Category: Policy Landscape

A partial federal government shutdown over the issue of funding for a wall on the Mexican border continued this week after the new 116th Congress was sworn in and Democrats elected Rep. Nancy Pelosi (D-CA) as House Speaker.  

Democrats elected Rep. Nancy Pelosi (D-CA) as House Speaker at the start of the 116th Congress.

• The shutdown began Dec. 21 after negotiations were unable to resolve President Trump’s request of at least $5 billion for construction of a wall versus Democrats’ offer of approximately $1.3 billion for border security.  
• After taking control of the House yesterday with a 235-199 majority (one seat is still contested), Democrats passed legislation to reopen the government.  Their legislative proposals consist of a six-bill spending package (H.R. 21) to fund a number of agencies for the rest of the fiscal year until September 30 – with a continuing resolution (H.J. Res 1) to fund the Department of Homeland Security (DHS).
• Senate Majority Leader Mitch McConnell (R-KT) stated yesterday he will not allow funding legislation on the Senate floor for a vote unless it is supported by President Trump.  (New York Times, Jan. 4)
• Congressional leaders met with President Trump twice this week in attempts to negotiate a spending deal.  After today’s White House meeting, Trump said he “absolutely” told policymakers that the shutdown could last months or years, but that he hopes planned talks this weekend will lead to an agreement.  (BBC News, Jan. 4)
• The impasse has halted operations for about 25% of government agencies, with approximately 380,000 federal employees on furlough and another 420,000 working without pay. The shutdown affects seven agencies, including DHS, which has temporarily halted operations for immigration programs including the EB-5 investment program.

The partial government shutd own began Dec. 21 after negotiations were unable to resolve President Trump’s request of at least $5 billion for construction of a wall versus Democrats’ offer of approximately $1.3 billion for border security.

• The National Flood Insurance Program, administered by the Federal Emergency Management Agency (FEMA), said it would continue to allow sales of new flood insurance policies during the shutdown.  FEMA Administrator Brock Long noted that Congress reauthorized the flood insurance program through May 31, 2019 and Trump signed the legislation (S. 3628) before the shutdown began.  Brock also cited The National Association of Realtors estimate that the inability to sell new flood insurance policies would affect 1,400 home closings each day. (NAR, Dec. 27 and CQ, Dec. 28)
• White House Council of Economic Kevin Hassett said yesterday that the shutdown will cut U.S. economic output by about 0.1 percent every two weeks. “Our estimate is that GDP in the first quarter could go down by about a tenth if this were to resolve in the next few weeks,” Hassett said at the White House. (Bloomberg, Jan. 3)
• Separately, the new Democratic majority in the House has established a Select Committee on the Climate Crisis, which will be chaired by Rep. Kathy Castor (D-FL).  “We must … face the existential threat of our time: the climate crisis,” Pelosi said in her opening address to Congress Thursday. (Politico, Jan. 3) 
• Additionally, the House Energy and Commerce Committee announced this week that climate change would be the subject of its first hearing in 2019.  (Energy and Commerce, Jan. 3)

The effects of the government shutdown and prospects for policymaking in the new divided Congress will be topics for discussion during The Roundtable’s Jan. 29-30 State of the Industry Meeting in Washington, DC.

Nearly a month into the partial government shutdown, the impasse over funding of a border wall on the Mexican border continues with no sign that an agreement between President Trump and Congress is near. (Axios, Jan. 16

White House Council of Economic Advisers Chairman Kevin Hassett this week doubled the estimate of how the government’s partial shutdown is reducing economic growth. The initial cost to the economy, estimated at 0.1 percentage point in growth every two weeks, was revised to 0.13 percentage point every week.  ( Fox  interview , Jan. 15 /Forbes, Jan. 16 / Vox, Jan. 18 )

• White House Council of Economic Advisers Chairman Kevin Hassett this week doubled the estimate of how the government’s partial shutdown is reducing economic growth. The initial cost to the economy, estimated at 0.1 percentage point in growth every two weeks, was revised to 0.13 percentage point every week.  (Forbes, Jan. 16 and Vox, Jan. 18) 
• Another potential impact of the shutdown may affect landlords who rent to the federal government.  According to Bloomberg Government, the General Services Administration (GSA) usually issues the government’s rental obligations, but with furloughed staff unable to process the checks, the payments may stop.  “The GSA leased more than 190 million square feet in nearly 7,000 buildings nationwide at the start of its 2018 fiscal year, representing roughly $5.6 billion in annual rent payments,” BGov reported Jan. 15. The GSA states it “is aware of concerns from the Lessor community regarding GSA’s ability to make timely rent payments,” and “is diligently exploring all available options.”   
• Federal Reserve Chairman Jerome Powell said last week that if the shutdown is prolonged, it would start to noticeably affect the economy.  “If we have an extended shutdown, I do think that would show up in the data pretty clear.”  Powell added that the full economic impact of closed government agencies is difficult to track because data usually provided by the Commerce Department is not currently available, due to the shutdown.  (Economic Club of Washington  video interview at 13:30 and The Hill, Jan. 10) 
• The results of a Federal Reserve survey of the 12 regional Fed banks through Jan. 7 known as “the beige book” were released this week, showing a generally positive picture for the U.S. economy but revealing an undercurrent of worry.  (WSJ, Jan. 16)  

The Fed’ s  “ beige book ” shows a generally positive picture for the U.S. economy but reveals an undercurrent of worry. (WSJ, Jan. 16)

• According to the Fed report, “Outlooks generally remained positive, but many Districts reported that contacts had become less optimistic in response to increased financial market volatility, rising short-term interest rates, falling energy prices, and elevated trade and political uncertainty.” 
• The report adds that “A number of Districts reported rising home prices, while prices for commercial and industrial space either increased or were flat” while noting that U.S. labor markets were shown to have tightened as businesses struggled to find workers at any skill level. (Reuters, Jan. 16) 

The Fed’s Open Market Committee will meet next on Jan. 29-30, the same time as The Roundtable’s State of the Industry Meeting in Washington. 

 

Congressional negotiators reported progress on a border-security deal this week, as they aim to pass legislation by Feb. 15 to fund approximately 25% of the government.  Without a new funding measure, the government will face a second partial shutdown.  (Roundtable Weekly, Feb. 1)

Senate Appropriations Chairman Richard Shelby (R-AL) met with President Trump yesterday, stating: “[The president] said to me again he would like for us to wrap it up, to get a legislative solution. We’re negotiating on the substance, serious stuff now…”

• Senate Appropriations Chairman Richard Shelby (R-AL) met with President Trump yesterday, stating: “[The president] said to me again he would like for us to wrap it up, to get a legislative solution.  We’re negotiating on the substance, serious stuff now. …This is the most positive I’ve been or I’ve seen in the talks since, oh gosh, maybe ever.”  (CQ and Roll Call, Feb. 7)
• House Appropriations Chairwoman Nita Lowey (D-NY) said yesterday that negotiators are acting in “good faith” but may not be able to finish work by Friday.  Shelby added, “I think we’re looking at Monday right now.  But there’s a lot to do.” (BGov and Fortune, Feb. 7)
• If the 17 members of the conference negotiation committee reach agreement by Monday, legislative text could reach the House floor by Thursday, Feb. 14 – followed by action in the Senate.

Infrastructure  

President Trump also briefly commented during the SOTU on the need for funding national infrastructure improvement projects. “I know that Congress is eager to pass an infrastructure bill. And I am eager to work with you on legislation to deliver new and important infrastructure investment, including investments in the cutting edge industries of the future. This is not an option, this is a necessity,” Trump said.  (Politico, Feb. 5) 

House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR)  on “The Cost of Doing Nothing: Why Investing in Our Nation’s Infrastructure Cannot Wait.”

• House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR) responded to the SOTU, stating: “None of this can happen, however, if we continue to ignore the looming crisis facing the Highway Trust Fund. I will work to build bipartisan agreement around legislation, but I can’t do it alone. This will require massive effort from the White House, stakeholders, and supporters in Congress to get something real across the finish line.”  (DeFazio Statement, Feb. 5)
• The need to repair aging roads, bridges, transit, airports and harbors throughout the country was the focus of Chairman DeFazio’s Infrastructure Committee hearing yesterday on “The Cost of Doing Nothing: Why Investing in Our Nation’s Infrastructure Cannot Wait.”  (Chairman DeFaizo’s Opening Remarks, Feb.7)

The Roundtable sent a comment letter to President Trump in Jan. 2018 offering specific suggestions on how innovative financing sources may be used to help pay-for infrastructure improvements – and how restructuring a lengthy permitting process and cutting unnecessary red tape will help control project costs and delays.  (Reference: The Roundtable’s 2019 Policy Agenda Infrastructure section). 

“Green New Deal” 

This week also saw the unveiling of a sweeping Democratic congressional resolution called the “Green New Deal” that aims to “achieve net-zero greenhouse gas emissions” in the next 10 years.  (Sen. Ed Markey new release, Feb. 7) 

Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) introduced  a sweeping Democratic congressional resolution called the ” Green New Deal ” that aims to “achieve net-zero greenhouse gas emissions” in the next 10 years.

• Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) yesterday introduced the resolution. The measure is a non-binding, aspirational blueprint that includes a federal jobs guarantee, basic income and universal health care.  All the declared 2020 Democratic presidential candidates in the Senate are among the co-sponsors of the resolution.  (Wall Street Journal and CNBC, Feb. 8)
• The proposal includes the goals of upgrading every existing building in the United States and requiring that new buildings should “achieve maximal energy efficiency, water efficiency, safety, affordability, comfort, and durability, including through electrification.”  (Fast Company, “AOC’s Green New Deal is a Wake-up Call for the Building Industry,” Feb. 7)
• Federal data show that commercial building energy use has decreased dramatically since the late 1970s.  The Roundtable’s membership and Sustainability Policy Advisory Committee (SPAC) have worked closely with policymakers and federal agencies for years to achieve substantial reductions in CRE’s energy consumption and carbon footprint on a national scale.  (Reference: 2019 Policy Agenda’s Energy section)
• The Roundtable and SPAC continue to advocate further steps in achieving greater energy efficiency in buildings.  The Roundtable currently is working with stakeholders on a proposal to reduce the after-tax cost of energy efficient systems and equipment, in light of the 2017 tax overhaul’s new framework for expensing building improvements.

Energy efficiency for commercial buildings, government funding and infrastructure and were among the topics discussed last week during The Roundtable’s State of the Industry Meeting, where Speaker of the House Nancy Pelosi (D-CA) was a featured speaker.  (Roundtable Weekly, Feb. 1)

A $333 billion spending package passed by Congress yesterday and signed by President Trump today funds the government through Sept. 30 (end of FY2019),  avoiding a second government shutdown.  (Senate Appropriations Committee summary, Feb. 15)

President Trump today declared a national emergency over illegal immigration at the border. White House officials said executive powers will be used to reprogram $6.6 billion in Pentagon and Treasury funds to build a border wall.

• The legislative measure signed today includes funding for the Department of Homeland Security (DHS) and six other government agencies.  The debate over DHS funding for a wall along the southwestern border with Mexico led to a five-week partial government shutdown.  During the shutdown, the EB-5 Immigrant Investor Regional Center Program and federal cleanups at Superfund sites around the nation were suspended.  With today’s funding package, EB-5 has received another extension through Sept. 30. (Roundtable Weekly, Jan. 25).  

• Policymakers this week agreed to appropriate $1.38 billion for 55 new miles of barriers along the Mexican border. President Trump originally requested $5.7 billion to construct 234 miles of barriers. (Wall Street Journal, Feb. 15). 

• President Trump today also declared a national emergency over illegal immigration at the border.  White House officials said executive powers will be used to reprogram $6.6 billion in Pentagon and Treasury funds to build a border wall.  (The Hill, and New York Times, Feb. 15)

• House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Charles Schumer (D-NY) responded they would use “every available remedy” to overturn the emergency declaration.  (Pelosi-Schumer joint statement, Feb. 15)

• House Democrats plan to introduce legislation to block the president’s effort to reprogram funding for wall construction.  Legal challenges, which are also expected, could end up in the Supreme Court. (USA Today, Feb. 14 and AP, Feb. 15)

President Trump said he expected a legal battle over the emergency proclamation. “I expect to be sued. I shouldn’t be sued,” he said today. “We will possibly get a bad ruling. And then we’ll get another bad ruling. And then we’ll end up in the Supreme Court, and hopefully we’ll get a fair shake,” he added.  (Wall Street Journal, Feb. 15)