By Matt Vallone, Director of Research & Analysis
WEBINAR: DoD Budget and Key Programs Under the Trump Administration
Mark your Calendars! Avascent is holding its annual webinar on our views of what the DoD Budget for Fiscal Year 2018 and beyond may hold on Monday, February 6, at 11:30am EST. Register here.
*Note: As a reminder this event will be hosted as a webinar only. There is not an accompanying in-person presentation.
Main Story: Uproar Over Immigration Order May Slow Senate Confirmations
For the second straight weekend, spontaneous protests broke out across the country, this time in response to an Executive Order indefinitely barring Syrian refugees from the country and implementing a 90-day ban on travel from seven Middle Eastern nations. We will leave it to other organizations to cover the debate over the order, but it will likely have a significant impact on what goes on this week in the Senate. In the House, it is unlikely that there will be any formal response to the furor, but the Senate had expected to make progress on a number of Cabinet nominees this week. Democratic Senators may seek to force votes on legislation related to the EO in exchange for allowing nominations to proceed. Absent agreement, they may force the Senate to go through the process of cloture, adding time and effort on to the approval of each cabinet member. It is unclear if this will happen, but if it does, very little may occur on the Senate floor this week.
In terms of Defense-related activity, the White House issued an executive order on Friday that President Trump claims will start “a great rebuilding” of the armed forces. While it will be some time before full details of a Trump budget come out (recent reports seem to indicate late April is most likely), this executive order should signal expanded defense spending to allow the military to acquire new platforms and restore degraded readiness. Beyond working to prepare the FY 2018 budget, the order calls for the Department of Defense to review its strategy, the state of military readiness, and a review of the United States’ nuclear deterrent.
Early on Monday, the President made defense news again, announcing that there would be savings of $600 million on the next contract for F-35s. This is broadly in-line with previously planned savings from increased production and larger unit orders. Additional details on savings will be clear when the contract is announced. More oddly, President Trump stated that Boeing “will be competing during the rest of the process for the rest of the planes.” Video here. We will anxiously look for clarification from the White House or the Department of Defense, as it is uncertain how this competition could actually be implemented.
House Activity – The House will spend most of the week passing legislation to block or revoke various rules approved by the Obama administration in the end of 2016. These resolutions can pass both chambers with a simple majority under chapter 8 of title 5 of US code. They expect to pass five separate resolutions aimed at rules covering a variety of issues, ranging from a rule requiring multinational firms to disclose payments to foreign nations to regulations regarding Federal acquisition.
Senate Activity – In the Senate, Majority Leader Mitch McConnell has scheduled votes on a number of President Trump’s nominees, though the schedule may be pushed back by outrage over President Trump’s executive order. The voting began with a successful cloture vote on Secretary of State nominee Rex Tillerson on Monday night. Today there will be a vote on Elaine Chao to be Transportation Secretary, and then a vote on Tillerson’s nomination on Wednesday. A variety of other cabinet officials will be voted on in committee this week, but it is unclear when they would get to the floor for a vote.
- SASC – No hearing scheduled
- HASC – 2/2 Consideration of Committee Oversight Plan for 115th Congress, 2118 Rayburn, 10am
- HAC-D – No hearing scheduled
- SAC-D – No hearing scheduled
Government Activity Round-Up
Two new interesting reports came out in the past week. First, the Congressional Budget Office has released its regular update on ‘The Budget and Economic Outlook: 2017 to 2027‘. Given that the CBO’s projections will have an outsized impact on the scoring on various proposals, this document will be an important part of this year’s budget debates. This update highlights that “for the first time since 2009, the federal deficit increased in relation to the nation’s economic output” and projects that, under current law, budget deficits will increase throughout the ten-year period. The CBO also projects that ‘moderate economic growth’ will continue, with GDP growing by about 2% throughout the forecast. More at the link.
The GAO doesn’t have anything quite as interesting as the budget & economic forecast, but there are two DoD relevant reports to mention. The first is a look at the performance of the first VA and DoD integrated facility in Chicago. Topline recommendations are that in order for this project to be an effective demonstration, both agencies should develop reporting with more specific timeframes and milestones to review recommendations and ensure they are implemented. The second report looks at the proposals made by the IRS last year to limit inversions. This is the practice through which firms currently based in the United States merge or acquire firms in lower-tax countries as a mechanism for avoiding U.S corporate taxes. The GAO found that the current IRS proposals don’t adequately account for some of the risks associated with these transactions.
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