September spending deadlines loom as Congress returns

Lawmakers return to the Capitol on Tuesday with little time to tackle big-ticket items to avoid a government shutdown and raise the nation’s debt limit.

But the devastation caused by Hurricane Harvey may actually make it easier to get the bitterly divided Congress to get on the same page to address fiscal challenges, especially when they are likely tied to disaster relief for millions of victims.

Republicans also must reach agreement soon on a budget blueprint for next year if they want to use special rules to avoid a Democratic filibuster of a major tax overhaul, the GOP’s biggest goal for the remainder of the year. They also hope to create a tax code with fewer loopholes and deductions as well as lower corporate and individual rates – no easy task.

GOP lawmakers are still reeling since the Obamacare vote before the August recess. In returning to Washington they will confront an increasingly tense relationship with President Donald Trump, who lashed out at Senate Majority Leader Mitch McConnell and other Republicans over the break. The rift has soured an already uneasy alliance and possibly made it harder for Congress and the White House to find common ground on the jammed fall agenda.

Hurricane relief

The Trump administration sent Congress Friday a request for $7.85 billion in new money to support disaster response efforts for Hurricane Harvey and House Republicans are expected to schedule a vote on Wednesday, congressional sources told CNN.

The ultimate price tag for the massive recovery and rebuilding effort is expected to be well more than $100 billion, and by far the largest relief effort taken up by Congress.

“The number is going to be big,” Texas GOP Rep. Will Hurd said on CNN last week. But Hurd noted the immediate priority is to get the Federal Emergency Management Agency another infusion of cash in its emergency response account before the broader package can be drafted later in September.

So far there has been bipartisan support to get those affected by Harvey all the help they need.

In recent debates over disaster aid some conservatives, including then GOP congressman and current Vice President Mike Pence, have insisted that disaster relief must be offset with spending cuts elsewhere. It’s unclear whether there will be a significant bloc demanding any reductions to cover some of the aid, but notably House Freedom Caucus Chairman Mark Meadows, a leading conservative, has already stated he won’t make that demand.

Spending and debt limit

The addition of a disaster relief package could actually make getting other complicated items – a spending bill to avoid a shutdown and a measure to raise the debt limit – through this fall. Before the devastating storm wreaked havoc across southeast Texas and parts of Louisiana, top Republican leaders were searching for a strategy to thread the needle on those issues, which regularly cause internal splits and headaches.

Many conservatives have demanded that any legislation to increase the debt limit be accompanied by spending reforms. Pairing the Harvey relief package with a bill to increase the credit limit and potentially a longer-term spending deal through 2018 would put pressure on those on the right of the GOP conference.

Many of those who have opposed similar packages in the past, such as Texas GOP Sen. Ted Cruz, are the same ones who will be requesting massive federal assistance for their own constituents this fall.

Treasury Secretary Steven Mnuchin said Sunday that he and Trump would like to see Harvey funding tied with a debt ceiling bill.

“Without raising the debt limit, I’m not comfortable that we will get the money that we need this month to Texas to rebuild,” he said on Fox News.

The Trump administration hasn’t pressed for House Speaker Paul Ryan and McConnell to bundle the issues, but it’s possible that leaders will try to avoid a fight over the credit limit by heading it off earlier in the month.

Republican leaders and aides on both sides of the Capitol are discussing several options. One scenario would be to have the House approve the short-term Harvey funding package and have the Senate attach a bill to increase the debt ceiling without any conditions and send it back to the House for final action. There would be immense pressure on the House to back the package and send it to the President, but GOP leaders would need to rely on Democrats for a big chunk of the votes.

After a tumultuous summer when GOP leaders and many rank-and-file Republicans distanced themselves from the President after a string of controversial comments, there is growing sense that Republicans want to avoid even the threat of a shutdown, which would only increase the spotlight on the gridlock in Washington.

National Flood Insurance Program

As the flood waters continue to recede in Houston, homeowners are wondering if they’ll get enough money to rebuild – that’s where the National Flood Insurance Program comes in. But the program is set to expire at the end of the month unless Congress re-authorizes it.

After a slate of devastating storms this century – including Katrina and Sandy – the program has about a $25 billion debt and lawmakers have been debating a complete overhaul ahead of the re-authorization deadline. But with lawmakers split along regional lines, it appears the most likely outcome by September 30 is a short-term extension.

CNN Money reports that the program has less than $2 billion in cash on hand, with only $6 billion more left in borrowing capacity. And that’s before the expected avalanche of claims roll in from Hurricane Harvey.

Republican Rep. Jeb Hensarling of Texas is the chairman of the House Financial Services Committee. He’s been pushing legislation that reforms the program, but his proposal faces criticism for raising rates for policy holders to keep the program afloat.

On the Senate side, a few bipartisan bills are floating around that also seek to reform and re-authorize the NFIP, but the committee that oversees the issue, the Senate banking committee, hasn’t settled on one single bill.

Sen. Sherrod Brown, the committee’s top Democrat, said it was “too early” to predict how Harvey will affect the timeline of re-authorization but said “it is likely that Congress will pass a short-term extension to ensure the program doesn’t lapse.”

Republican Sen. John Kennedy of Louisiana is also on the committee and vowed on CNN’s “New Day” on Thursday that “Congress is going to do whatever it takes.”

“If you had flood insurance and you paid your hard-earned dollars in premiums, by God, you’re going to get paid” he said.

Tax reform

Republicans believe passage of a tax bill would both drive economic growth for the next decade and reinvigorate their supporters, who have been frustrated since the GOP failed to deliver on their top priority to repeal the Affordable Care Act. A tax bill could stand as their lone major accomplishment to show voters before the 2018 midterm election.

One leading congressional expert doubts a tax bill will be approved and expects Congress to only pass the “bare minimum” in the coming months, blaming Trump’s “behavior” for the inability to pass more.

“2017 will be one of least productive Congresses in many years,” said American University political science professor James Thurber. “President Trump is undermining the leadership in the House and Senate and making it very difficult to get legislative momentum.”

Trump will meet with the so-called “Big Six” leaders working on tax legislation on Tuesday, which includes McConnell, Ryan, top committee chairmen, along with Mnuchin, the Treasury secretary, and White House chief economic adviser, Gary Cohn.

It will be their first meeting since Trump blasted McConnell on Twitter for not getting the votes for health care reform and other issues. McConnell will also be back at the White House for a meeting of the top four bipartisan leaders on Wednesday on the broader legislative agenda.

While their interaction could be awkward, McConnell allies believe the low-key Kentuckian will be unemotional and professional in his dealings with Trump and will keep the focus on passing their to-do list.

“It is amazing that he continues to attack his own leadership,” Thurber said. “Trump may be forcing the four leaders to work more closely together on certain issues like hurricane relief and infrastructure.”

Other items of note

Beyond the critical fiscal issues, Congress hopes to address other pressing items this fall, including passing a major defense policy bill, confirming scores of nominees to serve in the Trump administration, and passing a children’s health insurance bill that could be used to approve funding to stabilize individual health insurance markets, something that is needed now that Obamacare remains intact.

Another must-pass measure on the docket is a bill reauthorizing the Federal Aviation Administration, which also faces a deadline of September 30.

Both the House and the Senate have yet to pass a bill to renew the agency’s legal authority. Under consideration on the House side is Trump’s proposal to privatize the air traffic control system, while the Senate transportation committee advanced a bill earlier this summer without it.

CORRECTION: This story has been updated to accurately reflect the total emergency FEMA spending the White House requested from Congress is $7.85 billion.