The beginning of any new administration brings new agendas and approaches to governing, but the Trump administration has injected a remarkable amount of change in style and practice. This should come as no surprise to anyone since the president's promise to disrupt the regular Washington order is exactly why he won the election.
Uncertainty currently dominates the Capitol. This will likely recede as rapidly approaching major policy challenges are confronted. These include funding government in April, and then again in October, and raising the nation's debt ceiling this fall. In addition to these central responsibilities of governing are the almost-impossible demands from the administration for Congress to repeal and replace the Affordable Care Act by April and enact comprehensive tax reform by August.
The president's track record over the next six months will bring into clearer focus the staying power of his approach to governing. One major rule in Washington that has not changed is that a president's power rises and falls with the administration's achievement or failure of policy goals. Successful implementation of publicly supported programs leads to increased popularity and calms the nerves of members of Congress who are looking toward their next re-election campaign.
For bankers, affordable housing providers, economic development practitioners and other community leaders, there is a preference for more certainty and stability rather than less. At this point, the nation's fiscal and tax policy going forward is a big unknown. This lack of certainty in these and other important areas may present future problems, or may not, which is the classic definition of uncertainty. Maybe certainty is more a comforting idea than a truly achievable state, as Albert Einstein alluded to when he said, "As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality."
Health Care, Fiscal and Tax Policies to Dominate Washington's Next Six Months
At the moment, all of Washington's attention is focused on the Republican House plan to revamp the Affordable Care Act. The process has been intense and chaotic, with public infighting between House and Senate Republicans, conservative organizations, Congress and the White House. This has taken much focus away from a number of deadlines, some hard-wired in statute and others self-made:
- The debt ceiling was reached March 15 ("extraordinary measures" now needed through August-September).
- FY 2017 funding ends April 29, and a new omnibus appropriations bill, with all of its added baggage, must be signed.
- The White House is pressuring Congress to repeal Obamacare by April, an extremely tricky lift.
- The White House is also pushing Congress to enact tax reform vote by August. Tax reform happens every 35 years for a reason. Senate Majority Leader Mitch McConnell has already said this timetable will not be met.
- The government will shut down Oct. 1 unless FY 2018 appropriations are enacted. Look for another massive omnibus appropriations bill by that date or later in the year. The major point of contention over this legislation will be how to add money for discretionary defense spending ($54 billion) and cut non-defense spending, which is expected to be in the administration's budget blueprint.
Hanging over all of these issues will be whether or not bills will (or can) be passed if they add to the federal deficits. As discretionary spending takes a smaller and smaller percentage of federal budgets, efforts to force cuts on these programs to fund new initiatives will meet stiffer and stiffer resistance.
Bipartisan Senate Bill Increases Low-Income House Tax Credits
While most of the news today involves increased partisanship, bipartisan Senate legislation would represent a significant increase in tax credits to support affordable housing. The Affordable Housing Credit Improvement Act was introduced March 7 by Sen. Maria Cantwell (D-Wash.) and Senate Finance Committee Chairman Orrin Hatch (R-Utah). A coalition of 2,000 national, state and local affordable housing stakeholders has expressed strong support for the bill. National coalition members include the National Council of State Housing Agencies, the National Association of Homebuilders, the National Association of REALTORS®, the National Housing Conference and others.
The coalition statement noted, "This legislation would increase Housing Credit authority by 50 percent, taking a meaningful step towards addressing our nation's vast and growing affordable housing needs. It would also strengthen the Housing Credit by providing states with additional flexibility, making the financing of affordable housing more predictable and streamlined, facilitating Housing Credit development in challenging markets like rural and Native American communities, increasing the Housing Credit's ability to serve extremely low-income tenants, and supporting the preservation of existing affordable housing. The legislation also contains important provisions that would support development of rental homes using the Housing Credit coupled with multifamily Housing Bonds, which currently provide critical financing to roughly 40 percent of Housing Credit apartments."
Work Begins on Flood Insurance Reauthorization
The House Financial Services Committee and the Senate Banking Committee kicked off hearings and a legislative effort to reauthorize the National Flood Insurance Program, which expires Sept. 30. Timely reauthorizations has been challenging for Congress, with 17 short-term expirations and four lapses between 2008 and 2012. Chairmen and ranking members of both committees expressed a commitment to timely reauthorization.
OCC Offers Draft Licensing Manual Supplement for Evaluating Fintech Charters
On March 15, the Office of the Comptroller of the Currency provided additional detail on evaluating national bank charter applications from financial technology (fintech) companies that engage in the business of banking. The OCC will accept comments on the document until April 14.