ADS Ventures Newsletter

Return to Regular Order

On July 25 th , just before the Senate vote on repealing Obamacare, Senator John McCain, R-AZ, made a heartfelt appeal for a return to "regular order." Senator McCain said, "Let's trust each other. Let's return to regular order. We've been spinning our wheels on too many important issues because we keep trying to find a way to win without help from across the aisle."

"Regular order" is the term that is used to describe the procedures and processes that have historically governed the workings of Congress. The concept of "regular order" refers to the process of developing legislation within the Congressional committees. "Regular order" means that legislation goes through a process of hearings, negotiations, and compromise in order to reach a rough consensus within the Congressional committee. Then, the legislation moves through the House and the Senate governed by rules that allow amendment and ample time for debate. "Regular order" is not just the precedents and rules that have governed the legislative process, it is also a fundamental concept that Democracy requires compromise and that bipartisanship is essential for the long-term stability of funding and policy.

"Regular order" in the Senate is dramatically different from the "regular order" in the House as the Senate requires 60 votes for passage of legislation. Since it is rare for either party to win more than 60 Senate seats and on those occasions when either party exceeds the 60-vote threshold, their members have always had sufficient ideological diversity that has made it difficult to pass legislation without garnering at least a few members of the other party. The exception to the Senate 60 vote threshold occurs with the rules of reconciliation. Reconciliation rules allow passage of certain legislation with a simple majority; but reconciliation can only be used once a year and the rules severely limit the nature of legislation that can be passed under reconciliation. (This is why the Senate is no longer using reconciliation to repeal the Affordable Care Act - leadership's hope is to now use it for tax reform.)

The House has a simple majority requirement for passage of legislation. In the mid 1990s, shortly after the Republicans took control of the House majority, Speaker Gingrich, R-GA 6, began a practice of requiring a majority of the majority for passage of any legislation. In 2006, during consideration of a Senate passed immigration bill, Speaker Hastert, R-IL 14, made a concrete commitment to formalize the previously informal practice of requiring a majority of the majority for passage of legislation. This is now referred to as the Hastert rule.

The failure of the Republican effort to repeal Obamacare and the growing divisions within the Republican party between President Trump, Speaker Ryan, R-WI 1, and Majority Leader McConnell, R-KY, (the so-called establishment wing of the Republican Party), have created an environment where it is increasingly likely that Congress will return to "regular order" on most significant legislation. In other words, Congress and the Republican majorities in the House and the Senate have now tried every other way of passing legislation and they are left with "regular order" as their only option.

This scenario is playing out in the pending legislation to will provide "Obamacare fixes" to create stability for health insurance markets and lower health care insurance costs for the government and for consumers. This is being jointly led by Senators Lamar Alexander, R-TN, and Senator Murray, D-WA, the Chair and Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee.

This Wednesday, September 6 th at a White House meeting, with the bipartisan Congressional leadership, President Trump cut off and undercut his own Treasury Secretary as well as Speaker Ryan and Leader McConnell to cut a budget and debt ceiling deal with his new "besties" Nancy and Chuck. While I have not looked back earlier than the FDR Administration (1933-1945), I can find no instance since 1933 when a sitting President so openly and clearly undercut his own party in Congressional negotiations. It is now beyond obvious that President Trump will take whatever actions he chooses at that moment in time with no consideration or concern for how his position impacts the party that he is the titular leader of. While President Trump put Speaker Ryan and Leader McConnell in a position where they had no choice but to support the Trump/Pelosi/Schumer budget/debt ceiling deal this time, Speaker Ryan and Leader McConnell both recognize that they are on their own hung out to dry with a President and a Republican nativist populist base that appears to be primarily interested in extinguishing the Congressional Republican establishment. It now appears likely that in December, when Congress recesses for the year, the only legislative achievements for 2017 will be hurricane relief, putting DACA into statutory law, stabilizing the Obamacare markets, the passage of an Appropriations bill, and increasing the debt ceiling. No Congressional observer predicted or even in their wildest imaginations expected that 2017 would end this way. Ironically, each one of these items has or will pass with a huge majority of Democrats in support and a minority of Republicans joining them to reach the required 60 or 50% thresholds.

It is hard to underestimate the astonishment and the anger within the Senate and House Republican Caucuses on the ways in which they feel "set up and boxed in" by President Trump. While the Speaker and the Majority Leader have done their best to put the best face on things and to perfect their best smile/grimace, the rank and file House Republicans are now charting their own individual paths governed not by party unity, solidarity, or discipline, but rather guided by their reelection concerns and personal ideologies. In the wake of the Donald, Nancy, and Chuck agreement, the Republican Congressional consensus and working protocols around tax reform have broken down and the so-called Freedom caucus has now put forth their own version of tax reform creating a very high likelihood that the Republican majorities in House and Senate will not be able to move on their top priority next year without significant Democratic support, participation and buy-in.

While President Trump has certainly not drained the swamp, his erratic behavior has assuredly upended the Congressional processes, expectations and dysfunctional stalemate. So far, the ironic result of his actions related to legislation (regulations and executive orders are a quite separate story) appears to be forcing the House and Senate to slowly return to "regular order".

Deadlines Still Loom

While Congress and the White House addressed several of the key financial concerns last week with the deal to extend the Continuing Resolution by three months, raise the debt ceiling, and fund Hurricane Harvey relief efforts, several "must-pass" items remain on the agenda for the month - primarily reauthorizations for major programs that expire on September 30th. The top three include:

Federal Aviation Administration

Authorization for the Federal Aviation Administration (FAA) is set to expire on September 30 th . The authorization for this agency was most recently enacted in July of 2016. Policymakers on both sides of the aisle have been looking forward to this reauthorization as an opportunity to make much needed reforms to the FAA and its related programs to address many of the challenges and shortcomings that the agency has faced over the years. The House and Senate committees of jurisdiction over FAA have crafted their versions of a long-term FAA reauthorization. However, neither full chamber has approved their respective measures (H.R. 2997 in the House and S. 1405 in the Senate). With looming fiscal deadlines, the prospects of a long-term FAA authorization look dim, so we predict a short-term extension that will give leadership in both chambers more time to work out a compromise.

National Flood Insurance Program

The National Flood Insurance Program (NFIP), the government program designed to offer primary flood insurance to properties with significant flood risk and to help reduce flood risk through adoption of floodplain management standards, is also set to expire on September 30 th of this year. Failure to act before the end of the fiscal year would jeopardize new policies and claims on existing policies. The House Financial Services Committee has passed - largely on a partisan basis - a package of bills aimed at overhauling and extending NFIP. Particularly notable, the House measures move towards greater privatization of flood insurance. In the Senate meanwhile, the Banking Committee has announced a bipartisan NFIP reauthorization bill that excludes many of the more controversial House provisions. The fiscal effects of Hurricanes Harvey and Irma on an already heavily indebted NFIP (roughly $24 billion) will raise the program's profile, but Congress will be operating on a very short timeframe and opinions on the future of the program face deep philosophical divides. Congress has passed 17 short-term NFIP extension bills since the program's inception. In no real surprise, we anticipate another short-term patch before expiration at the end of FY17.

Children's Health Insurance Program

Enacted in 1997, and routinely reauthorized (more or less) since then with bipartisan support, the Children's Health Insurance Program (CHIP) CHIP provides health coverage to around 9 million children from families which, in general, make too much to qualify for Medicaid, but don't have robust employer-provided coverage. CHIP was most recently reauthorized in 2015 as part of a larger bill that received huge bipartisan majorities (92-8 in the Senate), but in the dysfunctional Congress of 2017 risks being swept up in larger forces. In recent weeks, some conservative Republicans have advocated using the "must-pass" CHIP reauthorization as a vehicle to finally repeal some elements of Obamacare, while a few Democrats have floated using CHIP to include funding to stabilize individual insurance markets under the health care law. Either proposal could be a poison pill to CHIP reauthorization. While advocates have some reason for concern, the good news is that the September 30 deadline is not hard and fast; although a failure to reauthorize CHIP by that date would stop federal funding to the states temporarily, most states have reserves that would last several months should Congress fail to meet this deadline. And we expect that, despite threats and schemes to the contrary on both sides, Congress will most likely meet its obligations and extend this vital program.

Slow to the Start or Off to the Races?

With just nine weeks of legislating left in the first year of the 2017-2018 session, several big-ticket items remain pending on Beacon Hill. To name a few - criminal justice reform, health care cost containment, and potential FY2018 override votes.

At the outset of this session, Senate President Stan Rosenberg set several ambitious goals; namely, ensuring that the Fair Share Tax made its way to the ballot box in 2018, approving paid family leave, and addressing criminal justice reform. For his part, Speaker DeLeo kept his cards close, indicating that the House would focus its work primarily on early education reform, the Pregnant Workers Fairness Act, and marijuana policy. Of these issues, the Legislature has checked a number off their respective lists, enacting major cannabis reform, approving the Fair Share Tax ballot initiative, and adopting protections for pregnant workers.

If past is precedent, however, the Legislature has its work cut out for them over the coming months. This Session, legislators filed approximately 6,000 bills for consideration. To date, just 77 have become law. Of those that have received the Governor's imprimatur, just 13 bills (apx. 17%) contain fiscal and/or policy measures. The remaining 64 bills consist of primarily administrative matters (e.g. sick leave banks, home rule petitions, etc.). Though much has been made of this Session's slow start, looking at the past two Legislative Sessions, we're actually running about average both in content and in number. In 2015-2016, by this time members had tackled just 10 fiscal and/or policy initiatives of a total 75. In 2013-2014, the count came to 17 fiscal and/or policy measures of a total 79. That said, in the past two sessions, more than have of the Session Laws were enacted after the August recess. In the 2015-2016, of the 96 bills enacted in the back half of 2015, 16 consisted of substantive vs. administrative measures. In 2013-2014, of the 117 measures passed, 13 were substantive. With these numbers in mind, the Legislature's ability to reach agreement on additional initiatives in the upcoming weeks will ultimately determine whether 2017 was actually as slow a start as advertised.

Complicating the calculus, state legislators continue to encounter a litany of D.C. distractions requiring, if not their immediate action, at least their attention. For example, President Trump's decision this week to end the Obama Administration's Deferred Action for Childhood Arrivals (DACA) policy, resulted in a coordinated effort from legislators and advocacy groups alike speaking out against the decision and analyzing its potential impact on the Massachusetts economy (read: significant).

Pols with higher aspirations face a different kind of distraction, with special elections scheduled to take place in the not too distant future. Several sitting legislators are currently considering or actively vying for new positions, meaning that the special election dominos may very well continue to fall into the New Year.

These distractions will make the legislative lift of finalizing major policy reforms like criminal justice and health care cost containment that much more significant. Both issues are slated for consensus building hearings this fall. In addition to the anticipated flurry of legislative hearings, we may also see the Legislature take up a limited number of FY2018 override votes when they return to formal sessions next week. Depending on the Commonwealth's fiscal position and the Legislature's ability to reach consensus on MassHealth reform, the Governor will keep his red pen at the ready, potentially initiating unilateral 9C cuts.

Order your PSL with an extra shot, and prepare for an active autumn in Boston!

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