the House Rules Committee posted text for the
Consolidated Appropriations Act of the 2016 fiscal year (FY). This
$1.1-trillion congressional spending package, known as the omnibus, shows
Washington at its worst.
Lawmakers are being asked to sign off on 2,200
pages (with an additional 1,000 pages of explanatory materials), at the 11th
hour, without having had sufficient time to analyze its contents.
The House plans to begin consideration of the bill
on Friday morning, with final votes expected to come Friday afternoon before
the House leaves town until Jan. 5, 2016. Exact timing of when the Senate will
vote on the bill is unclear, but lawmakers are expected to wrap up
consideration quickly and begin their vacation, perhaps as early as Friday
night. In the meantime, another short-term continuing resolution will be necessary
to avoid a government shutdown at midnight.
The omnibus spending package, along with the tax
extenders package, is full of provisions that were negotiated behind closed
doors.
Heritage experts have combed through the bill’s
numerous provisions and have provided their analysis on several key issues
below:
Higher Spending
War Account as Slush Fund
Even Higher Spending With Gimmicks
Sanctuary Cities Spared
No Additional Assurances on Vetting Refugees
Risk Corridor Bailouts Avoided
Planned Parenthood Affiliates Still Funded
Failure to Protect Conscience Rights
More Bad Than Good on Energy Provisions
Failure on WOTUS (EPA Water Rule)
Funding Barred for Unrelated Dietary Guidelines
Repeals Mandatory Country of Origin Labeling
Small Steps on School Lunch Funding
Congress Is at It Again With Tax Extenders
Obamacare’s Taxes
Higher Spending
Once again, Congress has missed a critical
opportunity to abide by the Budget Control Act spending caps and will not rein
in wasteful and excessive spending.
Base spending for the omnibus comes in at $1.066
trillion, the level agreed upon in the Bipartisan Budget Act of 2015. The
defense and non-defense subcategories are at the agreed upon levels as well.
Overall, FY2016 base discretionary spending in the
omnibus is $50 billion higher than the original Budget Control Act of 2011
(BCA) levels.
The Bipartisan Budget Act set a maximum amount of
discretionary spending, not a spending goal that had to be obtained. Since its
enactment in 2011, the Budget Control Act caps set by the law have been
exceeded each year.
With the Bipartisan Budget Act’s revised FY2017
spending level already set to bust the caps and be above the FY2018 cap, unless
Congress starts making the tough spending decisions and abiding by the Budget
Control Act, we are poised to continue this trend in the future.
War Account as Slush Fund
Funding for Oversees Contingency Operations (OCO)
is also at the $73.7-billion level agreed upon in the Bipartisan Budget Act,
with defense receiving $58.8 billion and non-defense receiving $14.9 billion in
FY 2016. The Bipartisan Budget Act increased Oversees Contingency Operations
funding by $16 billion for each of the next two years.
The $8 billion designated for non-defense is likely
to be used to cover base budget needs of the State Department rather than for
continuing war efforts, once again using Oversees Contingency Operations money
as a slush fund to increase non-defense discretionary spending up to the
president’s requested level while defense remains underfunded.
Even Higher Spending With Gimmicks
On top of the base discretionary funding and
Oversees Contingency Operations funding agreed upon in the Bipartisan Budget
Act, the omnibus also includes other above-the-cap spending for purposes such
as disaster and emergency declarations and program integrity initiatives.
The bill includes $7.1 billion in disaster
spending, which funds responses to presidential declarations for natural
disasters such as hurricanes, tornadoes, and wildfires, among other purposes.
The omnibus also provides $1.5 billion for program
integrity initiatives that aim to combat Medicaid waste, fraud, and abuse. An
additional $698 million is also appropriated to the Department of the Interior
for emergency declarations. While some of these may be worthwhile and necessary
purposes, these expenses (which recur almost every year) should be accounted
for in the base budget. Funds in excess of the discretionary cap should be
appropriated only when a true emergency or unforeseen disaster occurs. They
should not be used as another gimmick to circumvent the spending caps.
The omnibus also relies on Changes in Mandatory
Programs (CHIMPs) to bust through the (already inflated) spending caps. These
are changes to mandatory spending and entitlements that affect current-year
budget authority and are treated as changes in discretionary spending for the
purpose of scoring appropriations bills.
Sometimes these are real savings and may be used as
an acceptable offset, but most of the time they are simply a way to increase
discretionary spending in the current year with no real savings ever being
realized.
The FY2016 Conference Budget Resolution took a
first step in reining in CHIMPs spending by limiting the total amount that
could be used as an offset over the each of the next four years. However, the
agreement still allows for over $19 billion in additional spending this fiscal
year. This is purely additional discretionary spending over the agreed upon
budget caps. Moving forward, the use of CHIMPs should be eliminated completely.
—Justin Bogie, senior policy analyst, Roe Institute
for Economic Policy Studies
Sanctuary Cities Spared
The omnibus does not restrict Department of
Homeland Security or Department of Justice grants to cities that resist the
enforcement of federal immigration law, also known as sanctuary cities.
Federalism gives local governments some latitude in choosing to oppose or not
assist the federal government in enforcing immigration law, but the federal
government does not have to reward or pay for the results of such policies.
No Additional Assurances on Vetting Refugees
The omnibus also does not request additional
assurances, intelligence assessments, or risk-based plans for the refugee
process. If Congress is genuinely concerned about the vetting of refugees, then
it should have requested additional information with which to oversee such
vetting programs.
Similarly, while the bill makes small improvements
to the Visa Waiver Program (VWP), it also adds largely unhelpful and even
counterproductive restrictions to the program by denying Visa Waiver Program to
individuals who have travelled to Iraq, Syria, or other countries. Importantly,
it also does not expand the program in order to reap additional security
benefits.
—David Inserra, policy analyst for homeland
security and cybersecurity, Allison Center for Foreign and National Security
Policy
Risk Corridor Bailouts Avoided
The bill also continues a provision to prohibit the
Center for Medicare and Medicaid Program Management funds from being used to
make payments under Obamacare’s risk corridor program. This will prohibit the
administration from using undedicated funds to bail out unprofitable qualified
health insurance plans in the individual and small group markets.
Planned Parenthood Affiliates Still Funded
The trillion-dollar budget deal would continue to
allow hundreds of millions of dollars in taxpayer funds, from both
discretionary funding under Title X and from Medicaid reimbursements, to flow
to Planned Parenthood Federation of America affiliates—despite recent
disturbing videos showing Planned Parenthood officials haggling over the price
of body parts of aborted babies.
No federal funds should be going to Planned
Parenthood Federation of America or any of its affiliates or health centers.
Disqualifying Planned Parenthood affiliates from receiving Title X family
planning grants, Medicaid reimbursements, and other federal grants and
contracts should not reduce the overall funding for women’s health care. The
funds currently flowing to Planned Parenthood affiliates should be redirected
to health centers that offer comprehensive health care without entanglement in
abortion on demand. Members of Congress had the opportunity with the year-end
funding bill to end both mandatory and discretionary federal funding of Planned
Parenthood and end taxpayer entanglement with the largest abortion provider in
the country, but they failed to do so.
Failure to Protect Conscience Rights
While long-standing pro-life riders are included in
the omnibus, a much-needed policy to address serious conscience violations is
missing from the spending bill.
In August 2014, the Department of Managed Health
Care in California mandated that almost every health plan in the state include
coverage of elective abortions, including those plans offered by religious
organizations, religious schools, and even churches. The Weldon Amendment
prohibits federal, state, and local governments that receive certain federal
funds from discriminating against health care entities, including health care
plans, that do not “provide, pay for, provide coverage of or refer for
abortions.” While that policy has been included in appropriations bills since
2004 (including the current omnibus), enforcement of the conscience policy is
left to the discretion of officials in the Department of Health and Human
Services, which has a poor track record of moving quickly (if at all) on
complaints. The Obama administration has so far effectively ignored requests to
HHS for help obtaining relief from California’s mandate.
In response to this urgent problem, Congress should
provide victims of discrimination the ability to defend their freedom of
conscience in court, not leave them to wait on bureaucrats in the Obama
administration. The Abortion Non-Discrimination Act would do just that. The act
is currently part of the Health Care Conscience Rights Act, H.R. 940, a bill
that would address other conscience issues in Obamacare.
—Sarah Torre, policy analyst, DeVos Center for
Religion and Civil Society
More Bad Than Good on Energy Provisions
If you were to put a jelly bean for each energy
provision on a two-sided scale, one side being good free-market provisions and
the other being corrupt energy provisions, the bad side of the scale would be
hitting the floor.
The good provision is a very good provision,
indeed. Lifting the crude oil export ban would generate more jobs for
Americans, supply the United States and the world with more affordable energy,
and provide important geopolitical benefits for Washington and its allies.
But the numerous bad provisions waste taxpayer
money and provide targeted tax credits to politically connected companies. They
include:
A five-year extension of the wind production tax
credit (PTC). The wind PTC, which has been around since 1982, artificially
propped up an industry, advanced special interests, and allocated labor and
capital away from more competitive uses in the marketplace.
A five-year extension of the solar investment tax
credit (ITC), which companies can now take when they begin construction rather
than when they start producing power. Solar companies would be better off in
the long run without the ITC. They would understand their true price point to
be competitive in the short and long run.
A ramp up in Department of Energy spending for
renewables, energy efficiency provisions, fossil fuels, and nuclear. The
Department of Energy has ballooned by subsidizing and forcing energy
technologies into the marketplace. The private sector has demonstrated
countless times that it is far better equipped than government to allocate
resources and develop commercially viable technologies.
A handout for the oil industry. The legislation
would provide a targeted tax credit for small, independent refiners and allow
independents to exempt 75 percent of transportation costs when calculating
their Section 199 manufacturing deductions. This is nothing more than obvious
compensation for lifting the ban on crude oil exports. Further, the energy tax
provisions in the omnibus speak to the need for the federal government to stop
using the tax code to pick winners and losers for all energy sources and
technologies.
A three-year extension of the Land and Water
Conservation Fund. The massive amount of land owned and managed by the U.S.
government has resulted in land mismanagement, stifled opportunities for
recreation and resource production, and poor environmental stewardship.
Reauthorizing the LWCF is a recipe for prolonging mediocre and often poor
federal control of America’s land. Permanently eliminating the LWCF is
recognition that improved economic growth and environmental quality are born
not out of Washington, but in the states.
Absent from the text are provisions that would
block the Obama administration’s climate change regulations, regulations that
will drive up energy costs no climate benefit. Instead, the federal government
has hundreds of millions of dollars to dole out internationally through the
Climate Investment Fund and Strategic Climate Fund. Notably missing from the
omnibus spending bill is a provision prohibiting spending on the Green Climate
Fund.
This is no compromise, but instead a large
extension of government intrusion in energy markets where it does not need to
be.
—Nick Loris, Herbert and Joyce Morgan fellow, Roe
Institute for Economic Policy Studies
Failure on WOTUS (EPA Water Rule)
The omnibus bill fails to prohibit funding for the
Environmental Protection Agency’s and Army Corps’ controversial “waters of the
United States” rule, which would greatly expand the types of waters that could
be covered under the Clean Water Act, from certain man-made ditches to
so-called waters that are actually dry land most of the time.
In addition to this rule being an attack on both
property rights and the states’ role in protecting the environment, the
Government Accountability Office (GAO) just ruled that the EPA broke the law in
developing it.
The policy problems and the agency overreach should
have been more than enough to block funding for the rule. Both the House and
the Senate have already passed different bills that would repeal the rule (the same
bill still needs to be passed by both chambers). Attorneys general and agencies
from at least 31 states are suing the federal government regarding the rule.
Even environmental groups are suing.
If it somehow wasn’t a no-brainer to block funding
for the water rule before, then it certainly should have been after the GAO’s
opinion. The GAO found that the EPA violated the law when developing the rule
by trying to inappropriately gin up support for the rule through improper
lobbying activities and covert propaganda. Their illegal actions, according to
GAO, were focused not just on the regulatory process, but also on encouraging
opposition to legislation that would have blocked efforts to undermine the
rule. The legislative process itself, and the work of many members of Congress,
was itself being undermined by EPA’s actions. Yet Congress still allowed the
rule to go forward. If Congress won’t use the power of the purse to block this
rule, when will it ever use the power of the purse to block any rule?
Funding Barred for Unrelated Dietary Guidelines
Every five years, the Department of Agriculture and
the Department of Health and Human Services issue dietary guidelines to advise
the public on healthy eating. The Dietary Guidelines Advisory Committee (DGAC)
submitted its scientific report, which helps to inform the final guidelines, in
February. Throughout the Dietary Guidelines Advisory Committee process, there
has been a focus on non-dietary issues such as sustainability, climate change,
and other environmental factors.
The omnibus bill does prohibit funding for
guidelines that are not limited to nutritional and dietary information
(Division A, Sec. 734). It would also direct the Secretary of Agriculture to
work with the National Academy of Medicine to study the Dietary Guidelines
process (Division A, Sec. 735). The problem, though, is that any new Dietary
Guidelines, even if claimed to be based on nutritional and dietary factors
alone, will have no legitimacy, because the process was dominated by environmental
concerns, not dietary concerns.
Repeals Mandatory Country of Origin Labeling
The mandatory country of origin labeling (COOL)
requirements for certain meat products has been the subject of significant
controversy. Both Canada and Mexico have correctly alleged that COOL has a
discriminatory effect on their livestock exports to the United States,
violating trade obligations. COOL is merely a non-tariff trade barrier, having
nothing to do with health or safety, which is supposed to provide consumers
information.
Yet the government doesn’t need to impose such a
requirement if consumers value such information; the market will respond
accordingly. As it turns out, consumers don’t value this information. The World
Trade Organization (WTO) has repeatedly agreed with Canada and Mexico. After
just receiving WTO authorization, Canada and Mexico are about to impose over a
billion dollars in retaliatory tariffs on the United States. The omnibus bill
would repeal COOL before this costly retaliation is imposed on a wide range of
industries (Division A, Sec. 759).
—Daren Bakst, research fellow in agricultural
policy, Roe Institute for Economic Policy Studies
Small Steps on School Lunch Funding
The omnibus continues funding for the USDA’s new
school lunch standards, which were implemented as part of the Healthy and
Hunger Free Kids Act of 2010.
However, these standards have been burdensome to
schools and should not be funded. For example, a January 2014 report by the GAO
shows that since the implementation of the new standards, participation in the
school lunch program has declined, there has been an increase in food waste
among students, and some schools have dropped out of the program at least
partially due to the new standards.
The new standards have also imposed greater costs
on schools, such that some have even have had to draw from their education
funds to cover them.
The omnibus takes small steps in the right
direction by 1) allowing states to exempt schools from the whole grain
requirement if a state can “demonstrate hardship, including financial hardship,
in procuring specific whole grain products which are acceptable to the students
and compliant with the whole grain-rich requirements,” and by 2) prohibiting
funds to go toward rules that would require a reduction in sodium in school
meals until scientific research can establish that such a decrease is
beneficial to children.
The decision of what children eat is best left to
parents, not bureaucrats in Washington. Congress should prohibit any funding
from going toward these costly and heavy-handed standards.
—Rachel Sheffield, policy analyst, DeVos Center for
Religion and Civil Society; and Daren Bakst, research fellow in agricultural
policy, Roe Institute for Economic Policy Studies
Congress Is at It Again With Tax Extenders
The tax extenders are a yearly exercise that
Congress is long overdue to end. Lawmakers should go through the various
policies in the package, extend those that are sound policy, and eliminate
those that are not, all in a revenue-neutral manner. Once again, Congress did
not follow this sensible approach.
To its credit, Congress made several policies
permanent. Importantly, it made the Research and Development Credit, section
179 expensing for small businesses, and the exemption from subpart F income of
active financing income permanent. These are all necessary policies, given the
dilapidated state of the tax system. It will be a relief in future years that
they are no longer set to expire.
The price of these permanent extensions was steep.
Congress also made permanent the stimulus’ expansions of the Earned Income Tax
Credit (EITC), the Child Tax Credit, and the American Opportunity Credit. These
permanent expansions increase spending by nearly $160 billion over the next 10
years. Congress should have offset this spending with spending cuts in other
areas.
The bill also extends bonus depreciation, better
called 50 percent expensing, for five years. It would have been better had
Congress made it permanent, too, but a five-year extension is better than a
two-year continuance.
Disappointingly, Congress also included a five-year
extension of other policies that are not sound, including the New Markets Tax
Credit and the Work Opportunity Credit. These policies are examples of Congress
using the tax code to pick winners and losers. They should have been among the
first extenders to be permanently excised instead of receiving an expanded
extension.
The rest of the extenders get the at-this-point
standard two-year extension. Since the extenders were expired for 2015, the
two-year bill extends them retroactively for 2015 and through 2016. Congress
will be back at this game either in the lame duck session at the end of 2016 or
sometime in 2017.
Obamacare’s Taxes
A two-year moratorium on Obamacare’s medical device
tax, for 2016 and 2017, is also included in the tax bill. It is a bad tax, but
suspending it should not be confused with repealing Obamacare.
Strangely, the omnibus spending bill includes a
two-year delay of the beginning of the Cadillac tax on high-cost health
insurance plans from 2018 to 2020, as well as the delay of the tax on health
insurers, and an extension of various alternative energy credits, including the
production tax credit. The policies should not have been extended, especially
since Congress did not adopt equivalent Obamacare spending cuts.
Delaying the start of the Cadillac tax was the
wrong approach, especially since Congress did not adopt equivalent Obamacare
spending cuts. Congress should instead use it as a pivot to capping the tax
exclusion of employer-provided health insurance.
Even though it is long past time for Congress to
end its practice of dealing with the extenders semiannually, it did make
certain important policies permanent. That will make the extenders easier to
deal with next time and lowers the revenue baseline for tax reform. These are
steps in the right direction after years of standing still.
