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Congress Averts a Shutdown But Now Faces a Messy 2018 Start

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The Republican-controlled Congress managed the bare minimum task of keeping the government open before the holiday recess, yet made little progress on a medley of divisive fiscal and social issues it will now be forced to confront in January.

Among these are resolving a long-running dispute over defense spending levels; raising the nation’s debt ceiling, which came back into force this month; and dealing with the looming deportations of undocumented immigrants, known as dreamers, who arrived in the U.S. as children.

All the unfinished business could impede President Donald Trump’s ability to rack up more legislative victories, including a large-scale infrastructure bill, before the 2018 midterm elections.

(Related: Congress Passes Stopgap Funding to Avert Government Shutdown)

“At some point, and for the good of the country, I predict we will start working with the Democrats in a Bipartisan fashion. Infrastructure would be a perfect place to start,” Trump tweeted Friday morning.

Lawmakers have a limited amount of time until they turn their focus to campaigning for re-election. “We need to get the leftovers done,” said Ryan Costello, a Pennsylvania Republican. “Until we deal with Groundhog Day, we can’t move on to our agenda.”

Leaders were able to corral rank-and-file lawmakers to vote for a bare-bones funding patchwork, and the government now has enough money to operate through Jan. 19.

Patience Thin

Patience, however, is running thin among both Democrats and Republicans, so the votes may not be there to keep delaying final spending measures for the current fiscal year.

Many lawmakers are eager to take agencies off auto-pilot and to devote more funding for the armed forces, the opioid abuse crisis, medical research and other priorities. They are divided, however, over how much to spend and how much to add to deficits.

To get the stopgap bill enacted, lawmakers dropped plans to provide long-term financing for the Children’s Health Insurance Program, or CHIP, and the community health centers program as well as a long-term extension of electronic surveillance programs. Resolving those issues will take priority over the president’s plans for an infrastructure bill and welfare reform.

Congress also left town without being able to agree on an $81 billion hurricane and wildfire relief package, so working out differences on that will be high on the agenda in the new year.

Chuck Schumer, the Senate Democratic leader, said Thursday that he thought the disagreements could have been resolved “had my Republican colleagues, especially in the House, not put them on the back burner while jamming through their tax bill.”

Bipartisan Standoff

Both parties are expected to return to the negotiating table in early January to try to hammer out a budget cap agreement, raising limits on domestic and defense spending imposed under the 2011 Budget Control Act.

They are far apart.

“We find ourselves no closer to an agreement than we were 11 months ago,” Steny Hoyer, the second-ranking House Democrat, said Thursday.

House Minority Leader Nancy Pelosi said that Republicans have sought to increase defense spending by $54 billion and non-defense spending by $37 billion. Democrats find that unacceptable because they want equal increases.

Demonstrated Needs

Tom Cole, an Oklahoma Republican and a member of the Appropriations Committee, said that the Democratic formula of “parity” increases made more sense in the days of divided government and less so now that Republicans control Congress and the White House. He argued that increases should be based on demonstrated needs.

In addition to agreeing on spending levels, both sides must resolve whether and how any of the budget cap increases will be paid for. In the past, Congress has tapped federal pensions, crop insurance and Medicare provider payments.

Sen. Susan Collins, R-Maine (Photo: Collins)

Sen. Susan Collins, R-Maine (Photo: Collins)

If a budget deal is struck, that outline could clear the way for the House and Senate to flesh out the details of fiscal 2018 spending through a giant trillion-dollar omnibus bill.

Budget caps are just the first of many problems Congress faces in January.

Surveillance Law

Both Republicans and Democrats are deeply divided over the government’s warrant-less electronic surveillance law, Section 702 of the Foreign Intelligence Surveillance Act, or FISA. A compromise attempt between Republican libertarians and security hawks was pulled from consideration this week. Instead, a short-term extension of the authority, to Jan. 19, was put into the funding bill.

In the Democratic ranks, lawmakers face increasing pressure to force a showdown on the dreamers, who had been protected under an Obama administration program called Deferred Action for Childhood Arrivals, or DACA.

In September, Trump revoked the order and some of the undocumented immigrants say they are already losing protected status, along with their jobs.

Sen. Jeff Flake, an Arizona Republican, has secured a commitment from Majority Leader Mitch McConnell to put any deal on the issue on the Senate floor in January.

A deal could involve expanded border security spending. Sticking points remain on Trump’s demand for a border wall, for more deportation agents and for changes that would end the ability of immigrants to bring family members to the U.S.

Battle Ahead

“The battle’s going to come in January,” Ralph Norman, a Republican from South Carolina, said in an interview after the House approved the temporary funding. “One of the reasons I voted for this now is I didn’t want DACA thrown in.”

“For everybody, it’s going to be the big deal, it’s going to be the big war,” Norman said. “DACA, the devil’s in the details about that.”

Then there’s the question of Obamacare’s future, which continues to haunt the Capitol.

Sen. Susan Collins of Maine says she has a commitment from McConnell to allow votes on two Obamacare bills meant to lower premiums by restoring cost-sharing reduction payments and by setting up a reinsurance program. But they face strong opposition among Republicans in the House.

A compromise could involve passing just the reinsurance portion along with expiring Medicare provisions. Congress must reauthorize a number of Medicare payment policies — many of which expire at the end of 2017 — or doctors, hospitals, and other health care providers could face large cuts. The policies make payment adjustments that particularly benefit critical providers in rural areas and account for other regional variations in the cost of providing health care. They also extend coverage options for older Americans with special needs that require care coordination and disease management. House Republicans and Democrats reached a deal in November to reauthorize funding for the policies.

Some Republicans want to make another run at repealing Obamacare once these leftovers are out of the way.

McConnell has suggested that repeal is off the table. That sparked a furious rebuke from Sen. Lindsey Graham of South Carolina, who wants to spearhead another attempt. The math in the Senate for achieving that will only worsen in January once Alabama Democrat Doug Jones is sworn in and the Republican majority shrinks to 51 members.

McConnell on Thursday also suggested cutting entitlements won’t be on the agenda next year, a day after House Speaker Paul Ryan said he wants to push welfare-to-work proposals. McConnell could use the budget process to try to ram through work requirements for welfare, food stamps and Medicaid, though that could be politically difficult in an election year.

—With assistance from Laura Litvan, Anna Edgerton and Anna Edney.

—Read Tax Reform Fight Flares at House CHIP Hearing on ThinkAdvisor.

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