to: Tim Brink / Jim gaffney / Catie Scott

fr: Michael Oscar

dt: 12/13/2017

RE: CONGRESSIONAL UPDATE

This Week in Congress… This week, Republicans are trying to make headway on finalizing a tax overhaul as their self-imposed end-of-the-year deadline comes ever closer. Members of the conference committee debated differences between the bills passed by the House and Senate. A final vote in each chamber likely will not be until next week at the earliest, setting up what will likely be a climactic few days as lawmakers try to avoid a government shutdown before leaving Washington for the holidays.

TAX BILL:The Treasury Department estimates the Senate Republican tax code overhaul would shrink annual deficits over 10 years, a sharp difference from congressional revenue estimatesshowingthe GOP tax plans could cost at least$1 trillion over a decade. Treasury’s Office of Tax Policy released an analysis of the Senate-passed bill, which predicts the legislation would raise revenue by $300 billion over 10 years compared to current law. Per the summary, “that estimate assumesan ambitious 2.9 percent growth rate in inflation-adjusted gross domestic product over the next decade, stemming from the proposed tax cuts and a combination of regulatory reform, infrastructure development and welfare reform." The Joint Committee on Taxation (JCT), the official scorekeeper for tax legislation, predicted the House and Senate billswould each lose $1 trillion in revenue over 10 years even after factoring in economic growth, but Republican leaders dispute the JCT findings, arguing the joint committee is too pessimistic about growth prospects under the GOP plans.

CONTINUING RESOLUTION: Last Friday, President Trump signed the latest continuing resolution (CR) extending government funding through December 22nd. When this CR expires,Congress is expected to pass another short-term CR into January.The next hurdle is to reach an agreement to raise the budget caps, which will set the stage for the appropriators to write an FY18 omnibus bill. There are a number of challenges in wrapping up both the budget cap debate and the FY18 bills. Republicans want to boost defense spending, but without parity for non-defense programs. Also, Democrats want to boost defense, but are insisting on an equal amount for non-defense programs. Democrats want to include a fix for young undocumented immigrants through the Obama-era Deferred Action for Childhood Arrivals (DACA) program, which the Trump administration is rescinding. Rumor has it that Congressional leaders are considering more than $200 million in cap increases for each of the next two years, but it is unclear how that would be split between defense and non-defense programs.

Negotiations are underway as to what to include in the next CR. The current thinking is to include: a third emergency supplemental, CHIP reauthorization, extension of cost-sharing reduction subsidies, creation of a health care reinsurance program, aid for community health centers/National Health Service Corps, an extension of various special Medicare provisions, and reauthorization of the National Flood Insurance Program. Also conservatives are calling for including a full year of defense spending in the next CR, but some GOP and Democratic lawmakers have dismissed that idea as a non-starter

INFRASTRUCTURE PLANS: On Tuesday, House Transportation and Infrastructure ChairmanShustermet with President Trump and other administration officials to discuss the Administration'sinfrastructure plan. Shuster met with Transportation Secretary Chao, White House Chief of Staff Kelly, Director of Legislative Affairs Short and National Economic Council Director Cohn to discuss the president's plan. Once a priority for the administration's first 100-days, the infrastructure proposal is now seen as a potential legislative goal for 2018. Per Chairman Shuster, “today’s meeting with the President was a very positive step forward as we begin to work towards improving America’s infrastructure. We had a good, productive discussion, and I look forward to working with the President, the Administration, and my congressional colleagues as we move into the new year to identify specific proposals and priorities.”

Per D.J. Gribbin, a special adviser to the president on infrastructure, said that the plan would include substantial funding for states and local governments that raise their own money for infrastructure, but per Gribbin the plan would not take a geographic approach to spending. The view appears to run counter to the views of key Republican senators who are likely to demand benefits for their states. Senate Commerce, Science and Transportation Chairman Thune has been skeptical of the administration's initial desire to rely on private investors, saying they would not find profitable projects in a state such as South Dakota. House Transportation and Infrastructure Ranking Democrat DeFazio railed against Gribbin's reference to incentives for state and local governments to spend on infrastructure.Shuster was skeptical too, likening the plan to the notion that the federal highways system should be “devolved” to the states to completely fund and manage on their own. As recently as last week, Shuster still had concerns about what the White House would propose. Apparently the White House will propose spending about $100 billion on the incentive payments. Public-private partnerships, once a centerpiece of the plan, would be de-emphasized in favor of a more agnostic view about how states and local governments raise money for infrastructure.


PENSION REFORM (Composite Plan Design): As we conclude 2017, we remain committed to maintaining pension benefits and retirement security for the men and women in the construction and maintenance of the nation’s industrial infrastructure. Unfortunately, uncertainty and risk in the current multiemployer pension system threatens its overall long-term sustainability, as well as the ability of many construction employers to compete for work and continue to provide job opportunities for highly skilled building and construction trade workers.

To address this uncertainty in the multiemployer system, we call upon Congress to enact legislation strengthening multiemployer pension plans by providing contributing employers and participants in collectively bargained multiemployer benefit plans with more choices in retirement plan models. Modernizing the multiemployer pension system through the authorization of flexible composite plans would provide local joint labor-management trustees of multiemployer pension plans a new voluntary – not mandatory – tool to ensure the long-term viability of their funds and the benefits they provide at no cost to the federal government or pension plan participants.

This new composite plan design would:

·  Bridge the gap between the existing options of traditional defined benefit plans and the defined contribution model;

·  Reduce risks for contributing employers while still providing reliable, lifetime retirement security for plan participants through an annuitized life-time benefit – much like defined benefit pension plans;

·  Protect plan participants’ retirement security through strict management and funding requirements that would provide safeguards against adverse severe market declines;

·  Apply only to benefits earned in the future, thereby protecting benefits earned by plan participants in existing “legacy plans;”

·  Improve the condition of legacy plans as benefits are paid out and participants earn accruals in the new plan – protecting the PBGC from the failure of more plans; and

·  Limit the need for higher PBGC premiums, which would further erode the pension system by driving employers out of the system.

NORTH AMERICAN SHALE GAS EXPLORATION:

·  Trump Administration Shrinks States’ Authority on Pipeline Decisions: The Trump Administration is considering using federal authority to circumvent state decisions in bid to fast-track pipeline projects.

·  North Dakota Adopts New Rule on Oil/Gas Royalties: Last week, the North Dakota Industrial Commission passed a rule requiring oil and natural gas companies to provide explanations each time they make a deduction from mineral owners’ royalty checks. The North Dakota Petroleum Council said the rule could cost the industry several million dollars.

·  East Coast Offshore Drilling Plan: The Interior Department could publish a draft proposal for opening waters off the East Coast to oil and natural gas drilling. Under the new five-year plan, the administration would auction off drilling rights in areas of the Atlantic Ocean that were not included in the Obama Administration's lease sale plan running through 2022.

·  EPA Replaces Greenhouse Gas Rule: EPA Secretary Pruitt said his agency would formulate a new rule rather than simply eliminating the Obama Administration’s Greenhouse Gas Rule. To date, utilities have been pressing for a less ambitious rule rather than the uncertainty of having no regulation at all.

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