Policy Traffic Backed Up at the Wall

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Legislative action largely has been placed on hold so far this year as Congress and the Administration have tried to resolve the issues that led to the longest government shutdown in American history: funding major parts of the government and the border wall. Once that crisis is resolved, policymakers must turn quickly to the very long list of priority policy matters that have backed up during the standoff. Here is a brief summary of issues affecting the work of charitable nonprofits that are caught up in the policy traffic:

  • Tax Legislation: Nowhere is the delaying effect of the wall showdown more noticeable than in the delaying action on widely supported tax legislation. There is no single bill at present, but the components are readily identified. The nonprofit community has made the case for repeal or one or more of the new 21 percent unrelated business income taxes on tax-exempt entities. One repeal bill was reintroduced in the House last month, and House Majority Whip Jim Clyburn (D-SC) is scheduled to offer a bill on Tuesday to repeal the tax on nonprofits for their costs for providing commuter transportation benefits to their employees. Many business lobbyists are working full time seeking renewal of 28 tax breaks that expired at the end of 2017, and will trigger higher taxes on the affected businesses unless enacted, retroactively, in the coming weeks. Lawyers and accountants are leading the call for Congress to pass a technical corrections bill to address dozens of typos, inconsistencies, and other drafting mistakes in the 2017 Tax Cuts and Jobs Act.
  • Spending and Sequestration: As Congress struggles to enact appropriations for the current fiscal year that started last October 1, the budget and spending process for the upcoming 2020 fiscal year is already late. The kick off of the budget season has been delayed until March 11 when the White House will start releasing the President’s funding requests and Congress commences the hearing and negotiating process. This year, federal lawmakers are required to cut military and domestic spending by about $125 billion in order to comply the Budget Control Act of 2011, or face across-the-board spending cuts known as “sequestration.” Congress regularly comes up with ways to get around the sequester, but divided government likely will make the negotiations even more complex.
  • Debt Ceiling: Come March 2, the federal government will no longer have the authority to borrow money to pay its bills. The Treasury Department will exercise what’s come to be known as “extraordinary measures” to keep the government open into the summer, but then the crisis of another potential government shutdown occurs. Congress can raise the nation’s borrowing limit, suspend the debt limit law for a time certain, or play politics seeking leverage for ulterior and unrelated legislative gains. Brinksmanship in 2011 led to the Budget Control Act and sequestration discussed above, which merely added more complexity and partisan sniping to an already fraught process.
  • Other Must-Pass Bills: Some of the most urgent programs affecting individuals that nonprofits serve are set to expire on February 15 when the continuing resolution funding parts of the federal government is set to expire. These include the Violence Against Women Act, Temporary Assistance for Needy Families, Child Care Entitlement to States, and the Pandemic and All-Hazards Preparedness Reauthorization Act. Further, there are myriad, urgently needed issues before the three-dozen congressional committees that will be the subject if hearings, oversight, and legislation in the coming months.

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