President Donald Trump’s nominees for the Department of Energy (DOE), Department of Labor (DOL), Department of Treasury (DOT), and the Environmental Protection Agency (EPA) continued to progress through the confirmation process despite intense Democratic opposition to several of the nominees.
In the least dramatic case, President Trump’s nominee for Secretary of the Department of Energy, former Texas Gov. Rick Perry, was approved by the Senate Energy and Natural Resources Committee in a 16-7 vote on January 31. Perry had previously stated that he regretted his prior statements calling for abolition of the Department and articulated his vision for a robust, all-of-the-above energy policy. He is expected to easily secure confirmation when the full Senate votes on his nomination.
Andy Puzder, President Trump’s nominee to head the Department of Labor, was delayed indefinitely on January 31 because Puzder failed to submit paperwork concerning conflicts of interest and financial history to the Office of Government ethics. His nomination has garnered strong opposition from labor groups and congressional Democrats due to his stances against government regulation, a higher minimum wage, and the Affordable Care Act.
On February 1, Republicans on the Senate Finance Committee suspended committee rules and confirmed President Trump’s Treasury secretary nominee, Steven Mnuchin, on a party-line vote, allowing the full Senate to vote on his nomination. In an unusual move, committee Democrats boycotted the committee meeting in an effort to block or slow down confirmation of Trump’s nominees. Senate Republicans dismissed the boycott and their attacks on Mnuchin’s testimony as partisan maneuvering. Mnuchin is expected to be confirmed when the full Senate votes on his nomination next week.
In similar move, Senate Republicans on the Environment and Public Works Committee suspended committee rules and approved President Trump’s EPA nominee , Scott Pruitt, on a 11-0 party-line vote after Senate Democrats boycotted the confirmation meeting. Congressional Democrats and environmental groups have waged an intense campaign against Pruitt’s nomination, citing his numerous lawsuits against the EPA while serving as Oklahoma’s Attorney General and general skepticism that Pruitt agrees with the Agency’s mission. Committee Republicans again dismissed the boycott and attacks on Pruitt’s record as motivated by partisan impulses. He is expected to be confirmed next week.
Last week, President Donald Trump floated the possibility of levying a 20 percent border-adjustment tax on imports from Mexico as part of an overall tax-reform package. He estimated that the new tax would raise up to $10 billion a year that would help finance the proposed border wall and benefit U.S.-based manufacturers. Many private-sector companies and advocacy groups have argued that the tax would harm their ability to do business while some major manufacturers have applauded the proposal.
Congressional Republicans have also proposed a border tax but with different mechanism of raising money. Rather than directly taxing the dollar value of goods that are imported, the proposed Congressional border-adjustment tax would provide incentives through exclusions and deductions from the U.S. corporate income tax. The goal of the plan is to make importing goods far less profitable while maximizing profits for American companies seeking to export. President Trump has expressed skepticism of the Congressional plan and described it as “too complicated”.
For both plans, some economists have warned that they risk causing a trade war or increased tariffs on American goods. The Trump Administration has promised additional details of his proposal in the coming weeks and months.
Legislation to allow Congress to repeal in a single vote any rule finalized in the last 60 legislative days of the Obama administration passed the House of Representatives on Wednesday.
The GOP-backed Midnight Rule Relief Act (HR 21), which passed the previous Congress in November, was approved largely along party lines by a vote of 238-184 on the second day of the new Congress, despite Democratic opposition. If passed by the Senate and signed by President-elect Donald Trump, the legislation would amend the Congressional Review Act to allow lawmakers to bundle together multiple rules and overturn them with a joint resolution.
President Obama has threatened to veto the bill should it reach his desk, but this is unlikely. It will now be sent to the Senate for consideration., where the GOP needs eight Democrats to vote in favor. This will be a significant hurdle to overcome.
Last week, the House of Representatives approved H.R. 26, the Regulations from the Executive in Need of Scrutiny Act of 2017 (REINS Act), legislation that would require Congress to approve all federal agency regulations that have an annual economic impact of $100 million or more.
Republicans have argued that the Obama Administration has abused its regulatory powers and that many significant regulations are hurting the economy and employment, creating a need for congressional oversight of major regulations. Democrats are sharply critical of the bill, claiming it will hinder federal agencies from regulating and creating unworkable conditions for bureaucrats.
The REINS Act will now be sent to the Senate for committee consideration. WDMA applauded the House for passing the REINS Act and has urged the Senate to consider the bill quickly. For questions on this bill or WDMA’s efforts on regulatory reform, contact Kevin McKenney at 202-367-2480 or firstname.lastname@example.org.
The Federal Housing Finance Agency (FHFA) the regulator of Fannie Mae and Freddie Mac, projects that both agencies could need as much as $126 billion in taxpayer-funded bailouts to stay afloat in case another big recession hits.
The projections came Monday as the FHFA released the results of Fannie and Freddie’s stress tests, which are mandated by the Dodd-Frank Act.
The new report describes how well Fannie and Freddie would hold up under a set of hypothetical “severely adverse” economic conditions, which include a steep drop in real U.S. gross domestic product and big increases in unemployment and inflation. Under the severely adverse scenario, the government-sponsored enterprises (GSEs) would require between $49.2 billion and $125.8 billion in federal funding — known as Treasury draws — to continue operating.
Since 2008, when Fannie and Freddie were placed into FHFA-controlled conservatorship, they have taken a total of $187.5 billion in draws from the Treasury Department. Treasury used so-called “senior preferred stock purchase agreements,” or PSPAs, to bail out the GSE as they teetered on the brink of collapse during the mortgage meltdown.
Neither enterprise has made a draw since 2012, although funding commitments of $258.1 billion remain available under the PSPAs.
Four years ago, Treasury and FHFA changed the PSPAs to require Fannie and Freddie to direct all their net income to the Treasury. Because of this change, dividends paid by the GSEs — a total of about $241 billion sent to the Treasury since they stopped taking draws and again became profitable — have not counted towards paying back Fannie and Freddie's draws.
The GSEs are allowed to retain some income generated by their business operations to act as a capital buffer against potential losses. The buffer also reduces the need for Fannie and Freddie to make any additional draws from Treasury.
But FHFA Director Melvin Watt cautioned in February that because of the PSPAs' terms the capital buffer is shrinking each and will disappear by 2018.
The loss of the capital buffer would require Fannie and Freddie to make additional draws from Treasury if they face losses from interest rate or earnings volatility, Watt said. The director warned such a development "could have real ramifications on the availability and cost of credit for borrowers."