Washington Weekly: Doomed Healthcare Duel

The Senate approved Trump administration nominees and held votes on expiring health subsidies (see below). The House passed the National Defense Authorization Act (see below), a package of capital formation bills (see below), and a number of environmental and energy-related bills (see below). It also passed a bill to repeal Trump administration executive orders that banned collective bargaining for certain federal workers.

The Senate will approve a large package of 97 Trump administration nominees and vote on the annual defense bill. The House will vote on several health care and environmental and energy bills.

Doomed Healthcare Duel.

The Senate held votes this week on competing health care plans. The Democrats’ proposal would extend the expiring Affordable Care Act (ACA) subsidies for three years, while the Republicans’ bill would let the enhanced ACA subsidies expire and instead contribute up to $1,500 to certain health savings accounts. Both bills received 51 votes, with four Republicans crossing over to vote for the ACA extension. As such, both fell well short of the 60-vote procedural threshold needed to advance legislation in the Senate. The House next week will hold votes on several health care bills. There also are efforts in the House to use a discharge petition to force a vote on different proposals to extend the ACA subsidies. While these efforts have bipartisan traction, a vote likely wouldn’t happen until next month (and it’s unlikely to succeed in the Senate even if it passed the House). With that, the enhanced tax subsidies (originally put in place in 2021 in response to the Covid-19 pandemic) will likely expire at the end of the year. While there will continue to be bipartisan discussions, the issue seems primarily poised to be a campaign issue with each side pointing fingers at the other for increased health insurance premiums that millions of Americans are facing.

Defense Bill Finale.

After negotiators agreed on the final text for the National Defense Authorization Act (NDAA) this past weekend, the House passed it in bipartisan fashion this week. The Senate will follow suit next week. The final bill authorizes $901 billion of defense spending, which includes increased funding for the building of military ships and aircraft. Inevitably, lawmakers try to attach their legislative priorities (even if they have little to do with defense) to the NDAA since it is a must-pass bill. China hawks were able to add provisions restricting US exports of critical technologies to China and tightening reviews of foreign land purchases near US military bases, though they were not able to add a proposal to restrict exports of advanced AI chips to China. One recent addition was a provision to compel Defense Secretary Pete Hegseth to provide Congress with unedited videos of the Caribbean airstrikes against alleged drug-smuggling boats. A bipartisan Senate bill focused on efforts to address housing affordability did not make it into the final bill. Also omitted was a controversial provision pushed by the White House to preempt state laws setting artificial intelligence standards. The NDAA is the last outstanding item that Congress must pass before the end of the year.

Capital Formation.

The House this week passed on a strong bipartisan basis a package of capital formation bills called the INVEST Act. It tries to build on prior legislative efforts (particularly the JOBS Act) by Congress to expand access to capital for small businesses and streamline requirements for companies that want to publicly list. The INVEST Act also has provisions focused on increasing opportunities for retail investors, such as an expanded definition of the accredited investor standard (which allows for access to certain private investments) and a greater ability for closed-end funds to invest in private funds. Finally, it has a bill long sought by the financial industry that would allow firms to send regulatory documents (like annual reports) to investors through electronic means (rather than paper copies) as the default method. While a strong vote in the House may provide momentum in the Senate, the Senate Banking Committee continues to be preoccupied with crypto legislation. The Senate also may look to develop its own bill rather than working off the INVEST Act, which would complicate efforts to pass a capital formation package into law in the shortened legislative calendar of an election year.

The White House and State AI Regulations.

President Trump signed an executive order yesterday aimed at thwarting state-level regulation of artificial intelligence (AI). The order sets up an AI task force to sue states over AI-related laws and directs certain federal agencies to work with the Justice Department to circumvent onerous state and local regulations. The tech industry praised the move. It had been pushing the Trump administration and Congress for a national law rolling back the increasing number of state-level regulations that have cropped up. Preempting state AI laws is not a new issue, but it has struggled to gain traction in Congress, which prompted the executive action. There were efforts to include a 10-year AI moratorium in the “One Big Beautiful Bill” and a preemption provision in the recent defense policy bill, but neither effort had sufficient support. The White House’s actions will be subject to litigation.

Permitting Reform: Gridlocked.

Few issues unite Washington like the need to modernize America’s permitting process for energy and infrastructure projects. Both parties agree that the current system, which is dominated by lengthy reviews under the National Environmental Policy Act (NEPA), is slowing down the development of everything from transmission lines to clean energy. However, that’s effectively where the agreement ends. House Republicans are pushing an aggressive overhaul that would impose strict timelines and curb judicial challenges. Democrats want reforms to be paired with stronger environmental safeguards, an emphasis on renewable energies, and other climate priorities. A bipartisan agreement known as the SPEED Act has emerged and may get a House vote next week. However, as with all good compromises, both parties have found reasons to be critical. While Congress did overwhelmingly pass a pair of bills this week to study NEPA’s impact on projects and allow for digitizing environmental reviews under NEPA, the impact from these is well short of what everyone agrees needs to be done. The agreement that permitting reform is essential is a step in the right direction, but the lack of progress is a reminder that the “how” often matters more than the “what.”

Intellectual Property.

A House committee passed a bipartisan bill this week to crack down on theft of intellectual property (IP). Sponsored by Rep. Blake Moore (R-UT) and Rep. Brad Schneider (D-IL), the bill frees Customs and Border Protection to closely coordinate with the private sector when it suspects that imported merchandise violates US IP laws. Estimates have IP theft (much of it attributed to China) costing the US economy more than half a trillion dollars. This legislation would not solve the problem, but we are encouraged to see a bipartisan effort to try to alleviate it and will be keeping an eye on whether the bill passes the full House.

Regulatory Independence?

The Supreme Court this week heard a case involving a 100-year precedent where the court had determined that the President can only fire FTC commissioners for cause. Given that that case has formed the basis for protections of officials at other agencies, a decision favorable to President Trump would give him greater authority to fire commissioners at independent agencies. A case before the court next month will be on whether the President has similar authority to fire members of the Federal Reserve Board. The Trump administration already has taken steps to exercise more control and authority over the regulatory agenda at these agencies. Even if the court rules against the administration, it can continue to leave vacancies for Democratic commissioners unfilled. The erosion of the independence of regulatory agencies likely will carry over into future administrations and could lead to more precipitous and fundamental changes in policy depending on who wins the White House.

Farm Aid.

The Trump administration unveiled a $12 billion aid package this week to help farmers recover from lost agriculture revenue from falling prices and tariff policies. The Agriculture Department will provide row-crop farmers (producers of crops like corn, cotton, rice, soybeans and wheat) up to $11 billion in aid through an assistance program available in February. The remaining $1 billion will be for growers of commodities, such as fruits and vegetables and “specialty” crops not covered by the new program. Farmers have been hurt this year by trade uncertainty and rising production costs. The Trump administration is trying to defuse tensions with an important political constituency. The aid package was welcome news for Republicans representing agricultural districts and states, including some who have called on the Trump administration to provide further relief. As tariff negotiations continue and we enter into an election year, further farmer aid next year is likely.  

Retirement Time.

With the end of the year approaching, many Americans will be making decisions about whether it is the right time to retire. Congress is no different. While some retirements align with the normal rationale of age and the desire to enjoy life after work, most are driven by frustration with the institution or an early read on shifting political winds. Many lawmakers will be pondering their electoral futures as they head home for the holidays to enjoy time with their families. There already have been 49 members of Congress who have announced they will not be seeking re-election (23 Democrats and 26 Republicans). With numerous state filing deadlines approaching, and what is expected to be a tumultuous start to the year, it won’t be surprising to see another round of retirement announcements in the coming weeks. Retirements are often the canary in the coal mine about voter sentiment in the next election, and a flood of Republican retirements would indicate rough waters ahead in November.