County Republican Party Chairman Jim Duncan (R-NC), who Republican sources said is considering a bid.              


Arizona Senate: Reps. Matt Salmon (R-AZ) and David Schweikert (R-AZ) are both considering primary challenges to long-time Senator John McCain (R-AZ).

Indiana Senate: Former Senator Evan Bayh (D-IA) announced he was not interested in running for Senate in the next cycle.


Kentucky Governor: Kentucky Secretary of State Alison Lundergan Grimes (D-KY) announced this week that she would not run for Governor this year. Matt Bevin (R-KY), who unsuccessfully challenged Senator Mitch McConnell (R-KY), also announced that he would seek the GOP nomination for Governor this year.

North Carolina: NC Attorney General Roy Cooper (D-NC), long considered a rising star in NC politics, said this week that he was considering a run against Governor Pat McCrory (R-NC) in 2016.


Governor Chris Christie (R-NJ): Chris Christie and his supporters have formed a political-action committee called Leadership Matters for America ahead of a likely bid for president, adding a third well-known Republican figure to the fight for campaign funds among the party's core donor class.

Former Governor Bob Ehrlich (R-MD): Bob Ehrlich, the former Maryland Governor who lost his re-election bid in 2006, is travelling to New Hampshire this week and setting up a leadership PAC as part of laying the ground work for a potential 2016 GOP Presidential bid.

Former Governor Sarah Palin (R-AK): After giving a speech in Iowa that was roundly criticized by conservatives, Sarah Palin told reporters that she was considering a run for President in 2016.

Senator Lindsey Graham (R-SC): Graham officially launched his “Security Through Strength” PAC this week as part of his efforts to test the waters for a potential run in 2016.

Senator Bernie Sanders (I-VT): Self-described “socialist” Senator Bernie Sanders said this week that he didn’t think Democratic front-runner Hillary Clinton (D-NY) was “bold enough.” Sanders is considering a presidential run as either a Democrat or an independent.



Tuesday, February 3rd

10:00 a.m. House Armed Services Committee – Hearing. Full committee hearing on "World Wide Threats."

10:00 a.m. House Energy and Commerce Committee – Hearing. Oversight and Investigations Subcommittee hearing on "Examining the U.S. Public Health Response to Seasonal Influenza."

10:00 a.m. House Science, Space, and Technology Committee – Hearing. Oversight Subcommittee and Research and Technology Subcommittee joint hearing on "The NSF's (National Science Foundation) Oversight of the NEON (National Ecological Observatory Network) Project and Other Major Research Facilities Developed Under Cooperative Agreements."

10:00 a.m. House Transportation and Infrastructure Committee – Hearing. Railroads, Pipelines and Hazardous Materials Subcommittee hearing on "How the Changing Energy Markets Will Affect U.S. Transportation."

10:00 a.m. House Ways and Means Committee – Hearing. Full committee hearing on "The President's FY2016 Budget Proposal."

10:15 a.m. House Oversight and Government Reform Committee – Hearing. Full committee hearing on "Inspectors General: Independence, Access and Authority."

11:00 a.m. House Foreign Affairs Committee – Hearing. Western Hemisphere Subcommittee hearing on "The Strategic Importance of the Western Hemisphere: Defining U.S. Interests in the Region."

11:00 a.m. House Judiciary Committee – Hearing. Full committee hearing on "Examining the Adequacy and Enforcement of Our Nation's Immigration Laws."

2:00 p.m. House Homeland Security Committee – Hearing. Transportation Security Subcommittee hearing on "A Review of Access Control Measures at Our Nation's Airports."

3:30 p.m. House Armed Services Committee – Hearing. Military Personnel Subcommittee hearing on "Wounded Warrior Program Update."

Wednesday, February 4th

10:00 a.m. House Armed Services Committee – Hearing. Full committee hearing on "Final Recommendations from the Military Compensation and Retirement Modernization Commission."

10:00 a.m. House Administration Committee – Hearing. Full committee hearing on "Committee Funding for the 114th Congress."

10:00 a.m. House Education and the Workforce Committee – Hearing. Full committee hearing on "State of American Schools and Workplaces: Expanding Opportunity in America's Schools and Workplaces."

10:00 a.m. House Financial Services Committee – Hearing. Oversight and Investigations Subcommittee hearing on "Exploring Alleged Ethical and Legal Violations at the U.S. Department of Housing and Urban Development."

10:00 a.m. House Foreign Affairs Committee – Hearing. Full committee hearing on "Cuba: Assessing the Administration's Sudden Shift."

10:00 a.m. House Transportation and Infrastructure Committee and Senate Commerce, Science and Transportation Committee – Hearing. House Transportation and Infrastructure Committee and Senate Commerce, Science and Transportation Committee joint hearing on "Impacts of the Proposed Waters of the United States Rule on State and Local Governments."

10:00 a.m. House Judiciary Committee – Hearing. Immigration and Border Security Subcommittee hearing on the "Legal Workforce Act," to amend the Immigration and Nationality Act to make mandatory and permanent requirements relating to use of an electronic employment eligibility verification system.

10:00 a.m. House Transportation and Infrastructure Committee and Senate Environment and Public Works Committee – Hearing. House Transportation and Infrastructure Committee and Senate Environment and Public Works Committee joint hearing on "Impacts of the Proposed Waters of the United States Rule on State and Local Governments."

10:30 a.m. House Budget Committee – Hearing. Full committee hearing on "The President's FY2016 Budget."

1:00 p.m. House Judiciary Committee – Hearing. Regulatory Reform, Commercial and Antitrust Law Subcommittee hearing on H.R.526, the "Furthering Asbestos Claim Transparency (FACT) Act of 2015."

2:00 p.m. House Foreign Affairs Committee – Hearing. Middle East and North Africa Subcommittee hearing on "The Palestinian Authority's International Criminal Court Gambit: A True Partner for Peace?"


Tuesday, February 3rd

9:30 a.m. Senate Armed Services Committee - Hearing. Full committee hearing on "Findings of the Military Compensation and Retirement Modernization Commission."

10:00 a.m. Senate Budget Committee - Hearing. Full committee hearing on the president's FY2016 budget request.

10:00 a.m. Senate Health, Education, Labor and Pensions Committee - Meeting. Full committee meeting "Roundtable - Fixing No Child Left Behind: Innovation to Better Meet the Needs of Students."

10:00 a.m. Senate Foreign Relations Committee - Hearing. Western Hemisphere and Global Narcotics Affairs Subcommittee hearing on the impact of U.S. policy changes on human rights and democracy in Cuba.

10:30 a.m. Senate Finance Committee - Hearing. Full committee hearing on "Internal Revenue Service Operations and the President's Budget for FY2016."

Wednesday, February 4th

9:30 a.m. Senate Armed Services Committee - Hearing. Full committee hearing on the nomination of Ashton Carter to be Defense Secretary.

10:00 a.m. Senate Finance Committee - Hearing. Full committee hearing on "The President's Budget for FY2016," focusing on the HHS budget request, agency operations and implementation of the Patient Protection and Affordable Care Act.

10:00 a.m. Senate Commerce, Science and Transportation Committee - Hearing. Full committee hearing on "Building a More Secure Cyber Future: Examining Private Sector Experience with the NIST Framework."

10:00 a.m. Senate Homeland Security and Governmental Affairs Committee - Hearing. Full committee hearing on "Deferred Action on Immigration: Implications and Unanswered Questions."

2:15 p.m. Senate (Special Committee on) Aging - Hearing. Full committee hearing on "Broken Trust: Combating Financial Exploitation of Vulnerable Seniors."

2:30 p.m. Senate Commerce, Science and Transportation Committee - Hearing. Oceans, Atmosphere, Fisheries, and Coast Guard Subcommittee hearing on "The Impacts of Vessel Discharge Regulations on our Shipping and Fishing Industry."

2:30 p.m. Senate Indian Affairs Committee - Hearing. Full committee hearing on "Loan Leveraging in Indian Country."

2:30 p.m. Senate Indian Affairs Committee - Markup. Full committee markup of S.184, the "Native American Children's Act"; S.209, the "Indian Tribal Energy Development and Self-Determination Act Amendments of 2015"; S.246, to establish the Alyce Spotted Bear and Walter Soboleff Commission on Native Children; and S.286, to amend the Indian Self-Determination and Education Assistance Act to provide further self-governance by Indian tribe.

Thursday, February 5th

10:00 a.m. Senate Finance Committee - Hearing. Full committee hearing on "The President's Budget for FY2016."

10:00 a.m. Senate Health, Education, Labor and Pensions Committee - Hearing. Full committee hearing on "Who's the Boss? The 'Joint Employer' Standard and Business Ownership."


0.2 cents

- Approximate price of a gallon of gasoline in Venezuela—meaning $1 will purchase 482 gallons of gas—where prices have remained flat since 1989 despite a series of currency devaluations.

$4.5 million

- Approximate cost of 30 seconds of ad time during Super Bowl XLIX—a $500,000 increase over the previous year.


“They’re traveling the last mile of communism in a ‘57 Chevy. It’s rather pathetic.” -- Sen. Jeff Flake, R-Ariz., on Fidel and Raul Castro (Arizona Republic)


"The RNC released its first presidential debate schedule, which includes at least nine debates in different states across the country. As opposed to the Democratic debates, which will just be Hillary staring at her opponents until they burst into flames." –Jimmy Fallon



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