WASHINGTON — Ahead of Congress’ midnight Thursday deadline, snags caused by policy differences are holding up a $1.1 trillion, government-wide spending bill, with efforts to relax new regulations on some risky financial products the prime culprit.
The massive measure is the main piece of unfinished business before the lame-duck Congress packs up for the holidays and Republicans take full control of Capitol Hill next month. GOP leaders want a clean slate to start next year and are eager for a deal. Democrats want a deal as well — while they retain power in the Senate.
Money issues have been worked out. Now, the main hang-up involves efforts by House Financial Services Chairman Jeb Hensarling, R-Texas, to erode provisions of the 2010 Dodd-Frank law that tightened regulation of the financial sector, including legislation to ease regulations on businesses that use derivatives to hedge risk.
Another key hang-up involves legislation that would exempt banks from having to “push out” much of their trading in complex and risky financial instruments known as swaps into affiliates that aren’t eligible for federal assistance such as deposit insurance.
Aides said efforts to pass politically tricky legislation to shore up economically distressed multiemployer pension plans by permitting a reduction of benefits for current retirees were likely to fail.
But negotiators did reach agreement on a renewal of the government’s program that provides a backstop to the market for insurance against terrorist attacks. The agreement between Hensarling and Sen. Charles Schumer, D-N.Y., would extend the program, which is crucially important to the construction industry, for six years and double the level of damages at which the government would step in and cover most damages from a terror attack from $100 million to $200 million. Hensarling, however, is linking inclusion of the terrorism insurance measure contingent on getting other items related to Dodd-Frank into the broader bill.
The broader spending measure would fund the day-to-day operations of every federal agency, from the Pentagon to the Border Patrol to the agencies coordinating the government’s response to Ebola at home and abroad. Details were closely held but the parameters of the measure came into shape after lengthy negotiations last week and over the weekend.
Republicans targeted domestic agencies such as the IRS and the Environmental Protection Agency for cuts while Democrats sought to preserve Amtrak subsidies and Transportation Department “TIGER” grants to state and local governments for infrastructure projects.
Top leaders had hoped to unveil the spending measure by Monday evening in anticipation of a House vote Wednesday, but working out the measure’s many policy add-ons — called “riders” — proved too difficult for the top Democrats and Republicans in the House and Senate. Now, the hope is that the measure will be made public Tuesday.
Current funding expires at midnight Thursday, so a short-term funding bill is likely to be required to make sure there isn’t a government shutdown.
Also on the packed agenda for the week is a renewal of the government’s terrorism insurance programs, eagerly sought by the construction industry; a one-year renewal of a package of expired tax breaks for individuals and businesses; and a defense policy measure that renews the Pentagon’s authority to train Syrian rebels to battle Islamic State militants who control large swaths of Iraq and Syria.
President Barack Obama would receive more than $5 billion of his $6.2 billion request to combat Ebola at home and abroad, but aides said the measure is likely to undercut reforms to the school lunch program that are a top priority of first lady Michelle Obama by easing requirements for limiting salt and including more whole grains in lunches that are the main meal of the day for many poor children.
There’s more than $70 billion to conduct overseas anti-terror operations, including funds to fight Islamic State extremists and money for State Department diplomacy efforts. But the Pentagon’s core budget would be held flat at current levels of about $490 billion.
The bill freezes funding for core government accounts at slightly more than $1 trillion, but the total cost will approach $1.1 trillion after war funding and emergency money to fight Ebola is added in. Veterans’ health programs get increases, but large portions of the budget are mostly frozen in place.
The measure would also extend legislation that blocks state and local governments from taxing access to the Internet through Sept. 30.
The trucking industry appeared on track to win a provision blocking new “hours of service” rules requiring two nights of sleep before the clock would start on a new workweek.