Republican leaders are teeing up a FY 2017 budget resolution that will be taken up in the first few weeks of the 115th Congress when members return to Washington, DC next week on January 3. As has been promised, the budget resolution will contain reconciliation instructions leading to the repeal of many, but not all, of the provisions of the Affordable Care Act (ACA) (P.L. 111-148).
One of the main reasons Congressional Republicans are targeting the ACA is because it is unsustainable as constructed. The federal government spends more on health care than any other part of the budget. According to the Committee for a Responsible Federal Budget (CRFB), health care costs in the U.S. “are growing rapidly due to rising per-capita health costs and an aging population. Over the next 30 years, combined federal health spending is projected to grow by 3.3 percent of GDP – from 5.5 to 8.8 percent – explaining more than half the increase in projected deficits.”
Republican leaders are also likely to fulfill a long-time promise to overhaul the U.S. tax code. To do so, they will again employ the congressional budget resolution process for FY 2018 and include reconciliation instructions to make necessary changes to the tax code.
It’s been at least 30 years since Congress overhauled the tax code. As we reported in a blog earlier this year, in FY 2017 the Congressional Budget Office estimates just over $3.5 trillion will be collected in individual, payroll & corporate taxes. Individual and corporate tax rates have been the most highly touted areas for reforms although several other proposals are being considered. President-elect Trump’s team will be actively lobbying Congress on his economic plan designed to grow the economy 4% per year and create at least 25 million new jobs that would include a middle-class tax cut of up to 35% and reduce the number of tax brackets from 7 to 3. The Trump team will also advocate for business tax rates to be lowered from 35 to 15 percent. Other changes in tax code could come in the form of allowable deductions for childcare and elder care, including tax-free Dependent Care Savings Accounts for both young and elderly dependents.
Look for President-elect Trump to waste no time in undoing several Obama Administration executive orders. According to the University of California-Santa Barbara American Presidency Project, a non-profit, non-partisan, leading source of presidential documents, President Obama has signed 266 executive orders during his two-terms in office. Those executive orders helped Obama to side-step Congress and push through his agenda on issues including labor, climate and immigration.
President-elect Trump will also waste no time in providing regulatory relief. While the incoming President cannot simply disregard regulations, he can weaken enforcement of them. Regulations that will likely receive the most focus in the first 100 days include the recent Federal Communications Commission ruling protecting net neutrality, Dodd-Frank law regulating the financial industry and EPA’s Clean Power Plan that cuts carbon emissions.
President-elect Trump’s first (FY2018) budget for the U.S. will be due on February 6, 2017 about 17 days after his inauguration. Look for his budget to identify federal funds that will be withheld from “Sanctuary Cities” – U.S. cities that implement policies protecting illegal immigrants from federal immigration laws. In addition, President-elect Trump will likely mobilize immigration officers to apprehend all immigrants convicted of a crime and deport them. According to recent congressional testimony from Immigration and Customs Enforcement (ICE) 953,506 aliens with final orders of removal remain in the U.S. Currently 23 countries are considered “recalcitrant” because they will not accept criminal aliens deported from the U.S. ICE is also closely monitoring an additional 62 countries with strained cooperation, but which are not deemed recalcitrant at this time. President-elect Trump could instruct the State Department to withhold visas for any citizens from recalcitrant countries until they agree to accept their U.S. deportees.
A hiring freeze aimed to reduce the federal workforce is likely to be started. According to the Government Accountability Office (GAO) more than 30% of federal employees will be eligible to retire by 2019. It is likely that a lot of these jobs will not be filled.
President-elect Trump has made it clear that he intends to immediately begin renegotiating U.S. trade deals including the North American Free Trade Agreement (NAFTA) and Trans Pacific Partnership (TPP). Renegotiating trade deals are going to come with plenty of complications. Recall the NAFTA Implementation Act was adopted, 234-200 in the House of Representatives on November 17, 1993. It passed in the Senate on November 20, 1993, by a vote of 61-38. President Bill Clinton signed it into law. While President-elect Trump could invoke NAFTA Article 2205 and withdraw from the agreement, the agreement between the remaining countries Canada and Mexico remains intact. Moreover, Canada and Mexico are going to have demands (see our earlier blog on 21st Century Trade Agreements). And, even if President-elect Trump is successful in gaining a better agreement for the U.S., that agreement must be ratified by members of Congress who may be more cautious of a U.S electorate that favored President-elect Trump’s anti-trade campaign rhetoric. Justin Trudeau, Canada’s Prime Minister has previously said he is willing to renegotiate NAFTA. Mexico’s Finance Minister, José Antonio Meade, has indicated they are not interested in renegotiating the trade pact. The TPP involves 12 countries in the Pacific Rim and covers 40% of the world’s economy. TPP has not been ratified. Japan’s Prime Minister Shinzo Abe a leading supporter of TPP has said that TPP without the U.S. would be “meaningless.” If TPP is not ratified China will be the beneficiary through increased opportunities to export products to the Pacific Rim countries.
The first 100 days of the new Trump Administration coupled with a Republican-run legislative branch are shaping up to be action-packed and extraordinary.