In Lead-Up to Holidays, Congress Pushes Tax Reform and a New CR

With one day remaining before the current continuing resolution (CR) – the stopgap spending measure that keeps the government funded in the absence of regular appropriations – expires, Congress has been knee-deep in tax reform, health program funding and fiscal year 2018 spending discussions. Congress has now moved tax reform forward, but other issues still loom large.

Congress on Wednesday passed the sweeping Tax Cuts and Jobs Act to overhaul the U.S. tax code. The $1.5 trillion bill narrowly passed the Senate in a 51-48 vote and passed the House (for the second time to fix technical problems with the legislation) in a 224-201 vote. The bill is now with the president, who may sign the bill into law as early as today but will likely push enacting the bill until early January to postpone the automatic cuts it would trigger. (Read more on the statutory Pay-As-You-Go rule from Politico here.)

AADR remains concerned about how the net $1.5 trillion this bill is expected to add to the federal deficit over 10 years could undermine – and even jeopardize – non-defense discretionary programs, which encompass virtually everything outside of national defense and entitlement programs (education, scientific research, public health programs, infrastructure, etc.). Yet, in a positive move for the research community, the House and Senate during conference committee removed the House bill’s initial provision to treat as taxable income the tuition waivers provided to graduate students by universities in exchange for their teaching courses or conducting research while seeking graduate degrees. In the new bill tuition waivers, which benefit graduate students but are never received by the student as income, will not to be taxed and treated as income – as is current practice.

AADR was troubled about how that provision, among others, could impact higher education and our nation’s scientific advancement by burdening students pursuing or wishing to one day pursue advanced degrees. AADR spoke out against the bill’s potential implications for research, and so did our members. We would like to thank those of you who responded to our call to action and reached out to your elected officials, whether through our action alert or other mechanisms. Through AADR’s action alert portal alone, roughly 80 messages were sent to members of Congress. Your voice matters; the public outcry resulting in the removal of the graduate waiver tax provision in the final bill proves that.

With the tax bill now more or less off its agenda, Congress shifts its attention to reaching an agreement that will keep the government funded beyond tomorrow’s deadline.

Last night House Republicans released the text of a new CR, H.R. 1370, to keep the government funded through January 19, 2018. The bill, which replaces the previously proposed H.J. Res 124, would also extend funding for the Children’s Health Insurance Program (CHIP), the National Health Service Corps and Community Health Centers, and it would waive statutory PAYGO requirements to prevent the automatic spending cuts triggered by the tax legislation’s enactment. However, as a way to pay for the public health program extensions, the CR also contains a provision to cut $750 million from the Prevention and Public Health Fund through fiscal year 2022. As a reminder, the Prevention Fund, which is regularly targeted in spending negotiations, accounts for roughly 12 percent of the Centers for Disease Control and Prevention budget.

At this point, House Democrats say they will vote against the CR unless they get assurances that a final spending bill for fiscal year 2018 will provide parity between defense and non-defense spending and include a solution for Dreamers. Senate Democrats’ standing is unclear.

In sum, there is still much to negotiate in advance of tomorrow’s CR deadline. Continue to check AADR’s blog for updates.

UPDATE: On January 18, Congress voted to approve a CR to fund government operations through January 19 and includes a waiver of the PAYGO spending cuts. The bill provides temporary funding for CHIP and $550 million for community health centers that will is intended to last through March 31. The extension was partly paid for by the previously mentioned $750 million cut to the Prevention Fund, which will begin with a $100 million cut in FY 2019. 

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