Washington Snapshot - June 8, 2017

In This Week's Edition of Snapshot…

News from the Hill

So, What's Up with Tax Reform?

In the coming months, we will provide weekly updates with new developments in the tax reform process.

While there has been an uptick in discussions about comprehensive tax reform, several other legislative items will likely need to be addressed before Congress can tackle our tax code, including healthcare and raising the debt limit.

Regarding healthcare, Republican House and Senate leaders aim to repeal and replace Obamacare. The House has passed a bill that is currently awaiting action by the Senate. Earlier this week, Republican senators met to discuss their plans for replacing Obamacare. According to The Wall Street Journal, senators left the meeting divided on how to address Medicaid in their repeal bill.

As the debate over healthcare continues, some members of Congress are beginning to raise the notion of moving onto other issues. The Journal also noted, “‘It’s more likely to fail than not,’ Sen. Lindsey Graham (R-SC) said of the health bill, citing the GOP’s hardening factions over how to handle the expansion of Medicaid ushered in by former President Barack Obama’s 2010 health law. ‘We need to bring this to an end and move to taxes.’”

Congress also faces the issue of increasing the debt limit — which the White House has requested they resolve prior to leaving for the August congressional recess. With conflicting statements being issued by administration officials, it hasn’t been clear what the administration’s position is on how to address the debt limit. Treasury Secretary Steven Mnuchin called for a “clean raise” to the debt ceiling (meaning, an increase to the debt limit would not be conditional on negotiated spending cuts). Conversely, Office of Management and Budget (OMB) Director Mick Mulvaney favors conditional spending cuts to a debt limit increase. President Trump made a statement this past Tuesday to reconcile these two positions by distinguishing Secretary Mnuchin as the lead voice on this effort.

So where does that leave us with tax reform? Well, the answer is still not entirely clear, but we have some insight based on recent comments by key players in this process. Last week we reported the outstanding question of whether forthcoming tax legislation would be revenue-neutral or not (as it would need to be if Congress were to try and pass that bill under reconciliation). At that time, the White House’s position on this was unclear, given the contradictory statements made by Secretary Mnuchin and OMB Director Mulvaney. This week, the White House’s Director of Legislative Affairs Marc Short suggested that President Trump might not mind pushing a tax package that did is not revenue-neutral.

With regard to the White House’s timing on tax reform, National Economic Director Gary Cohn noted in an interview with Fox Business Network that “we will have a very detailed, drafted tax plan to be delivered to Congress by when they get back from the August recess.”

From the congressional perspective, Senate Finance Committee Chairman Orrin Hatch shared his optimism that Republicans will be able to overcome their internal disagreements on tax reform, saying that he believes they are “making some serious headway toward a workable framework” and that the “unresolved issues… are far from insurmountable.” With deflated support for the House-proposed border adjustment tax (BAT) — which was intended to generate revenue to offset the tax cuts that Republicans hope to enact — Chairman Hatch is revisiting his idea of corporate integration, according to his chief tax counsel Mark Prater (read more on corporate integration here). Prater also told BGov that they are currently reviewing past tax proposals — including former Ways & Means Chairman Dave Camp’s 2014 plan — for ideas on how to generate revenue.

“Johnson Amendment” May Be Discussed in House Hearing

Today, the House Judiciary Subcommittee on Regulatory Reform, Commercial, and Antitrust Law will hold a hearing titled “Oversight of the Activities of the Justice Department’s Civil, Tax and Environment and Natural Resources Division and the U.S. Trustee Program.”

While the “Johnson Amendment” — a prohibition of charitable 501(c)(3) organizations from participating in, or intervening in (including the publishing and distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office — is not the focus of this hearing, it is a subject that may be raised. The Council will be sending a member of the government relations team to monitor the hearing and will provide any necessary updates in a future edition of Snapshot.

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DOE Aims to Reduce Regulations Following EO

In response to one of President Donald Trump’s executive orders (EO) from earlier this year, the Department of Energy (DOE) began seeking public comments to identify “existing regulations, paperwork requirements and other regulatory obligations that can be modified or repealed, consistent with law, to achieve meaningful burden reduction while continuing to achieve the Department's statutory obligations.”

The President’s EO requires that two federal regulations to be repealed for every one new regulation that is introduced. DOE’s public comment period ends on July 14.

President Trump Unveils Infrastructure Plan in Budget

As part of President Donald Trump’s fiscal year (FY) 2018 budget proposal that was sent to Capitol Hill at the end of May, he unveiled his plan for tackling America’s infrastructure problems. According to Politico, “It laid out a vision for $200 billion in direct federal spending over the next decade on needs such as roads, bridges, tunnels, railroads, and expanded broadband, along with incentives for states, cities, and private investors and efforts to reduce the burdens of regulations.”

Infrastructure improvements and spending have been seen as areas of potential bipartisanship agreement as members on both sides of the aisle see the need for investment. However, once Congress begins their FY 2018 budget and appropriations process, we will see if infrastructure continues to remain a priority for both parties.

Happening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

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Nonprofits Ratchet Up Pressure to Break Illinois Budget Impasse; Texas Bans Governments from Seeking Sermon Disclosures

As of today (6/8), Illinois has gone 1 year, 11 months, and 8 days without a State budget due to intransigence by politicians on all sides. Legislators and the Governor failed to meet the May 31 deadline in the regular session and are now working overtime to try to reach a deal before the start of the next fiscal year on July 1.

Nonprofits are becoming increasingly vocal in their insistence that lawmakers approve a spending and revenue plan that addresses the needs of the state. Forefront, the state association of nonprofits and regional association of grantmakers, joined other groups in releasing a letter last week that delivered a stark demand: Don’t Come Home without a Fully Funded, Balanced Budget!

Texas Bans Governments from Seeking Sermon Disclosures

The Governor of Texas signed a bill making it a crime for governmental units to compel the production or disclosure of sermons from religious leaders. Presumably, the new law is in reaction to the reported effort of the Mayor of Houston to read the transcript of a sermon that he thought crossed the line from free speech to unlawful endorsement or opposition to a candidate for public office (nonprofit nonpartisanship or the Johnson Amendment).

The issue came up at the May 4 congressional hearing at which witnesses cited the Houston Mayor’s demands as justification for weakening the Johnson Amendment, the federal tax law provision that protects foundations and charitable nonprofits, including houses of worship, from demands by politicians and their operatives for political endorsements and campaign contributions. Private and community foundations are among the more than 4,700 organizations that have already signed the Community Letter in Support of Nonpartisanship that calls on Congress to retain the protections against partisan demands at the federal level.

Philanthropy News and Op-Eds

Council and Independent Sector CEOs Pen Op-Ed on Johnson Amendment

With the new administration taking steps to actualize their priorities, the philanthropic sector must be prepared to adapt to a shifting political landscape. One of these shifts is already upon us as the administration attempts to weaken and possibly even eradicate the Johnson Amendment.

Council President and CEO Vikki Spruill and Independent Sector President and CEO Dan Cardinali recently co-authored an op-ed to raise awareness and support for protecting this crucial law.