July Washington D.C. Preview

QUICK FIX

— With limited funding to spare and a tight deadline, key lawmakers are busy working on the upcoming farm bill reauthorization.   — The National Institutes of Health remains sans director, while Democrats and Republicans remain unresolved on the reauthorization of legislation to combat opioid addiction and substance abuse.   — Following the Supreme Court’s decision to strike down President Joe Biden’s student debt relief plan, the Education Department has begun pursuing alternate paths to debt relief.

AGRICULTURE Lawmakers race to draft farm bill:   — Key House and Senate lawmakers working on the upcoming farm bill reauthorization have a busy summer ahead. Top members of the Agriculture Committees will need to negotiate final top-funding priorities with limited new funding available and amid ongoing fights over food aid and conservation spending.   Lawmakers and staff from both chambers will ramp up drafting their farm bills, with the goal to hammer out differences between the Senate and House versions, pass the final bill in Congress and send it to Biden’s desk before the end of the year. Lawmakers are under the clock. Some farm bill programs expire beginning on Sept. 30.   Lawmakers will also need to sort out key differences over annual funding for USDA programs in the appropriations process, slated to come to a head in September. — Meredith Lee Hill

HEALTHCARE The NIH, fentanyl, global health are at the center of Washington discussions:   — The National Institutes of Health has been without a director for a year and a half. Biden has nominated Monica Bertagnolli, who leads the National Cancer Institute, as the next agency head. Bertagnolli, a Boston cancer surgeon, has a reputation for unflappability and broad support within the scientific community, following her decades of work in clinical oncology.   But Sen. Bernie Sanders (I-Vt.), who leads the Senate HELP Committee, has said that he won’t move forward with Biden’s health nominees until he receives a comprehensive plan from the administration to lower drug prices.   — The NIH itself faces challenges: While the agency has traditionally enjoyed bipartisan support from Congress, the next NIH head will be tasked with running the sprawling health research organization in an era when alternative truths and alternative facts are normalized, even at the congressional level.   Global health researchers say the NIH’s proposed grant oversight rules could slow their work and hurt relationships with international collaborators.   If the agency finalizes the rules, foreign subrecipients of NIH grants will have to provide copies of their lab notebooks and data to their NIH-funded partners every few months. Researchers who collaborate with partners outside the U.S., especially in places without robust infrastructure, say the prospect of sending data and lab notes is daunting.   The proposal follows a January report from the Health and Human Services inspector general, which found that NIH did not effectively monitor or enforce the terms of its grants with EcoHealth Alliance, the research group that collaborated with China’s Wuhan Institute of Virology in studying pandemic threats. The inspector general report pointed specifically to EcoHealth's "inability to obtain scientific documentation" from the Chinese lab.   Following any changes, the finalized rules are slated to go into effect Oct. 1.   — The House Energy and Commerce Committee has taken up the reauthorization of the SUPPORT Act, the 2018 bill that was seen at the time as a potential turning point in the fight against opioid addiction. The provisions of the law expire at the end of September. More than two dozen bills have been proposed as part of the reauthorization process.   Republicans and Democrats agreed in a June hearing on the need to expand treatment for people with substance use disorder and to remove the stigma that often accompanies the condition. But they disagree on some key measures to do that, such as permanently allowing states to use Medicaid to cover treatment in large mental health institutions. States must now obtain a CMS waiver to do that. While Republicans support the change, some Democrats are concerned it would lead to more people being institutionalized instead of receiving care close to home.   — Another disagreement centers on whether Congress should permit incarcerated people with substance use disorder access to Medicaid coverage. Medicaid beneficiaries lose coverage when they are imprisoned, including when in pretrial detention. Democrats think allowing coverage is crucial, as people with substance use disorder have a nearly 130 times higher risk of dying from an overdose in the days after being released from prison than those without the disorder. But Republicans are concerned it would shift massive costs to states without solving the problem. — Erin Schumaker, Carmen Paun

EDUCATION Biden’s student loan lifeline:   — The Supreme Court struck down Biden’s plan to cancel up to $20,000 of student debt for tens of millions of Americans. But Biden is pushing forward to make good on his promise, especially as he seeks reelection in 2024.   The Education Department has already started the rulemaking process to pursue an alternate path to debt relief by using the Secretary of Education’s authority under the Higher Education Act. The Department issued a notice the same day as the high court’s decisions and announced a virtual public hearing on July 18 and requests for comments.   House Education and Workforce Chair Virginia Foxx (R-N.C.) and Senate HELP ranking member Bill Cassidy (R-La.) have rebuked Biden’s new plan, calling it an attempt to “illegally revive his student loan ‘forgiveness’ scheme” and “a violation of the debt ceiling agreement.” They are likely to keep pressing Education Department officials over the new plan and the plan to restart repayment. — Bianca Quilantan

EMPLOYMENT AND IMMIGRATION Labor nomination crunch time? The lead-up to the August recess could bring nomination crunch time for key labor positions — or, if the urgency level over the past few months is any indication, maybe more of the same slog:   — Acting Labor Secretary Julie Su hasn’t yet had a confirmation vote scheduled, months after Biden’s announcement of her nomination in February and her Senate HELP Committee green light in April. While Su can legally continue her work with the word “acting” in her title, a handful of Democrats including HELP Chair Bernie Sanders (I-Vt.) have signaled they want to see a vote.   — Lower profile but still crucial for labor issues, the National Labor Relations Board risks becoming unworkably small after Democratic board member Gwynne Wilcox’s term expires in August, which would leave the board with two Democrats and one Republican. Biden re-nominated Wilcox for a term that would end in 2028. But the five-member board — which already has one vacancy — traditionally doesn’t make precedent-shifting decisions without at least a three-member majority vote, so a lapse in her time on the board could slow the labor agency’s ability to function. Typically, the Senate agrees to move an NLRB nominee from each party concurrently; however, no Republican has been nominated yet. The uncertainty could result in a rush to vote on decisions this summer, while the board is still up to strength.   — We’re also watching negotiations between UPS and Teamsters before their contract expires at the end of this month, as failure to make a deal could result in a disruptive strike. While a handful of Democrats in Congress have made statements in support of workers, there’s been no indication yet of serious federal intervention. — Olivia Olander

TAX Republicans' opening salvo on a tax bill; GOP tax package nears a floor vote:   — The biggest item on the docket in the tax policy arena will certainly be an upcoming House floor vote on a tax package approved by the Republican-controlled Ways and Means Committee in June.   The package includes across-the-board boosts to the standard deduction; loosened IRS reporting requirements for users of apps like PayPal and Venmo; increased allowances for businesses that deduct the costs of their assets and their research and development expenses; and a new “opportunity zone” program intended to facilitate investment in rural areas, among other items.   Considering that Congress is split and any tax package would need bipartisan support to cross the finish line this year, observers expect Republicans to want to usher the tax legislation to a floor vote before August recess to allow time for negotiations.   But, in the fractious GOP caucus in which Speaker Kevin McCarthy has only a handful of votes to spare, Republicans may have their work cut out for them in getting the package over to the Senate. Specifically, GOP members of the “SALT caucus” have been adamant that any tax legislation should include a repeal of the $10,000 cap on state and local tax deductions.   Such a provision was not ultimately included in the package spearheaded by Ways and Means Chair Jason Smith (R-Mo.). Smith has since had meetings with Republicans concerned about the SALT deduction, but it remains unclear to what extent those GOP members may throw a wrench in the tax plans over the issue.   Meanwhile, keep an eye out for massaging on the package from Democrats, especially Senate Finance Chair Ron Wyden (D-Ore.). Democrats may be open to compromise on tax items if they get some sort of restoration of the expanded child tax credit, although both parties remain fairly far apart on their respective requests, including notably on how and whether they would pay for the ream of tax cuts. — Benjamin Guggenheim   A tough month for the IRS: The IRS will be a central focus of House lawmakers leading up to the August recess, fiscally and politically.   On the fiscal front, the House appropriations bill for Financial Services — which includes IRS funding — is expected to get a full committee vote this month. The legislation is a reversal of fortune for the IRS after Democrats pushed through an $80 billion infusion last year to fundamentally remake the agency.   This year, the Republican majority in the House is out to trim $11.2 billion from the IRS’s regular budget for fiscal year 2024. The agency also faces a $1.4 billion rescission in the funding boost it got last year under the debt limit deal between President Biden and Republicans.   The spending bill would also block the IRS from developing a free, agency-run e-filing system backed by many Democrats.   Politically, Republicans will continue battering the IRS over whistleblower allegations that Biden administration officials meddled in the investigation of Hunter Biden’s taxes. FBI Director Christopher Wray is set to appear before the House Judiciary Committee on July 12, where he will surely face questions about accusations that the FBI tipped off the Secret Service and Biden’s presidential transition team to IRS plans to interview Hunter Biden. — Toby Eckert

DEFENSE July defense policy rush:   — At least one chamber is on track to pass its annual Pentagon policy bill before the August break. Leaders of the House and Senate Armed Services Committees often seek to pass their competing bills before August, so their staffs can use the recess to iron out many of the differences in the legislation.   The House takes up the National Defense Authorization Act this week and will consider hundreds of amendments to it. The legislation is expected to pass with bipartisan support provided Republicans don't attach amendments that Democrats consider deal breakers, such as limits on abortion.   Across the Capitol, the pressure is on Senate Majority Leader Chuck Schumer to bring a defense bill to the floor after two straight years where attempts to pass it came up short in the upper chamber. It's unclear whether the Senate will set aside time to pass the bill before August.   — Joint Chiefs decision point: July will be a make-or-break period for the Joint Chiefs, which faces an unprecedented number of vacancies due to a blockade by Sen. Tommy Tuberville (R-Ala.) of senior military promotions over Pentagon abortion policies.   Schumer has signaled he won't hold individual votes to get around Tuberville's hold, meaning top officers won't have Senate-confirmed successors when they step down.   The first gap comes Monday when Marine Commandant Gen. David Berger steps down. If the dispute isn't resolved by August recess, the top officers in the Army and Navy will step down without permanent replacements. The number two officers in the services will perform the jobs on a temporary basis. — Connor O'Brien

TRADE Trade negotiations continue:   — South Korea hosts the next round of negotiations on the Biden administration's proposed Indo-Pacific Economic Framework from July 9 to 15 in Busan. The White House is pushing to finalize the pact, its signature economic initiative in Asia, by the time regional leaders gather for the Asian-Pacific Economic Cooperation summit in San Francisco in November.   — Trade and economic officials are continuing to work on several other ongoing initiatives, including the long-awaited White House executive order on outbound investment, USTR's lengthy review of Section 301 tariffs on China and negotiations with the EU on a critical minerals agreement and a sustainable steel and aluminum pact. — Doug Palmer

CYBERSECURITY A key nomination, and NDAA watch:   — NSA Nominations Hearing: Lt. Gen. Timothy Haugh will face the Senate Select Intelligence Committee in an open nomination hearing this month to head the NSA and its U.S. Cyber Command that will give cyber watchers an insight into his priorities and approach tactics. Along with Russia’s continued war in Ukraine, cyberattacks from foreign adversaries picking off government agencies and aiming to destabilize the U.S. and its allies continue to proliferate. The agency best positioned to knock Kremlin and Chinese hackers down a peg is the NSA and its U.S. Cyber Command, which is looking for a successor for Gen. Paul Nakasone.   — NDAA Time: It’s the next stage in the annual National Defense Authorization Act negotiations, and we’re on the lookout for the cyber amendments that are most likely to make it through the grueling process into the final product. House Homeland Security Chair Mark Green (R-Tenn.) has his own cyber measure in the NDAA, which would require the Department of Defense to report to Congress what it needs to ensure the National Guard has a state-level cyber unit to help individual states respond to attacks. Chair of the cyber wing of the House Armed Services Rep. Mike Gallagher (R-Wis.) also has an amendment requiring all major air carriers to carry out annual cybersecurity assessments. — Joseph Gedeon