It’s feast or famine when it comes to my updates, I guess. Another LONG one today. - Jeff Budget Deal/2018 Appropriations As I mentioned Monday, Congress needs to agree on overall spending level increase for the remainder of fiscal year 2018 before they can produce an omnibus spending bill for FY 2018 (at which point we’ll know what spending levels for things like WIOA Title II are going to be for FY 2018). Discussions are underway for a two-year budget deal that would raise the statutory spending caps by about $200 billion over two years. However, I am increasingly concerned about parity, the principle that the Obama administration held to regarding the caps — and that principle was that any increase to discretionary defense spending had to be matched by an equal increase in non-defense discretionary spending (that’s where the adult ed money comes from). This time around, Republicans want to raise defense spending but don’t want to agree to raise non-defense spending by an equivalent amount, and now we don’t have the White House to back up the parity principle. On the other hand, the omnibus is fillibusterable, which means 60 votes will be needed to pass it, which in turn means it will require Democratic votes to pass, which means the Democrats haven’t entirely lost their leverage on this. DACA Ensnarlement The other area where the Democrats seem to want to use their 60 vote leverage is in regard to DACA. I mentioned this Monday also; it was in the news a lot yesterday. Some Democrats have already said they wouldn’t vote for a spending bill that doesn’t include some sort of codifying of the Obama-era DACA rule. This has produced dramatic headlines about the possibility of a government shutdown over this issue. House Minority Leader Nancy Pelosi (D., Calif.) and Senate Minority Leader Chuck Schumer (D., N.Y.) very publicly pulled out of a planned meeting with President Trump yesterday after he tweeted something about not seeing a deal happening. Then Trump made his own dramatic statement about them skipping the meeting while sitting next to two empty chairs. But note this sentence in the WSJ article I link to below: "Democratic leaders have been vague about whether they would move to shutter the government if the spending bill doesn’t address their concerns over immigration.” To me that suggests they will back off in the end, and that this is all posturing. On the other hand, supposedly several moderate Republicans want to get something done on this too, so hopefully a deal can be made. https://www.politico.com/story/2017/11/21/congress-dreamers-government-shutdown-daca-250758 https://www.wsj.com/articles/trump-signals-tough-posture-on-immigration-1511884970 <https://www.wsj.com/articles/trump-signals-tough-posture-on-immigration-1511884970> http://thehill.com/homenews/administration/362194-trump-next-to-empty-chairs-tears-into-dems-for-skipping-meeting Tax Bill CEF has been wrangling internally over what to say, if anything, about the tax bill. There are, of course, a lot of specifics that various education groups are concerned about (higher ed in particular), but these are not appropriations issues per se (which is CEF’s focus), and CEF historically doesn’t take positions on tax policy. But the deficit increase that is predicted to result from this legislation will likely put pressure on lawmakers to make spending cuts down the road. So over Thanksgiving the CEF staff drafted a letter that focuses on the deficit pressure issue only, and sent that up to the Hill. See: https://cef.org/wp-content/uploads/11.28.17-revenue-loss-implications-for-ed-investments-FINAL.pdf The Senate Budget Committee quickly approved their version of the tax reform bill yesterday along party lines, 12 to 11. What’s significant about this is that two senators, Sent. Ron Johnson (R-Wisc.) and Bob Corker (R-Tenn), who had been making noises about not supporting the bill, appear to have fallen into line. Both senators voted “yes,” allowing it to pass the panel by a single vote, and Corker was talking about being in a good place etc. afterwards. Deals have been cut with people like Sen. Collins of Maine and others so it looks like Republicans are closing in on enough votes to pass the bill. PAYGO Here’s a fun fact I skipped in my update Monday: if the tax legislation being bandied about right now increases the deficit (which right now all estimates are that it will, by about $1.5 billion), something called the Pay-As-You-Go-Act (also known as PAYGO) triggers automatic sequestration of certain direct spending programs to offset the impact — to the tune of $150 billion in mandatory budget cuts every year for the next 10 years, starting at the end of this year. Importantly, PAYGO does not apply to discretionary programs like Title II of WIOA. Whew! But, among the hundreds of federal programs it will eliminate there is the Department of Education’s vocational rehabilitation state grant program, which some of you may have some involvement or interest in. The automatic sequester will also double the origination fees on student loans, increasing student debt and making college more expensive for borrowers. The only ways to avoid the automatic cuts are to enact offsetting spending cuts or some new tax increases (ha) to fill the gap, or waive/repeal the PAYGO rules for FY2018. But, waive/repeal of the PAYGO rules would require Democratic support in the Senate because, again, such a measure is fillibusterable and thus in practice will require 60 votes. I’m not really clear on where this one is going... Tax Reform Impact on Charitable Giving Following up on my mention of this on Monday: both the House and the Senate tax reform bills would preserve the charitable deduction, but would increase the standard deduction, which experts say will bring down the number of people who itemize their taxes to 5% (!) and be eligible to take the tax break. Their are estimates out there that charitable giving might then drop by as much as $13 billion. See: https://www.philanthropy.com/article/GOP-Tax-Plan-Would-Reduce/240103 There are some efforts in the Senate (led by Sen. Lankford, R-Okla.) to include a provision in the final package that would allow people to take a tax write-off for charitable gifts even if they don’t otherwise itemize, but it’s not clear whether that’s gong to make it into the final bill. One Last Tax Reform Item: SALT The Senate tax bill also repeals the state and local tax deduction (aka the SALT deduction). A lot of people are very worried that this could have a severe and significant negative effect on state and local budgets. This could, of course, impact state and local support for things like adult ed. Administration Proposes Using Pell Surplus for Disaster Aid Offset Just before Thanksgiving, the Administration submitted a request to Congress for another $44 billion in emergency funding for disaster relief. The request includes $14.8 billion in specific cuts to offset some of this funding, including rescinding $3.9 billion of previously appropriated Pell grant funding. This rescission would require Congressional approval. If it were to be enacted it would not impact Pell Grant awards for the upcoming academic year. However, as with anytime they dip into the Pell “surplus,” it does impact the overall fiscal solvency of the program. If the program experiences a shortfall, Congress could opt for future cuts or eligibility changes — and in the past, when they’ve looked to trim Pell, remember that they’ve gone after ability to benefit (ATB). Pell for Performance Act Here’s another Pell Grant thing that some of you might want to keep an eye on: Rep. Francis Rooney (R-FL) has introduced a bill in the House (H.R. 4414, the "Pell for Performance Act") that would convert Pell Grant funds a student receives into an unsubsidized Stafford loan if the student doesn't complete their degree within six years. The bill has been referred to the House Committee on Education and the Workforce. Coming Soon, Possibly: Higher Education Act Reauthorization Lots of talk this week about Higher Education Act reauthorization. Politico says that House Education and the Workforce Chairwoman Virginia Foxx (R-N.C.) is still planning to unveil a bill "this fall." In the Senate, Sen. Alexander (R-Tenn.), says it's his "top education priority.” Everything I’m reading so far just just concerns financial aid. CEF reported in an update that Chairwoman Foxx is interested in transforming federal aid into “one grant, one loan, one work study program.” Let me know if you all have any further insights or questions about any of these things. Jeff Carter Cell: (202) 374-4387 | @jeffcrtr Past President & Policy Advisor National Coalition for Literacy www.national-coalition-literacy.org <http://www.national-coalition-literacy.org/> jcarter@literacypolicy.org <mailto:jcarter@literacypolicy.org> Vice-President, Committee for Education Funding Executive Director Physicians for Social Responsibility 1111 14th St, NW, Suite 700 Washington, DC 20005 www.psr.org <http://www.psr.org/> | jcarter@psr.org <mailto:jcarter@psr.org>