CRS Reports

Introduction to U.S. Economy: Productivity

Dec 19, 2016

Introduction to Veterans Health Care

Dec 16, 2016

Military Construction: Process and Outcomes

Military installations often provide the most tangible evidence of the economic impact of the Department of Defense (DOD) on local communities. and demonstrate American commitment to foreign countries. Congress provides DOD with a military construction appropriation of several billion dollars annually and authorizes the Secretary of Defense and the military departments of the Army, Air Force, and Navy to plan, program, design, and build the runways, piers, warehouses, barracks, schools, hospitals, child development centers, and other facilities needed to support U.S. military forces at home and overseas. This military base footprint, from the largest base to the smallest reserve center, reflects both a federal investment in local communities and a local investment in national defense. This report outlines the end-to-end military construction process by which DOD and Congress act together to build that footprint, beginning with the realization of the need for a facility and ending with its dedication and the opening of its doors for occupancy. The process encompasses several steps: determination of need by the local installation commander and engineering office, vetting and prioritization of construction projects within the military chain of command and the military department, consolidation and budgeting within the Office of the Secretary of Defense to create the infrastructure construction portion of the multi-year Future Years Defense Program (FYDP), inclusion of the final budget year list of projects in the President’s annual budget request to Congress, review and adjustment of the list by the congressional defense committees, consideration and passage of the necessary appropriation and authorization bills and their enactment by the President, and execution of the approved construction program by the military services’ executive agents – Naval Facilities Engineering Command (NAVFAC), Army Corps of Engineers (ACE).

Dec 14, 2016

Department of Defense Research, Development, Test, and Evaluation (RDT&E): Appropriations Structure

The Department of Defense (DOD) conducts research, development, testing, and evaluation (RDT&E) in support of its mission requirements. The work funded by these appropriations plays a central role in the nation’s security and an important role in U.S. global leadership in science and technology. DOD alone accounts for nearly half of all federal R&D appropriations ($65.5 billion of $135.8 billion, or 48.2%, in FY2015). In its annual congressional budget requests, DOD presents its RDT&E requests by organization and by its own unique taxonomy aligned to the character of the work to be performed. More than 95% of DOD RDT&E funding is provided under Title IV of the annual defense appropriations act. These funds are appropriated for RDT&E in the Army, Navy, Air Force, a Defense-wide RDT&E account, and the Director of Operational Test and Evaluation. RDT&E funding is also provided for the Defense Health Program in Title VI; the Chemical Agents and Munitions Destruction Program in Title VI; and previously the National Defense Sealift Fund in Title V, though the President’s FY2017 budget does not request RDT&E funds for this purpose. In addition, some of the funds appropriated to the Joint Improvised-Threat Defeat Fund (JIDF, formerly the Joint Improvised Explosive Device Defeat Fund) are used for RDT&E though the fund does not contain an RDT&E line item. In some years, RDT&E funds also have been requested and appropriated as part of DOD’s separate funding to support Overseas Contingency Operations (OCO, formerly the Global War on Terror (GWOT)). These funds have typically been appropriated for specific activities identified in Title IV. Finally, some OCO funds have been appropriated for transfer funds (e.g., the Iraqi Freedom Fund (IFF), Iraqi Security Forces Fund, Afghanistan Security Forces Fund, and Pakistan Counterinsurgency Capability Fund) which can be used to support RDT&E activities, among other things, subject to certain limitations. Parsing RDT&E funding by the character of the work, DOD has established seven categories identified by a budget activity code (numbers 6.1-6.7) and a description. Budget activity code 6.1 is for basic research; 6.2 is for applied research; 6.3 is for advanced technology development; 6.4 is for advanced component development and prototypes; 6.5 is for systems development and demonstration; 6.6 is for RDT&E management support; and 6.7 is for operational system development. DOD uses crosswalks to report its RDT&E funding to the Office of Management and Budget and to the National Science Foundation. These crosswalks use different taxonomies than DOD’s for accounting for R&D funding.

Dec 13, 2016

An Introduction to Judicial Review of Federal Agency Action

This report provides a broad overview of the issues that may be relevant to any number of present and future challenges to agency action in federal court.

Dec 5, 2016

U.S. Stakeholders Critical of U.S.-Mexico Sugar Agreements

Nov 30, 2016

Long-Term Care Services for Veterans

The Veterans Health Administration (VHA), an operating unit of the Department of Veterans Affairs (VA), is a direct service provider of health care, similar in many ways to a large private sector health care system. In addition to providing inpatient, outpatient, and a range of other medical care services, the VHA provides and purchases long-term care services. The VA is one of two federal payers of long-term care services (the other being Medicaid). Since the 1960s, the VA has been authorized to provide nursing home care to eligible veterans in various settings, including VA facilities, private nursing facilities contracted by the VA, and state veterans homes (P.L. 88-450). These nursing home benefits were further expanded in subsequent legislation (P.L. 91-101 and P.L. 93-82). In 1999, the Veterans Millennium Health Care and Benefits Act (P.L. 106-117) required the VA to provide such benefits to veterans needing nursing home care due to one of their service-connected conditions, as well as veterans who overall have a service-connected disability rating of 70% or more, who need the care for any condition, service-connected or not. In addition, the law required the VA to maintain staffing and level of services for institutional care not less than the FY1998 level; the law also required non-institutional long-term care services as part of the VA medical benefits package. About 9.1 million veterans (43% of all veterans) were estimated to be enrolled in the VHA in FY2016. Although the overall number of veterans in the United States has declined since FY2000, the number of veterans enrolled in the VHA has increased significantly in that same time period. In FY2000, just over 4.9 million veterans were enrolled in the VHA; by FY2016 that number was estimated to have increased 86%, to 9.1 million enrollees. This increase is due, in part, to the growing number of veterans with service-connected disabilities, as well as more liberal enrollment policies. Among veterans with a service-connected disability, the proportion who have a disability rated as 70% or more service-connected (and therefore eligible for VA paid nursing home care) has also increased. VA long-term care programs are administered at the VA facility level, with some variability in how programs are administered. Each VA facility offers certain mandatory programs and may offer several optional programs as well. Eligibility for VA long-term care programs depends on eligibility for VA health care, which is based primarily on “veteran status” resulting from military service. Once enrolled, veterans’ eligibility for long-term care services depends on several factors, including veterans’ need for the service (as determined by the VA), whether the service is institutional or non-institutional, and (for certain programs), veterans’ service-connected status. Institutional settings may include both inpatient acute care and nursing home care. However, the majority of VA long-term care provided in institutional settings occurs in nursing home facilities, such as VA Community Living Centers (CLCs), community nursing homes, and state veterans homes. Non-institutional care includes outpatient and ambulatory care settings, as well as care that occurs in the home or another community-based setting. Non-institutional services include home-based primary care, community residential care, geriatric evaluation, palliative care, adult day health care, homemaker/home health aide care, respite care, home skilled care, home hospice, and veteran-directed home and community-based services and medical foster homes (at some facilities). Some long-term care services are provided directly by VA staff, whereas others are purchased from providers outside of the VA. Long-term care expenditures are a small but not insignificant part of the VHA total medical care budget, at just over one-tenth of the VHA’s budget. In FY2015, the VHA spent $7.4 billion (13% of its total appropriated funding for medical care, which was $55.8 billion) for veterans’ long-term care. Institutional care accounted for almost $5.3 billion, or 71% of VA’s total long-term care spending, while non-institutional care accounted for $2.1 billion, or 29%. The majority of VHA institutional care spending (64%) was for VA Community Living Centers (CLCs), nursing facilities owned and operated by the VA. This report provides an overview of VA long-term care services, including legislative highlights, eligibility, organizational structure, descriptions of services (both institutional and non-institutional care), and expenditures. The report also describes three key issues for Congress when considering the VA and its long-term care financing and delivery system: Veterans’ access to long-term care services. Settings where services are provided and the appropriate balance between institutional and non-institutional care. Veteran’s health coverage options and federal coordination.

Nov 28, 2016

Financial Innovation: “Fintech”

Nov 23, 2016

Haiti: Cholera, the United Nations, and Hurricane Matthew

Nov 17, 2016

The Patient Protection and Affordable Care Act’s (ACA’s) Transitional Reinsurance Program

Section 1341 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) establishes a transitional reinsurance program that is designed to provide payment to non-grandfathered, non-group market health plans (also known as individual market health plans) that enroll high-risk enrollees for 2014 through 2016. Under the program, the Secretary of the Department of Health and Human Services (HHS) collects reinsurance contributions from health insurers and from third-party administrators on behalf of group health plans. The Secretary then uses those contributions to make reinsurance payments to health insurers who enroll high-cost enrollees (statutes required the HHS Secretary to determine how high-risk enrollees are identified, and the Secretary in turn defined high-risk enrollees as high-cost enrollees) in their non-group market plans both inside and outside of the exchanges (also known as the marketplaces). That is, contributions are distributive in which they are collected from most non-group and group health insurers, but payments are made only to eligible non-group market health plans. Reinsurance is an extension of insurance and further acts as a risk transfer and risk spreading mechanism. The availability of reinsurance allows insurers to reduce their risk exposure and can affect the availability and affordability of health insurance coverage. That is, the availability of reinsurance may be one of many factors an insurer considers in assessing potential exposure to loss in a certain market. This may impact whether or not to enter a market, what types of products to offer, and what premiums to set. To mitigate the financial risk and uncertainty insurers may face in the early years of ACA implementation as a result of the ACA’s private health insurance market reforms, the ACA establishes three risk-mitigation programs (the transitional reinsurance program, the permanent risk adjustment program, and the temporary risk corridors program). Prior to ACA implementation, little information was available regarding health care usage and demand for the previously uninsured, as well as any pent-up demand due to the lack of health insurance coverage. Accordingly, to limit their risk exposure in offering plans on the non-group market, insurers would likely raise premiums to the extent possible to protect themselves against the potentially high cost associated with delayed care. However, some of the new ACA market reforms limit the degree to which insurers may vary premiums. The transitional reinsurance program is designed to mitigate the financial risk associated with individuals who had delayed needed health care while they were uninsured. Under the program, the HHS Secretary collects reinsurance contributions from most non-group and group health plans and then uses those contributions to make reinsurance payments only to non-group market health plans with high-cost enrollees. The programs cover a portion of the claims costs for these enrollees based on payment parameters set by the HHS Secretary. This report provides an overview of one of the three risk-mitigation programs, the transitional reinsurance program. The program’s aim is to offset the expenditures associated with high-cost individuals. The first section of the report provides background information on reinsurance and the ACA risk-mitigation programs. The second section describes the components of the transitional reinsurance program, as well as the amounts currently collected and remitted through the program. The third section discusses questions, including those raised by a recent Government Accountability Office report, regarding the scope of HHS’s authority to administer the transitional reinsurance program. The last section briefly summarizes relevant legislation regarding the transitional reinsurance program. Finally, the report includes a table in the Appendix that summarizes key aspects of the transitional reinsurance program.

Nov 16, 2016

Experimental Program to Stimulate Competitive Research (EPSCoR): Background and Selected Issues

The Experimental Program to Stimulate Competitive Research (EPSCoR) was established at the National Science Foundation (NSF) in 1978 to address congressional concerns about an “undue concentration” of federal research and development (R&D) funding in certain states. The program is designed to help institutions in eligible states build infrastructure, research capabilities, and training and human resource capacities to enable them to compete more successfully for open federal R&D funding awards. Eligibility for NSF EPSCOR funding is limited to states (including some territories and the District of Columbia) that received 0.75% or less of total NSF research and related activities (RRA) funds over the most recent three-year period. EPSCoR awards are made through merit-based proposal reviews. EPSCoR funding and program reach have increased over the years. Congress first appropriated funding for the NSF EPSCoR program in FY1979 at a level of around $1 million. EPSCoR and EPSCoR-like programs are now active at five agencies and have a collective annual program budget of over $500 million. In addition to NSF, agencies with active programs include the Department of Energy (DOE), the National Aeronautics and Space Administration (NASA), the U.S. Department of Agriculture (USDA), and the National Institutes of Health (NIH, whose program is called the Institutional Development Award [IDeA] program). In FY2015, program budgets were $273 million at NIH, $166 million at NSF, $34 million at USDA, $18 million at NASA, and $10 million at DOE. While these programs vary in some operations and policies, their common focus is to help eligible states build R&D capacity and improve their ability to compete for federal R&D funding. The EPSCoR Interagency Coordinating Committee (EICC), chaired by NSF, was formed in 1992 to help integrate the activities of EPSCOR and EPSCOR-like programs across the agencies and to create a unified effort. While EPSCoR was originally proposed as a short-term effort for certain states, it has grown in size and scope, generating debate among stakeholders about program goals and policies. As the programs have evolved, a number of assessments have been conducted to evaluate EPSCoR’s challenges and success, and to inform future directions. These assessments, and research literature, have repeatedly raised some broad issues. For instance, an overarching concern is finding an appropriate balance between supporting research development equitably across states while also supporting high-quality science through the merit review process. Common topics of discussion among stakeholders include the expansion and focus of EPSCoR goals, program coordination among federal agencies, criteria for state eligibility and graduation from the program, and metrics for assessing EPSCoR’s success. Congress has a long-standing interest in the EPSCoR program. Some Members of Congress have questioned the fairness of the program, which is unique at NSF in its state-targeted approach. Additionally, some have expressed concern that the EPSCoR approach does not fit within the broader merit-based grant-making process at NSF. Others Members of Congress have supported the program, stating that it has been successful in contributing to research of national interest, helping to balance federal R&D funding among states, and providing broader research education opportunities to create a skilled workforce. In the 114th Congress, legislation and amendments have been introduced both in support of the program (e.g., promoting long-term awards and naming it an established—rather than experimental—program) and in opposition (e.g., prohibiting the use of any funding for EPSCoR programs).

Nov 15, 2016

Department of Homeland Security Preparedness Grants: A Summary and Issues

Following the September 11, 2001, terrorist attacks, Congress increased focus on state and local homeland security assistance by, among other things, establishing the Department of Homeland Security (DHS) and authorizing DHS to administer federal homeland security grant programs. These homeland security grants have been administered by numerous DHS entities, and these grants have focused on such preparedness activities as assistance to states and localities to prepare and respond to terrorist attacks, securing critical infrastructure such as rail and ports, securing nonprofit (nongovernmental) organizations, and securing high-threat and high-risk urban areas. If homeland security continues to be of national interest, how homeland security assistance is funded, administered, and allocated will be of importance to Congress. Since Congress would continue to conduct oversight and legislate on homeland security assistance to states and localities, Members may elect to consider policy options that anticipate, as well as react to, future catastrophes. Throughout the past 15 years, there has been a continued discussion on the number and purpose of the grant programs, state and locality use of grant program funding, and the funding amounts annually appropriated to the grant programs. All of these issues identify a potential need for Congress to continue its debate and consider legislation related to federal homeland security assistance for states and localities and the nation’s overall emergency preparedness. One major issue remains, and is comprised of these other issues, and that is whether or not these grants are effective in assisting states and localities in meeting the national preparedness goals.

Oct 28, 2016

The Federal Minimum Wage: Indexation

In 1938, the Fair Labor Standards Act (FLSA) established a federal minimum wage of $0.25 per hour. The minimum wage provisions of the FLSA have been amended numerous times since then, typically for the purpose of expanding coverage or raising the wage rate. Since its establishment, the minimum wage rate has been raised 22 separate times, most recently in 2007-2009 when it was increased from $5.15 per hour to its current rate of $7.25 per hour in three steps. The federal minimum wage changes only when Congress amends the FLSA. Since 1938, Congress has amended the FLSA to raise the minimum wage 10 times for a total of 22 rate increases, with periods between increases ranging from 1 to 10 years. An alternative to periodically amending the FLSA to increase the minimum wage would be to index, or link, the federal minimum wage to another variable so that the minimum wage changes automatically when the other variable changes. Indexing the minimum wage provides regular adjustments to and reduces the volatility of minimum wage rates, maintains the relative value of the minimum wage to other economic indicators (e.g., prices), and decouples rate changes from other policy considerations. On the other hand, indexation may also reduce regular oversight of minimum wage changes because it automatically adjusts the rate and changes one part of the FLSA while leaving other parts of the act unchanged subject to congressional action. Although Congress has considered indexing the federal minimum wage at various points, it has not done so. The most common proposed indices for the minimum wage include different versions of the Consumer Price Index, personal consumption expenditures, employment costs, and hourly earnings. Based on a review of seven possible indices and a simulation of federal minimum wage rates under different indices, the minimum wage in 2016 would have been highest had it been indexed to average hourly earnings and lowest had it been indexed to personal consumption expenditures. Linking the value of the federal minimum wage to consumer prices would have generally resulted in minimum wages higher than the current rate, depending on the starting point. Currently, 17 states and the District of Columbia index (or have enacted laws that will in the future) their state minimum wages to some economic measure. In addition, indexation is used in some federal entitlement programs, such as Social Security and Supplemental Nutrition Assistance Program (SNAP) benefits, as well as in other federal wage regulations, such as the minimum wage for employees on certain federal contracts. Most of the numerous proposals in recent Congresses to increase the minimum wage would combine a series of nominal rate increases, followed by indexation to a consumer price index.

Oct 26, 2016

Unemployment and Inflation: Implications for Policymaking

The unemployment rate is a vital measure of economic performance. A falling unemployment rate generally occurs alongside rising gross domestic product (GDP), higher wages, and higher industrial production. The government can generally achieve a lower unemployment rate using expansionary fiscal or monetary policy, so it might be assumed that policymakers would consistently target a lower unemployment rate using these policies. Part of the reason policymakers do not revolves around the relationship between the unemployment rate and the inflation rate. In general, economists have found that when the unemployment rate drops below a certain level, referred to as the natural rate, the inflation rate will tend to increase and continue to rise until the unemployment rate returns to its natural rate. Alternatively, when the unemployment rate rises above the natural rate, the inflation rate will tend to decelerate. The natural rate of unemployment is the level of unemployment consistent with sustainable economic growth. An unemployment rate below the natural rate suggests that the economy is growing faster than its maximum sustainable rate, which places upward pressure on wages and prices in general leading to increased inflation. The opposite is true if the unemployment rate rises above the natural rate, downward pressure is placed on wages and prices in general leading to decreased inflation. Wages make up a significant portion of the costs of goods and services, therefore upward or downward pressure on wages pushes average prices in the same direction. Two other sources of variation in the rate of inflation are inflation expectations and unexpected changes in the supply of goods and services. Inflation expectations play a significant role in the actual level of inflation, because individuals incorporate their inflation expectations when making price-setting decisions or when bargaining for wages. A change in the availability of goods and services used as inputs in the production process (e.g., oil) generally impacts the final price of goods and services in the economy, and therefore changing the rate of inflation. The natural rate of unemployment is not immutable and fluctuates alongside changes within the economy. For example, the natural rate of unemployment is affected by changes in the demographics, educational attainment, and work experience of the labor force; institutions (e.g., apprenticeship programs) and public policies (e.g., unemployment insurance); changes in productivity growth; and contemporaneous and previous level of long-term unemployment. Following the 2007-2009 recession, the actual unemployment rate remained significantly elevated compared with estimates of the natural rate of unemployment for multiple years. However, the average inflation rate decreased by less than one percentage point during this period despite predictions of negative inflation rates based on the natural rate model. Likewise, inflation has recently shown no sign of accelerating as unemployment has approached the natural rate. Some economists have used this as evidence to abandon the concept of a natural rate of unemployment in favor of other alternative indicators to explain fluctuations in inflation. Some researchers have largely upheld the natural rate model while looking at broader changes in the economy and the specific consequences of the 2007-2009 recession to explain the modest decrease in inflation after the recession. One potential explanation involves the limited supply of financing available to businesses after the breakdown of the financial sector. Another explanation cites changes in how inflation expectations are formed following changes in how the Federal Reserve responds to economic shocks and the establishment of an unofficial inflation target. Others researchers have cited the unprecedented increase in long-term unemployment that followed the recession, which significantly decreased bargaining power among workers.

Oct 25, 2016

USDA’s Actively Engaged in Farming (AEF) Requirement

In 1987, Congress enacted what is commonly known as the Farm Program Payments Integrity Act (Omnibus Budget Reconciliation Act of 1987, P.L. 100-203, §§1301-1307), which requires that an individual or legal entity be “actively engaged in farming” (AEF) to be eligible for federal commodity revenue-support programs. AEF requirements apply equally to U.S. citizens, resident aliens, and foreign entities. Designing a transparent and comprehensive AEF definition has proven difficult and has evolved over the years. The current set of laws and rules governing farm program eligibility—particularly for family members on farm operations—remain subject to considerable scrutiny and criticism from both rural and farm advocacy groups as well as certain Members of Congress. In particular, critics contend that current U.S. Department of Agriculture (USDA) eligibility criteria—especially for providing active personal management—remain broad and subjective and may represent a low threshold to qualify for payments, thus facilitating the creation of new farm operation members simply to expand an operation’s farm payment receipts. Three major categories of legal entities are subject to AEF requirement for program payment eligibility: an individual, a partnership, and a corporation. An individual must meet three specific AEF criteria. First, independently and separately from other individuals with an interest in the farm business, the person makes a significant contribution to the operation of (a) capital, equipment, or land; and (b) active personal labor and/or active personal management. Second, the person’s share of profits or losses is commensurate with his/her contribution to the farming operation. Third, the person shares in the risk of loss from the farming operation. An individual that meets the AEF criteria is eligible for farm program payments but subject to annual payment limits. If a married person meets the AEF requirements, any spouse will also be considered to have met the AEF requirements, thus effectively doubling the individual payment limit. Another exception to AEF requirements is made for landowners provided they receive income based on the farm’s operating results. A general partnership is an association of multiple persons whereby each member is treated separately and individually for purposes of determining eligibility and payment limits. A partnership’s potential payment limit is equal to the limit for a single person times the number of persons or legal entities that comprise the operation’s ownership and meet the AEF requirements. Thus, adding a new member can potentially provide an additional payment limit. A corporation is an association of joint owners that is treated as a single person for purposes of determining eligibility and payment limits, provided that the entity meets the AEF and other eligibility criteria. Adding a new member generally does not affect a corporation’s payment limit but only increases the number of members that can share a single payment limit. In accordance with a provision in the 2014 farm bill (P.L. 113-79; §1604), USDA added more specificity to the role that a nonfamily member of a partnership or joint venture must play to qualify for farm program benefits. However, considerable issues remain that may be of interest to Congress. Long-standing concerns remain that some farm operations are organized to overcome program payment limits and maximize the amount of their farm program payments. In particular, some advocacy groups suggest that USDA’s new rule did not go far enough in tightening AEF criteria and that it continues to allow for a high number of farm managers and associated payment limits for both family and nonfamily farm operations.

Oct 19, 2016

Tax Policy and U.S. Territories: Overview and Issues for Congress

There are 14 U.S. territories, or possessions, five of which are inhabited: Puerto Rico (PR), Guam, U.S. Virgin Islands (USVI), American Samoa (AS), and the Commonwealth of the Northern Mariana Islands (CNMI). Each of these inhabited territories has a local tax system with features that help determine each territory’s local public finances. The U.S. Internal Revenue Code (IRC) has two important roles in establishing the tax policy relationship between the United States and the territories. First, native residents of U.S. territories are U.S. citizens or nationals but are taxed more similar to foreign citizens because income earned from territorial sources is treated like foreign-source income. The IRC also treats U.S. subsidiaries formed in the territories as foreign corporations, which can generally defer U.S. tax on income earned from business or trade in the territories. Second, the IRC serves as the local tax laws in the territories that are required to use a mirror-code system (USVI, Guam, and the CNMI), in which the territory substitutes its name for the “United States” to give the IRC the proper effect as the territory’s local income tax system. AS is not bound by the mirror system but has chosen to adopt much of the IRC for its income tax. PR has its own income tax system, which is not based on the IRC. These dynamics between federal and territorial tax policy raise several potential issues for Congress. First, economic development of the territories has been of perennial congressional interest. Tax incentives enacted by the territories and the United States have been shown to direct offshore investment to the territories. With this said, though, economic studies of one broader U.S. tax incentive, the now-repealed Section 936 credit, indicate that any employment effects are usually secondary to the magnitude of effects on shareholder earnings, and average tax benefit for corporations often equaled if not surpassed average compensation per employee. Tax policies that effectively subsidize a more narrow set of industries in certain territories, such as rum production in PR and the USVI and manufacturing in AS, still exist today. Second, federal tax benefits could be used to assist low-income households living in the territories. For example, the Earned Income Tax Credit (EITC) and the additional child tax credit (ACTC) could be expanded to low-income territorial households. The EITC is typically not available to territorial residents and the ACTC is limited to residents of the mirror code territories and certain residents of PR. Although these options could target lower-income households, they could also impose administrative costs for territorial households that are not required to file U.S. tax returns (e.g., because they only have territorial-source income). A payroll tax cut could be administratively simpler (since all territorial residents withhold taxes for some federal payroll taxes), but it would also be less narrowly targeted to lower-income households. Third, interactions and differences in tax rates between the U.S. and territorial tax policies also create opportunities for tax arbitrage and avoidance by corporations and certain individuals. For the United States, this tax revenue loss is part of a broader issue with international income and profit shifting. For the territories, the revenue lost from special tax incentives could be used to reform the local tax system, increase spending on social programs, or pay down their debt. Such tax avoidance opportunities can distort the allocation of capital away from locations and industries where investment earns the highest economic rate of return. Additionally, the ability for certain taxpayers to utilize sophisticated tax avoidance strategies could raise issues of fairness. This report summarizes U.S. tax policy related to the territories, including a general discussion of how federal taxes apply to territorial residents and how federal law affects the different territorial tax systems in similar or different ways. This report is not intended to be a comprehensive guide to federal or territorial tax policy or tax law.

Oct 7, 2016

Encryption: Frequently Asked Questions

Encryption is a process to secure information from unwanted access or use. Encryption uses the art of cryptography to change information which can be read (plaintext) and make it so that it cannot be read (ciphertext). Decryption uses the same art of cryptography to change that ciphertext back to plaintext. Encryption takes five elements to work: plaintexts, keys, encryption methods, decryption methods, and ciphertexts. Data that are in a state of being stored or in a state of being sent are eligible for encryption. However, data that are in a state of being processed—that is being generated, altered, or otherwise used—are unable to be encrypted and remain in plaintext and vulnerable to unauthorized access. Purposes of Encryption Today, encryption is as ubiquitous as the devices that connect to the Internet. Encryption is a tool that information security professionals and end users alike can employ to ensure that the data in their custody remain confidential to only those who are authorized to access the data. It also helps to ensure that data is accessed as the authorized users intend, and not altered by a third party. Strong encryption helps users around the world trust the systems and data they are using, thereby facilitating the transactions that allow society to operate, such as economic activity, control of utilities, and government. This is important because the world has become more connected, and attackers have become more persistent and pervasive. It is difficult to overemphasize the extent to which Internet-connected systems are under attack. But the frequency with which data breaches are exposed in the news media can act as an indicator of the prevalence of active exploitations. Encryption is a tool used to thwart attempts to compromise legitimate activity and national security. Major Issues However, encryption has posed challenges to law enforcement and elements of national security. Strong encryption sometimes hinders law enforcement’s ability to collect digital evidence and investigate crimes in the physical world. As more real world transactions are conducted via digital means and adversaries continue to perpetrate crimes, this problem may become more pronounced. There are multiple sides to the encryption debate, but the sides generally reduce to two main parties: those who favor cryptosystems built as strongly as possible, and those who favor cryptosystems built with the opportunity for access if necessary and approved by a judicial authority. Encryption has created new issues for end users, as well. The technology was adopted rapidly, and users were not afforded the same opportunities to alter their habits as with the more steady adoption of technologies in the past. With the quick adoption of encryption, users left themselves more vulnerable to being unable to access or share their own data, for instance in the event that they forget the key or lack a way to share that key. One proposal to alleviate concerns over access to encrypted data by law enforcement includes mandating access for law enforcement while retaining strong encryption. However, this proposal undermines how encryption systems are built by introducing some extraordinary access into the system beyond the direct access of the user. This proposal carries risk as it creates an attack vector which adversaries of all types could seek to exploit. The increased risk raises the possibility that a persistent adversary will be able to circumvent the protections put in place to allow limited access and compromise the data and systems in use. In the 114th Congress, many activities have focused on encryption, including some legislative proposals.

Sep 28, 2016

The Financial CHOICE Act in the 114th Congress: Policy Issues

The Financial CHOICE Act (FCA; H.R. 5983), sponsored by Chairman Jeb Hensarling, was ordered to be reported by the House Committee on Financial Services on September 13, 2016. The bill is a wide-ranging proposal with 11 titles that would alter many parts of the financial regulatory system. Much of the FCA is in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203), a broad package of regulatory reform legislation that initiated the largest change to the financial regulatory system since at least 1999. Many of the provisions of the bill would modify or repeal provisions from the Dodd-Frank Act, although others would address long-standing or more recent issues. This report highlights major proposals included in the bill but is not a comprehensive summary. In general, the changes proposed by the FCA can be divided into two categories: (1) changes to financial policies and regulations and (2) changes to the regulatory structure and rulemaking process. Major policy-related changes proposed by the FCA include the following: Leverage Ratio—allowing a banking organization to choose to be subject to a higher, 10% leverage ratio in exchange for being exempt from risk-weighted capital ratios, liquidity requirements, and other regulations. Regulatory Relief—providing regulatory relief throughout the financial system to banks, consumers, and capital market participants, including by repealing the Volcker Rule, Durbin Amendment, and fiduciary rule. Too Big To Fail—repealing the designation of systemically important financial institutions and emergency assistance and replacing an option for winding down systemic institutions with a new chapter in the Bankruptcy Code that is tailored to financial firms. The FCA also includes structural and procedural changes that affect the balance between regulator independence from and accountability to Congress and the judiciary, including Leadership—modifying the leadership structure of agencies with a single head to be bipartisan, multimember commissions. Funding—subjecting regulators that currently set their own budgets to the traditional congressional appropriations process. Rulemaking—requiring regulators to perform more detailed cost-benefit analysis when issuing new rules and to use cost-benefit analysis to review existing rules, as well as requiring congressional approval for a major rule to come into effect. Judicial Review—requiring courts to apply a heightened judicial review standard for agency actions taken by financial regulators rather than applying varying levels of deference to the agencies’ interpretations of the law. Enforcement—increasing the maximum civil penalties that could be assessed for violations of certain banking and securities laws and restraining certain agency enforcement powers. CFPB—renaming the Consumer Financial Protection Bureau as the Consumer Financial Opportunity Commission and modifying its powers, leadership, mandate, and funding.

Sep 14, 2016

Sea-Level Rise and U.S. Coasts: Science and Policy Considerations

Policymakers are interested in sea-level rise because of the risk to coastal populations and infrastructure and the consequences for coastal species and ecosystems. From 1901 to 2010, global sea levels rose an estimated 187 millimeters (mm; 7.4 inches), averaging a 1.7 mm (0.07 inch) rise annually. Estimates are that the annual rate rose to 3.2 mm (0.13 inches) from 1992 to 2010. Although the extent of future sea-level rise remains uncertain, sea-level rise is anticipated to have a range of effects on U.S. coasts. It is anticipated to contribute to flood and erosion hazards, permanent or temporary land inundation, saltwater intrusion into coastal freshwaters, and changes in coastal terrestrial and estuarine ecosystems. Some states, such as Florida and Louisiana, and U.S. territories have a considerable share of their assets, people, economies, and water supplies vulnerable to sea-level rise. In 2010, roughly 100 million people lived in U.S. coastal shoreline counties. Increased flood risk associated with sea-level rise may increase demand for federal disaster assistance and challenge the National Flood Insurance Program. Federal programs support local and state infrastructure investments that may be damaged or impaired, such as roads, bridges, and municipal water facilities. Sea-level rise also is anticipated to affect numerous federal facilities. Global and Relative Sea Levels. Sea levels are expressed in terms of global sea levels, which is the average value of sea surface heights around the globe, and relative sea levels, which is the sea level relative to the land surface. Since 1900, expanding oceans due to warming ocean water and melting glaciers and ice sheets have been the main drivers of global sea-level rise. Oceans have warmed due to a combination of natural variability and the influence of greenhouse gas emissions on atmospheric temperatures. Similarly, glaciers and ice sheets since 1900 have been melting due to both natural variability and greenhouse gas emissions. In 2012, the U.S. National Climate Assessment expressed very high confidence in global sea levels rising at least 0.2 meters (8 inches) but no more than 2.0 meters (6.6 feet) by 2100. There are regional and local variations in the rate of sea-level rise. Regional or local factors can be natural, such as the land rebounding upward after continental ice sheets melted at the end of the last ice age, or they may be due to human activities, such as groundwater pumping, oil and gas extraction, sediment compaction, and land management practices, among others. With few exceptions, sea levels are rising relative to the coastlines of the contiguous United States, as well as parts of the Alaskan and Hawaiian coastlines. Policy Considerations. Policy choices related to sea-level rise have the potential to shape the future development and resiliency of U.S. coasts. Policy options include a continuation of current government programs and policies, actions that address the forces contributing to sea-level rise globally or locally, and actions that reduce the vulnerability to and consequences of sea-level rise on U.S. coasts. For all the policy options, there are underlying questions of costs and benefits and who bears the costs of pursuing or not pursuing the policies. A challenge for federal lawmakers is how to deal with the tension between federal efforts to manage national and federal government risks (e.g., federal disaster costs, coastal ecosystem shifts) related to sea-level rise and the local and state roles in shaping coastal development and ecosystem health. Related policy questions include the following: To what extent do federal programs, regulations, and funding influence how coasts develop and redevelop? Who is responsible for the costs associated with adjusting to sea-level rise? Who will bear the risks associated with vulnerable coastal development and infrastructure? Some stakeholders are concerned that governments at all levels are paying insufficient attention to the risks posed by sea-level rise; others are concerned that overestimating the risk of sea-level rise could result in foregoing current uses of coastal areas and promoting overinvestment and overdesign of sea-level rise mitigation and adaptation. CRS In Focus IF10468, Sea-Level Rise and U.S. Coasts, also provides a brief overview of sea-level rise science and policy options.

Sep 12, 2016

Interior Immigration Enforcement: Criminal Alien Programs

Congress has long supported efforts to identify, detain, and remove criminal aliens, defined as noncitizens who have been convicted of crimes in the United States. The apprehension and expeditious removal of criminal aliens has been a statutory priority since 1986, and the Department of Homeland Security (DHS) and one of its predecessor agencies have operated programs targeting criminal aliens since 1988. Investments in DHS’s Immigration and Customs Enforcement (ICE) interior enforcement programs since 2004 have increased the number of potentially removable aliens identified within the United States. Inconsistencies in data quality, collection, and definitions prevent a precise enumeration of total criminal aliens and key subgroups such as criminal aliens convicted of removable offenses and aggravated felonies. It is also not known what portion of these groups consists of legally present noncitizens and unauthorized aliens. Noncitizens incarcerated in federal and state prisons and local jails—a subset of all criminal aliens—totaled 142,463 in 2013 (the most recent year for which complete data are available), with state prisons and local jails each accounting for more incarcerations than federal prisons. Until recently, the proportion of noncitizens incarcerated in U.S. prisons and jails corresponded closely to that of noncitizens in the U.S. population, but unreported incarceration data since 2013 has hindered such comparisons. To direct immigration enforcement efforts toward the criminal alien population, ICE operates the Criminal Alien Program (CAP), an umbrella program for marshaling agency resources to identify and remove criminal and other removable aliens. CAP is guided by the Priority Enforcement Program (PEP), which represents a set of immigration enforcement priorities that describe which foreign nationals should be removed and in what priority order. PEP also employs “interoperability,” which is a data sharing infrastructure between DHS and the Department of Justice that screens individuals for immigration-related violations when they pass through law enforcement jurisdictions. PEP replaced the former Secure Communities, which many jurisdictions with large foreign-born populations had opposed. ICE also uses the §287(g) program, which allows the agency to delegate certain immigration enforcement functions to specially trained state and local law enforcement officers, under federal supervision. PEP and the §287(g) program both screen for immigration violations as people pass through the criminal justice system. The National Fugitive Operations Program (NFOP) pursues known at-large criminal aliens and fugitive aliens outside of controlled settings (i.e., administrative offices or custodial settings). NFOP is not part of CAP, although ICE officers in its workforce use the same DHS resources and databases as ICE officers working for CAP. PEP, its predecessor Secure Communities, and the §287(g) program have all contributed to DHS removing large numbers of aliens in the past decade. Yet, these programs also have been controversial. Because interoperability screens all people passing through law enforcement jurisdictions, critics often charged ICE with removing many people who either committed minor crimes or who had no criminal record apart from unauthorized presence in the United States. Other critics charge that revisions to the set of enforcement priorities through PEP have since contributed to declining numbers of enforcement actions. The §287(g) program has raised concerns over inconsistent policies and practices among jurisdictions and allegations of racial profiling, among other issues. Such concerns caused ICE to revise the program in FY2012 and allow certain §287(g) agreements with law enforcement agencies to expire. Since then, immigration enforcement advocates have questioned why ICE has curtailed the program’s use. ICE has recently expressed interest in expanding it. For these and other reasons, Congress may be interested in measures of enforcement levels by program, the level of appropriations for different criminal alien programs, and the role of state and local law enforcement agencies in immigration enforcement.

Sep 8, 2016

Biologics and Biosimilars: Background and Key Issues

A biological product, or biologic, is a preparation, such as a drug or a vaccine, that is made from living organisms. Compared with conventional chemical drugs, biologics are relatively large and complex molecules. They may be composed of proteins (and/or their constituent amino acids), carbohydrates (such as sugars), nucleic acids (such as DNA), or combinations of these substances. Biologics may also be cells or tissues used in transplantation. A biosimilar, sometimes referred to as a follow-on biologic, is a therapeutic drug that is similar but not structurally identical to the brand-name biologic made by a pharmaceutical or biotechnology company. In contrast to the relatively simple structure and manufacture of chemical drugs, biosimilars, with their more complex nature and method of manufacture, will not be identical to the brand-name product, but may instead be shown to be highly similar. The Food and Drug Administration (FDA) regulates both biologics and chemical drugs. Biologics and biosimilars frequently require special handling (such as refrigeration) and processing to avoid contamination by microbes or other unwanted substances. Also, they are usually administered to patients via injection or infused directly into the bloodstream. For these reasons, biologics often are referred to as specialty drugs. The cost of specialty drugs, including biologics, can be extremely high. In April 2006, the European Medicines Agency (EMA) authorized for marketing in Europe the first biosimilar product, Omnitrope, a human growth hormone. The EMA has authorized a total of 21 biosimilars for the European market. The introduction of biosimilars in Europe has reduced prices for biologics overall, in some cases by 33% compared with the original price of the brand-name product. For one drug in Portugal, the price reduction was 61%. In contrast, the pathway to marketing biosimilars in the United States has had several barriers. FDA approved Omnitrope in June 2006, following an April 2006 court ruling that the FDA must move forward with consideration of the application. At the time Omnitrope was approved, FDA indicated that this action “does not establish a pathway” for approval of other follow-on biologic drugs and stated that Congress must change the law before the agency can approve copies of nearly all other biotech products. Four years later, in March 2010, Congress established a new regulatory authority for FDA by creating an abbreviated licensure pathway for biological products demonstrated to be “highly similar” (biosimilar) to or “interchangeable” with an FDA-licensed biological product. The new authority was accomplished via the Biologics Price Competition and Innovation Act (BPCIA) of 2009, enacted as Title VII of the Affordable Care Act (ACA, P.L. 111-148). In addition, Congress authorized FDA to collect associated fees via the Biosimilar User Fee Act of 2012 (BsUFA, P.L. 112-144). FDA has approved three biosimilars for marketing in the United States: Zarxio (filgrastim-sndz) in March 2015, Inflectra (infliximab-dyyb) in April 2016, and Erelzi, (etanercept-szzs) in August 2016. The entry of such products on the U.S. market may result in price reductions similar to those that have occurred in Europe.

Sep 7, 2016

Marketplace Lending: Fintech in Consumer and Small-Business Lending

Marketplace lending—also called peer-to-peer lending or online platform lending—is a nonbank lending industry that uses innovative financial technology (Fintech) to make loans to consumers and small businesses. Although marketplace lending is small compared with traditional lending, it has grown quickly in recent years. In general, marketplace lenders accept applications for small, unsecured loans online and determine applicants’ creditworthiness using an automated algorithm. Often, the loans are then sold—whole or in pieces—to investors. More traditional lenders are more apt to use employees to make credit assessments and have a greater need for office and retail space. Traditional lenders may hold loans themselves or package many loans together into large securities (a process called securitization). Due to these differences and to marketplace lending’s lack of industry track record, marketplace lending is facing uncertainty about its advantages, its risks, and how it should be treated by regulators. Some observers assert that marketplace lending may pose an opportunity to expand the availability of credit to individuals and small businesses in a fair, safe, and efficient way. Marketplace lenders may have lower costs than traditional lenders, potentially allowing them to make more small loans than would be profitable for traditional lenders. In addition, some observers believe the accuracy of credit assessments will improve by using more data and advanced statistical modeling, as marketplace lenders do through their automated algorithms, leading to fewer delinquencies and write-offs. They argue that using more comprehensive data could also allow marketplace lenders to make credit assessments on potential borrowers with little or no traditional credit history. Other observers warn about the uncertainty surrounding the industry and the potential risks marketplace lending poses to borrowers, loan investors, and the financial system. The industry only began to become prevalent during the current economic expansion and low-interest-rate environment, so little is known about how it will perform in other economic environments. Many marketplace lenders do not hold the loans they make themselves and earn much of their revenue through origination and servicing fees, which potentially creates incentives for weak underwriting standards. Finally, some observers argue that lack of oversight may allow marketplace lenders to engage in unsafe or unfair lending practices. Marketplace lenders are subject to existing federal and state regulations related to lending and security issuance, and some observers assert that the existing system is appropriate for regulating this lending. However, because existing regulations were developed and implemented largely prior to the emergence of marketplace lending, some argue that regulatory gaps and weaknesses exist and should be addressed. The evolution of the regulatory environment facing marketplace lenders is just one development that will likely occur in coming years. Traditional lenders will continue to adapt to the new technology, market entrants, and market conditions. Marketplace lending has not been through an entire economic cycle, and rising interest rates or the onset of a recession will reveal strengths and weaknesses of marketplace lending. Congress may have to consider the issues surrounding marketplace lending, because as the industry grows and develops, it will likely require attention from policymakers, regulators, and financial institutions.

Sep 6, 2016

Climate Change: Frequently Asked Questions about the 2015 Paris Agreement

Experts broadly agree that stabilizing greenhouse gas (GHG) concentrations in the atmosphere to avoid dangerous GHG-induced climate change could be accomplished only with concerted efforts by all large emitting nations. Toward this purpose, delegations of 195 nations adopted the Paris Agreement (PA) on December 12, 2015. The PA outlines goals and a structure for international cooperation to slow climate change and mitigate its impacts over decades to come. The PA opened for signature by Parties to the United Nations Framework Convention on Climate Change (UNFCCC) on April 22, 2016, at U.N. headquarters in New York City. Heads of state and ministers from more than 175 governments signed the PA, a record for a single day. Signature generally indicates that a nation state intends to be bound by the agreement, and it initiates the process by which a prospective Party follows its domestic procedures to ratify, accept, approve, or accede to the agreement. A government then deposits its instrument of ratification, acceptance, approval, or accession with the U.N. depositary. The PA will enter into force 30 days after at least 55 countries, representing at least 55% of officially reported GHG emissions, deposit their instruments. As of August 10, 2016, 22 states—representing 1.08% of global GHG emissions—had deposited their instruments of ratification. Based on stated intentions of many nations to deposit their instruments in 2016, including the United States and China, some experts suggest that the PA could enter into force by the end of 2016. The PA creates a structure for nations to pledge to abate their GHG emissions, set goals to adapt to climate change, and cooperate toward these ends, including financial and other support. The negotiators intended the PA to be legally binding on its Parties, though not all provisions in it are mandatory. Some are recommendations or collective commitments to which it would be difficult to hold an individual Party accountable. Key aspects of the agreement include: Temperature goal. The PA defines a collective, long-term objective to hold the GHG-induced increase in temperature to well below 2o Celsius (C) and to pursue efforts to limit the temperature increase to 1.5o C above the pre-industrial level. A periodic “global stocktake” will assess progress toward the goals. Single GHG mitigation framework. The PA establishes a process, with a ratchet mechanism in five-year increments, for all countries to set and achieve GHG emission mitigation pledges until the long-term goal is met. For the first time under the UNFCCC, all Parties participate in a common framework with common guidance, though some Parties are allowed flexibility in line with their capacities. This largely supersedes the bifurcated mitigation obligations of developed and developing countries that have held the negotiations in often-adversarial stasis for many years. Accountability framework. To promote compliance, the PA balances accountability to build and maintain trust (if not certainty) with the potential for public and international pressure (“name-and-shame”). Also, the PA establishes a compliance mechanism that will be expert-based and facilitative rather than punitive. Many Parties and observers will closely monitor the effectiveness of this strategy. Adaptation. The PA also requires “as appropriate” that Parties prepare and communicate their plans to adapt to climate change. Adaptation communications will be recorded in a public registry. Collective financial obligation. The PA reiterates the collective obligation in the UNFCCC for developed country Parties to provide financial resources—public and private—to assist developing country Parties with mitigation and adaptation efforts. It urges scaling up of financing. The Parties agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties. U.S. executive branch officials have stated that the PA is not a treaty requiring Senate advice and consent to ratification. Whether becoming a Party to the PA would require Senate advice and consent depends on the content of the agreement. If the PA were to contain new legal obligations on the United States or require authorizations to implement it, these factors would favor requiring Senate consent to the President’s ratification of it. However, many authorities have opined that the PA does not meet these thresholds for the United States. Beyond the Senate’s role in giving advice and consent to a treaty, Congress continues to exercise its powers through authorizations and appropriations for related federal actions. Additionally, numerous issues may attract congressional oversight, such as international rules to be developed to carry out the PA, guidance to Parties, use of funds, and assessment of the effectiveness of other Parties’ efforts.

Sep 1, 2016

The Commodity Credit Corporation: In Brief

The Commodity Credit Corporation (CCC) has served as a mandatory funding mechanism for agricultural programs since 1933. The CCC Charter Act enables it to broadly support the U.S. agriculture industry through authorized programs including commodity and income support, natural resources conservation, export promotion, international food aid, disaster assistance, agricultural research, and bioenergy development. While CCC is authorized to carry out a number of activities, it has no staff of its own. CCC is overseen by the Secretary of Agriculture and a board of directors, which are also U.S. Department of Agriculture (USDA) officials. CCC has $100 million in capital stock; buys, owns, sells, and donates commodity stocks; and provides loans for to farmer and ranchers. It has a permanent indefinite borrowing authority of $30 billion from the U.S. Treasury. By law, it receives an annual appropriation equal to the amount of the previous year’s net realized loss. This replenishes its borrowing authority from the Treasury and allows it to cover authorized expenditures that will not be recovered. The majority of CCC activities are authorized through omnibus farm bills—most recently the Agricultural Act of 2014 (P.L. 113-79). Farm bill authorization allows programs to utilize CCC’s borrowing authority, thereby not requiring an annual appropriation for individual programs. The use of this mandatory authority has expanded over time and has led to tension between authorizing committees (namely the House and Senate Agriculture Committees) and appropriation committees. Ultimately, it is Congress that passes legislation and not individual committees. As Congress looks to debate the next farm bill, many wonder whether CCC will be used to fund other areas of agriculture policy or whether spending will be restricted similar to recent limiting provisions in annual appropriations. The Charter Act also grants the Secretary of Agriculture broad powers and discretion in the use of CCC. Recently, the Secretary’s use of CCC to fund a bioenergy initiative has highlighted this discretion and created concern in Congress. Restrictions in annual appropriation legislation have reduced the Secretary’s use of CCC but not so much as to prevent the funding of recent cotton and dairy marketing assistance.

Aug 29, 2016

Regulation of Over-the-Counter (OTC) Drugs

Aug 29, 2016

Reforming the U.S. Postal Service: Background and Issues for Congress

This report provides background information on the responsibilities, financial challenges, and workforce issues facing the U.S. Postal Service (USPS). Additionally, it covers the current strategies and initiatives under development by the USPS and discusses further options for postal reforms. In FY2015, the USPS marked its ninth consecutive year of financial losses with a net loss of $5.1 billion. In addition, the USPS has reached its statutory debt limit of $15 billion. In recent years, the USPS has experienced growth in the package and shipping part of its business (known as Competitive Products). The USPS, however, has experienced sharp declines in both volume and revenue of its Market Dominant Products (e.g., First Class single-piece mail). The USPS has struggled in recent years to fulfill its statutory obligation to prefund its health benefits liability for future postal retirees. Under a prefunding schedule established by the Postal Accountability and Enhancement Act, the USPS has made $20.9 billion in contributions since FY2007 but defaulted on its remaining $28.1 billion in payments. In its most recent financial statement, the USPS requested reforms that would integrate postal employee healthcare options with Medicare, thereby reducing costs and making the prefunding liability expense more manageable. Such reforms would require statutory authorization from Congress. This report also covers several issues facing the USPS workforce. In recent years, initiatives designed to restructure the USPS retail and mail processing networks allowed the USPS to implement several workforce reduction strategies that helped cut costs. In FY2015, however, workforce costs increased. According to the USPS, this reversal was due to contract obligations and work hours associated with the growth in its labor-intensive package and shipping business. Additional postal initiatives and reform options discussed in this report include (1) changes to postal delivery standards, (2) consolidation of mail processing facilities, (3) closure of retail post offices, (4) five-day delivery, (5) updates to the postal fleet, (6) nonpostal products and services; and (7) postal banking. Appendix B of this report includes a table of House and Senate postal reform legislation introduced in the 113th and 114th Congresses, such as S. 2051, Improving Postal Operations, Service, and Transparency Act of 2015 (iPOST Act), and H.R. 5714, Postal Service Reform Act of 2016. For each bill, the table in Appendix B provides the bill number, title, sponsor, the committee(s) to which the bill was referred, a list of selected issues the bill covers, and the last major action (e.g., referral to committee, markup held).

Aug 25, 2016

Introduction to FEMA’s National Flood Insurance Program (NFIP)

The NFIP was established by the National Flood Insurance Act of 1968 (NFIA, 42 U.S.C. §4001 et seq.), and was most recently reauthorized by the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141). The general purpose of the NFIP is both to offer primary flood insurance to properties with significant flood risk, and to reduce flood risk through the adoption of floodplain management standards. Generally, communities volunteer to participate in the NFIP in order to have access to flood insurance, and in return are required to adopt minimum standards. FEMA manages a process, called Risk MAP, which conducts Flood Insurance Studies (FISs) to produce Flood Insurance Rate Maps (FIRMs). Depicted on FIRMs are Special Flood Hazard Areas (SFHAs), which is the area exposed to a 1 in 100 or greater risk of annual flooding. FIRMs vary in age across the country, and are updated on a prioritized basis with no definitive timetable. The Risk MAP process provides extensive outreach and appeal opportunities for communities. Updating a community’s FIRMs can take as long as three to five years or more. Participating communities must adopt a flood map and enact minimum floodplain standards to regulate development in the SFHA. FEMA encourages communities to enhance their floodplain standards by offering reduced premium rates through the Community Rating System (CRS). FEMA also manages a Flood Mitigation Assistance (FMA) grant program using NFIP revenues to further reduce comprehensive flood risk. NFIP flood insurance uses one of three types of Standard Flood Insurance Policies (SFIPs). SFIPs have maximum coverage limits set by law. Any federal entity that makes, guarantees, or purchases mortgages will require property owners in the SFHA to purchase flood insurance, generally through the NFIP. In moderate risk areas, community members may purchase Preferred Risk Policies (PRPs) that offer less costly insurance. NFIP policies also provide Increased Cost of Compliance (ICC) coverage to offset the cost of complying with floodplain management standards, such as elevating a substantially damaged property. The day-to-day sale, servicing, and claims processing of NFIP policies are conducted by private industry partners. Most policies are serviced by companies that are reimbursed through the Write Your Own (WYO) Program. The premium rate for most NFIP policies is intended to reflect the true flood risk. However, Congress has directed FEMA to subsidize flood insurance for properties built before the community’s first FIRM (i.e., the pre-FIRM subsidy). FEMA also “grandfathers” properties at their rate from past FIRMs to updated FIRMs through a cross-subsidy. Congress also directed the development of an Affordability Study, and a forthcoming Draft Affordability Framework, to evaluate methods for making flood insurance more affordable. Participating communities that fail to adopt FIRMs or maintain minimum floodplain standards can be put on probation or suspended from the NFIP. In communities that do not participate in the NFIP, or have been suspended, individuals cannot purchase NFIP flood insurance. Individuals in these communities also face challenges receiving federal disaster assistance in flood hazard areas, and have difficulties receiving federally-backed mortgages. Congress has provided discretionary appropriations to the NFIP for some of the cost of Risk MAP. Congress also authorizes the use of premium revenues for other NFIP costs, including administration, salaries, and other expenses. NFIP premiums also include additional charges, including a Federal Policy Fee, a Reserve Fund assessment, and a surcharge that help fund the NFIP. The NFIP currently owes $23 billion to the U.S. Treasury, leaving $7.425 billion in borrowing authority from a $30.425 billion limit in law. This debt is serviced by the NFIP, not the general taxpayer, and interest is paid through premiums. Though an exact timetable is unknown and depends heavily on future flood losses, it is unlikely that the debt will be repaid within 10 years or longer. After September 30, 2017, key authorities of the NFIP, such as the authority to issue new insurance contracts, will expire if they are not reauthorized by Congress.

Aug 16, 2016

Trends in the Timing and Size of DHS Appropriations: In Brief

(TO BE SUPPRESSED) Department of Homeland Security DHS budget Appropriations FY2016, FY2015 funding analysis

Aug 9, 2016

Overview of Funding Mechanisms in the Federal Budget Process, and Selected Examples

Every year, Congress considers numerous pieces of legislation that would create or modify federal government programs and activities. The variety of approaches used across the federal budget to fund these programs and activities involve different timelines for budgetary decisionmaking, and different processes (and committees) within Congress to make those decisions. How a particular funding mechanism is structured requires tradeoffs between the frequency of congressional review and the predictability of funding for the program. The purpose of this report is to explain these approaches, illustrating them with examples of how they have been applied in practice. When attempting to understand the mechanism through which a program is funded, one of its most basic elements is the type of law that controls that funding. Such laws—and the provisions within them—can be distinguished based on whether their primary purpose is to create or modify federal government programs or activities (“authorizations”), or whether their purpose is to fund those activities (“appropriations”). Discretionary spending programs generally are established through authorization laws, but the annual appropriations process determines the extent to which those programs will actually be funded, if at all. Examples of discretionary spending discussed in this report include the Office of Apprenticeship (Department of Labor; DOL) and the Violence Against Women Family Research and Evaluation program (Department of Justice). Mandatory spending is controlled by authorization laws. For this type of spending, the program usually is created and funded in the same law, often on a multiyear or permanent basis. Examples of this type of funding mechanism that are discussed in this report include the State Children’s Health Insurance Program (Department of Health and Human Services; HHS), Technical Assistance for Tribal Child Welfare Programs (HHS), and Social Security Disability Insurance (Social Security Administration; SSA). Alternatively, a mandatory spending program might be created in an authorization law but funded annually through an appropriations act; this is often referred to as “appropriated mandatory” spending. Examples of appropriated mandatory spending include the Social Services Block Grant (HHS) and Supplemental Security Income (SSA). In some cases, including the federal Health Center Program (HHS) and the Child Care and Development Fund (HHS), federal government programs are funded using a combination of mandatory and discretionary spending. Besides the type of law that controls the spending, another important aspect of any funding mechanism is what the source of that funding will be. This is because there is a distinction between the authority to expend funds and the source of the funds themselves. Revenue and other collections made by the federal government are generally deposited in the General Fund (GF) of the Treasury, which is the default source of spending for many different types of federal government activities. Examples of funding mechanisms that utilize the GF include the Office of Apprenticeship (DOL) and the Maternal, Infant, and Early Childhood Home Visiting program (HHS). Spending also may be funded by dedicated collections that result from the business-like activities that the federal government undertakes. Both the legal authority to make these collections, and the legal authority to expend them, may be provided either through authorization or appropriations acts, and may support either mandatory or discretionary spending. Examples of dedicated collections that are discussed in this report include those associated with the Immigration Examinations Fee Account (Department of Homeland Security), the Manufactured Housing Standard Program (Department of Housing and Urban Development), and the Health Surveillance and Program Support account (HHS). In some cases, including Medicare Part A and B (HHS) and the Prescription Drug User Fee Act activities undertaken by the Food and Drug Administration (HHS), programs are funded using a combination of the GF and dedicated collections.

Aug 4, 2016

Federal Benefits and Services for People with Low Income: Overview of Spending Trends, FY2008-FY2015

The Congressional Research Service (CRS) regularly receives requests about the number, size, and programmatic details of federal benefits and services targeted toward low-income populations. This report is the most recent in a series that attempts to identify and discuss such programs, focusing on aggregate spending trends. The report looks at federal low-income spending from FY2008 (at the onset of the 2007-2009 recession) through FY2015 (after implementation of the Patient Protection and Affordable Care Act, or ACA). Programs discussed here provide health care, cash aid, food assistance, education, housing and development, social services, employment and training, and energy assistance to low-income people and communities. Despite the common feature of an explicit low-income focus, these programs are extremely diverse in their purpose, design, and target population. They do not include social insurance (e.g., Social Security, Medicare, Unemployment Compensation), which is meant to be universal, or tax provisions, with the exception of two targeted tax credits. Key findings include the following: In nominal dollars (not adjusted for inflation), federal spending for low-income assistance programs grew from $561 billion in FY2008 to $848 billion in FY2015, a 51% increase over the eight-year period. This increased spending occurred in two distinct episodes. First, after a sharp spike in FY2009 affecting all categories of benefits and services, low-income spending peaked at $763 billion in FY2011, largely in response to the recession. The second episode was driven almost entirely by health care. Spending growth from FY2013 ($744 billion) to FY2015 ($848 billion) was primarily due to the ACA Medicaid expansion. Most low-income spending is for noncash benefits and services; health care is the largest category and Medicaid the largest individual program. In FY2015, noncash benefits and services accounted for 82% of all low-income assistance and cash aid comprised 18%. Health care dominates federal spending for low-income programs, accounting for more than half (52%) of such spending in FY2015. Medicaid alone comprised 45% of all low-income spending that year. This report identifies a large number of programs intended to assist low-income people, but spending is concentrated among a few. The four largest programs—Medicaid, the Supplemental Nutrition Assistance Program, Supplemental Security Income, and the Earned Income Tax Credit—together accounted for 68% of all low-income spending in FY2015, and the top 10 programs comprised 83%. After the top four, these programs include (in descending size) Federal Pell Grants, the Medicare Part D Low-Income Drug Subsidy, the Additional Child Tax Credit, Section 8 Housing Choice Vouchers, Temporary Assistance for Needy Families, and Title I-A Education for the Disadvantaged grants. Spending patterns described here do not reflect congressional decisions about the aggregate size of low-income spending that should occur each year. The size of each program is a function of its design and budgetary classification (mandatory versus discretionary), congressional budget and appropriations processes, external influences affecting the cost of goods and services, and other factors. This report tells a story—that low-income spending has grown sharply in recent years and is dominated by health care—but given the diversity among programs that serve low-income people, further generalizations should be made with care.

Jul 29, 2016

The Food and Drug Administration (FDA) Budget: Fact Sheet

The Food and Drug Administration (FDA) regulates the safety of foods (including dietary supplements), cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products. Seven centers within FDA represent the broad program areas for which the agency has responsibility: the Center for Biologics Evaluation and Research (CBER), the Center for Devices and Radiological Health (CDRH), the Center for Drug Evaluation and Research (CDER), the Center for Food Safety and Applied Nutrition (CFSAN), the Center for Veterinary Medicine (CVM), the National Center for Toxicological Research (NCTR), and the Center for Tobacco Products (CTP). Several other offices have agency-wide responsibilities. FDA’s budget has two funding streams: annual appropriations (i.e., discretionary budget authority, or BA) and industry user fees. In FDA’s annual appropriation, Congress sets both the total amount of appropriated funds and the amount of user fees that the agency is authorized to collect and obligate for that fiscal year. Between FY2012 and FY2016, FDA’s total program level increased from $3.832 billion to $4.745 billion. Although congressionally appropriated funding increased by 9% over that time period, user fee revenue increased more than 50%. The President’s FY2017 budget request was for a total program level of $4.826 billion, an increase of $81 million (+2%) over the FY2016 enacted appropriation of $4.745 billion. Both the House and Senate Appropriations Committees have reported their FY2017 Agriculture appropriations bills (H.R. 5054, S. 2956). This report will be updated with information on FDA funding for FY2017 once legislative action on appropriations for the new fiscal year is completed.

Jul 28, 2016

Overview of the Prudential Regulatory Framework for U.S. Banks: Basel III and the Dodd-Frank Act

The Basel III international regulatory framework, which was produced in 2010 by the Basel Committee on Banking Supervision (BCBS) at the Bank for International Settlements, is the latest in a series of evolving agreements among central banks and bank supervisory authorities to promote standardized bank prudential regulation (e.g., capital and liquidity requirements, transparency, risk management) to improve resiliency during episodes of financial distress. Because prudential regulators are concerned that banks might domicile in countries with the most relaxed safety and soundness requirements, capital reserve requirements are internationally harmonized, which also reduces competitive disadvantages for some banks with competitors in other countries. Capital serves as a cushion against unanticipated financial shocks (such as a sudden, unusually high occurrence of loan defaults), which can otherwise lead to insolvency. Holding sufficient amounts of liquid assets serves as a buffer against sudden reversals of cash flow. Hence, the Basel III regulatory reform package revises the definition of regulatory capital, increases capital requirements, and introduces new liquidity requirements for banking organizations. The quantitative requirements and phase-in schedules for Basel III were approved by the 27 member jurisdictions and 44 central banks and supervisory authorities on September 12, 2010, and endorsed by the G20 leaders on November 12, 2010. Basel III recommends that banks fully satisfy these enhanced requirements by 2019. The Basel agreements are not treaties; individual countries can make modifications to suit their specific needs and priorities when implementing national bank capital requirements. In the United States, Congress mandated higher bank capital requirements as part of financial-sector reform in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203, 124 Stat.1376). Specifically, the Collins Amendment to the Dodd-Frank Act amends the definition of capital and establishes minimum capital and leverage requirements for banking subsidiaries, bank holding companies, and systemically important non-bank financial companies. In addition, the Dodd-Frank Act requires greater prudential requirements on larger banking institutions. This report summarizes the higher capital and liquidity requirements for U.S. banks regulated for safety and soundness. Federal banking regulators announced the final rules for implementation of Basel II.5 on June 7, 2012, and for the implementation of Basel III on July 9, 2013. On April 8, 2014, federal regulators adopted the enhanced supplementary leverage ratio for bank holding companies with more than $700 billion of consolidated assets or $10 trillion in assets under custody as a covered bank holding company. On October 10, 2014, the federal banking agencies (i.e., Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation) announced a final rule to strengthen liquidity regulations for banks with $50 billion or more in assets. Additional requirements that have since been proposed or finalized particularly for the larger and more complex financial institutions are described in various appendices of this report. In addition, the 114th Congress is considering bills that would affect the banking system’s prudential regulation, including S. 1484, the Financial Regulatory Improvement Act of 2015, which would affect bank capital regulation. Greater prudential requirements for most U.S. banking firms may reduce the insolvency risk of the deposit insurance fund, which is maintained by the Federal Deposit Insurance Corporation (FDIC), because more bank equity shareholders would absorb financial losses. A systemic-risk event, however, refers to multiple institutions simultaneously experiencing financial distress. For example, higher bank capital reserves may absorb greater losses associated with the financial distress of an individual institution, but a systemic-risk event exhausts the capital reserves of the industry, thus threatening the level of financial intermediation conducted by the banking system as a whole. Higher capital reserves in the banking industry are also incapable of buffering losses associated with financial activity that occurs outside of the banking system.

Jul 27, 2016

U.S. Electronic Attack Aircraft

Electronic warfare (EW) has been an important component of military air operations since the earliest days of radar. The advent of the airplane enabled the United States to project power faster than land and naval forces had ever done. It also spurred the development of technologies, such as radar, that could detect and track enemy aircraft, thereby protecting military forces, infrastructure, and populations from aerial threats. Department of Defense EW Activities The Department of Defense (DOD) is engaged in numerous developmental EW activities. These activities include research and development (R&D) programs, procurement programs, training, and experimentation. Such activities are designed to improve various electronic attack (EA), electronic countermeasures (ECM), and suppression of enemy air defenses (SEAD) capabilities both in the near and long term. DOD EW activities often cut across service and intra-service community boundaries and defy easy categorization and oversight, making it difficult to determine and assess DOD-wide EW priorities. Although DOD does not have an overall EW procurement strategy, it is focusing more on this aspect of military operations in response to emerging threats. The DOD budget request for FY2017 showed an increase in Research, Development, Testing and Evaluation (RDT&E) funds for EW. Congressional appropriations and authorization conferees often matched or exceeded DOD’s request for EW programs to help ensure the survivability of numerous aircraft and to increase the military’s ability to suppress or destroy enemy air defenses. Congressional Decisions Regarding EW Congress has the authority to approve, reject, or modify Air Force and Navy funding requests for EW aircraft sustainment and modernization. Congress also has the authority to provide oversight of the nation’s EW requirements and capabilities. Congress’s decisions on appropriations for the airborne EW aircraft fleet may affect the United States’ EW capabilities, as well as the U.S. defense industry. As part of its FY2017 budget authorization, appropriations, and oversight responsibilities, Congress may influence DOD’s EW force structure, aircraft survivability, and air campaign effectiveness. Potential congressional oversight, authorization, and appropriations concerns for the sustainment and modernization of DOD’s airborne EW force include the following: a potential shortfall in EW capabilities if funds are not available for sustainment and upgrades that would keep the weapon systems viable until they are replaced; ascertaining DOD, Air Force, and Navy priorities for sustainment and modernization; and potential implications that changing the number of EW aircraft may have on future rounds of base realignment and closure efforts. Report Focus This report focuses on the definition of EW and the four primary aircraft that are the main assets for this mission area: the Navy’s EA-18G, the Marine Corps’ EA-6B Prowler, the Air Force’s EC-130H Compass Call, and the F-16CM Block 50 “Wild Weasel.” The report also addresses potential congressional oversight and appropriations concerns for the sustainment and modernization of the DOD’s EW aircraft. It does not address options for recapitalization currently being offered by industry.

Jul 26, 2016

Labeling Genetically Engineered Foods: Current Legislation

Jul 18, 2016

Digital Trade and U.S. Trade Policy

As the rules of global Internet develop and evolve, digital trade has risen in prominence on the global trade and economic agenda, but multilateral trade agreements have not kept pace with the complexities of the digital economy. The economic impact of the Internet is estimated to be $4.2 trillion in 2016, making it the equivalent of the fifth-largest national economy. According to one source, the volume of global data flows grew 45-fold from 2005 to 2014, faster than international trade or financial flows. Congress has an important role to play in shaping global digital trade policy, from oversight of agencies charged with regulating cross-border data flows to shaping and considering legislation to implement new trade rules and disciplines through ongoing trade negotiations, and also working with the executive branch to identify the right balance between digital trade and other policy objectives, including privacy and national security. Digital trade includes end-products like movies and video games and services such as email. Digital trade also enhances the productivity and overall competitiveness of an economy. According to the U.S. International Trade Commission, U.S. domestic and international digital trade added 3.4 - 4.8% ($517.1-$710.7 billion) to the U.S. gross domestic product (GDP) in 2011. The Department of Commerce found that in 2014, digitally delivered services accounted for more than half of U.S. services trade. The increase in digital trade also raises new challenges in U.S. trade policy, including how to best address new and emerging trade barriers. As with traditional trade barriers, digital trade constraints can be classified as tariff or nontariff barriers. In addition to high tariffs, barriers to digital trade may include localization requirements, cross border data flow limitations, intellectual property rights (IPR) infringement, unique standards or burdensome testing, filtering or blocking, and cybercrime exposure or state-directed theft of trade secrets. Digital trade issues often overlap and cut across policy areas, including IPR and national security; this raises questions for Congress as it weighs different policy objectives. The Organization for Economic Cooperation and Development (OECD) points out three potentially conflicting policy goals in the Internet economy: (1) enabling the Internet; (2) boosting or preserving competition within and outside the Internet; and (3) protecting privacy and consumers more generally. While no comprehensive agreement on digital trade exists in the World Trade Organization (WTO), other WTO agreements do cover some aspects of digital trade. Recent bilateral and plurilateral agreements have begun to address digital trade rules and barriers more explicitly. For example, the potential Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (T-TIP), and plurilateral Trade in Services Agreement (TiSA) are expected to address digital trade to varying degrees. Digital trade norms are also being discussed in forums such as the Group of 20 (G-20), the OECD, and the Asia-Pacific Economic Cooperation (APEC), providing the United States with multiple opportunities to engage in and shape global developments. Congress has an interest in ensuring the global rules and norms of the Internet economy are in line with U.S. laws and norms, and in establishing a U.S. trade policy on digital trade that advances U.S. interests.

Jul 15, 2016

The Coast Guard’s Role in Safeguarding Maritime Transportation: Selected Issues

Congress has made the U.S. Coast Guard responsible for safeguarding vessel traffic on the nation’s coastal and inland waterways. Congress typically passes Coast Guard authorization bills every one to two years and appropriates funds to the agency annually under the Department of Homeland Security appropriations bill. The fleet of vessels the Coast Guard inspects for safety reasons recently doubled because the agency is now responsible for inspecting tugs and towboats that push or pull barges (towing vessels), in addition to ships. In June 2016 the Coast Guard issued a final rule on this matter. The Coast Guard is now considering an hours-of-service limit for crews working on towing vessels in an effort to reduce accidents caused by fatigue and is reevaluating the crewing requirements for certain seagoing barges. These potential changes are controversial and could raise the cost of transporting petroleum and chemical products by barge. Other current controversies related to the Coast Guard’s vessel safety responsibilities include the following: Whether the agency should place greater reliance on nonprofit vessel classification societies to perform vessel inspections in place of Coast Guard personnel, as recommended by an independent review panel requested by Congress. Enforcement of new international rules requiring shippers of containerized cargo to more accurately verify the weight of their shipments; U.S. agricultural exporters contend this will significantly complicate and add costs to their shipments. The Coast Guard’s ability to operate in the Arctic, where a decline in sea ice during the late summer has led to increased maritime activity. The potential for replacing physical aids to navigation, such as channel marking buoys and beacons, with virtual aids utilizing GPS and electronic charts, at significant cost saving. The potential use of unmanned aerial vehicles (drones) to increase the efficiency and reduce the cost of Coast Guard sea patrols. Guidelines for the safe refueling of ships using liquefied natural gas (LNG). Enforcement of cleaner fuels for ships; cleaner fuels are reportedly causing some ships to have engine problems and are believed by some to be part of the reason for a ship collision in Houston in March 2015.

Jul 15, 2016

Agriculture and the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations

The Transatlantic Trade and Investment Partnership (T-TIP) is a potential reciprocal free trade agreement being negotiated between the United States and the European Union (EU). Formal negotiations began in July 2013. Through the negotiations, both sides are seeking to liberalize transatlantic trade and investment, set globally relevant rules and disciplines that could boost economic growth, support multilateral trade liberalization through the World Trade Organization (WTO), and address third-country trade policy challenges. Agricultural issues have been an active topic of debate in the negotiations, given the potential market access gains for both sides and the potential to address a series of regulatory and intellectual property rights issues. The United States is among the world’s largest net exporters of agricultural products. The EU is an important export market for U.S. agricultural exports and ranks as the fifth largest market for U.S. food and farm exports. However, in recent years, growth in U.S. agricultural exports to the EU has not kept pace with growth in trade to other U.S. markets, and imports from Europe currently exceed U.S. exports to the EU. In 2015, U.S. exports of agricultural products to the EU totaled $12 billion, while EU exports of agricultural products to the United States totaled $20 billion, resulting in a trade deficit of nearly $8 billion for the United States and reversing the net trade surplus in U.S. agricultural exports to the EU during the 1990s. (These statistics include data for all current 28 EU member states, including the United Kingdom, which voted in June 2016 to leave the EU, a process that could take many years.) Addressing market access for U.S. agricultural exports to the EU is among the major goals of the T-TIP negotiation. The U.S. Department of Agriculture (USDA) reports that the EU’s average agricultural tariff is 30%, well above the average U.S. agricultural tariff of 12%. Restrictive tariff rate quotas (TRQs) on agricultural products are also a concern for U.S. exporters. A USDA study reports that removing tariffs and TRQs could increase U.S. agricultural exports to the EU by an estimated $5.5 billion (compared to a 2011 base year). EU exports to the United States are estimated to rise by $0.8 billion. These totals cover all current 28 EU member states. High tariff barriers are further exacerbated by additional non-tariff barriers that may limit U.S. agricultural exports. Addressing non-tariff barriers is another major goal of the U.S. agricultural sectors in the negotiation, covering certain sanitary and phytosanitary (SPS) concerns. These include delays in reviews of biotech products (limiting U.S. exports of grain and oilseed products), prohibitions on growth hormones in beef production and certain antimicrobial and pathogen reduction treatments (limiting U.S. meat and poultry exports), and burdensome and complex certification requirements (limiting U.S. exports of processed foods, animal products, and dairy products). As such, T-TIP negotiations on agricultural products are conditioned by a number of these long-standing, high-profile transatlantic trade disputes between the United States and EU. Other EU regulations of concern to U.S. exporters include lack of a science-based focus in establishing SPS measures, difficulty meeting food safety standards and obtaining product certification, lack of cohesive labeling requirements, and stringent testing requirements that are often applied inconsistently across EU member nations. USDA reports that removing select non-tariff barriers affecting meats, field crops, and fruits and vegetables could raise U.S. exports to the EU by an additional $4.1 billion over gains estimated from removing tariffs and TRQs (compared to a 2011 base year) across all current 28 EU member states. Other U.S. concerns involve the EU’s use of geographical indications (GIs)—certain protected product names that many U.S. food producers consider to be generic names. Further complicating negotiations regarding GIs are underlying regulatory and administrative differences between the United States and the EU in how each addresses GIs within their respective borders.

Jul 14, 2016

Geographical Indications in the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations

Geographical indications (GIs) are place names used to identify products that come from these places and to protect the quality and reputation of a distinctive product originating in a certain region. The term is most often applied to wines, spirits, and agricultural products. Some food producers benefit from the use of GIs by giving certain foods recognition for their distinctiveness, differentiating them from other foods in the marketplace. In this manner, GIs can be commercially valuable. GIs may be eligible for relief from acts of infringement or unfair competition. GIs may also protect consumers from deceptive or misleading labels. Examples of GIs include Parmesan cheese and Parma ham from the Parma region of Italy, Tuscan olive oil, Roquefort cheese, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Ceylon tea, Florida Oranges, Idaho Potatoes, Vidalia Onions, Washington State Apples, and Napa Valley Wines. The use of GIs has become a contentious international trade issue, particularly for U.S. wine, cheese, and sausage makers involved in trade between the United States and the European Union (EU). Accordingly, GIs are among the agricultural issues that have been raised in the ongoing Transatlantic Trade and Investment Partnership (T-TIP) negotiations, a potential reciprocal free trade agreement that the United States and the EU are negotiating. Many U.S. food manufacturers view the use of common or traditional names as generic terms and the EU’s protection of its registered GIs as a way to monopolize the use of certain wine and food terms and as a form of trade protectionism. Specifically, several industry groups have expressed concern that the EU is using GIs to impose restrictions on the use of common names for some foods—such as parmesan, feta, and provolone cheeses and certain wines—and limit U.S. food companies from marketing these foods using these common names. Complicating this issue further are GI protections afforded to registered products in third country markets. This has become a concern for U.S. agricultural exporters following a series of recently concluded trade agreements between the EU and countries such as Canada, South Korea, South Africa, and other countries that are, in many cases, also major trading partners with the United States. Laws and regulations governing GIs differ between the United States and EU, which further complicates this issue. In the United States, GIs are generally treated as brands and trademarks, whereas the EU protects GIs through a series of established quality schemes. These approaches differ with respect to the conditions for protection or the scope of protection, but both establish rights for collective use by those who comply with defined standards. In the United States, the U.S. Patent and Trademark Office (PTO) administers GI protections, along with labeling requirements for wine, malt beverages, beer, and distilled spirits under the jurisdiction of the Alcohol and Tobacco Tax and Trade Bureau. In the EU, a series of regulations governing GIs was initiated in the early 1990s covering agricultural and food products, wine, and spirits. Legislation adopted in 1992 covered agricultural products (not including wines and spirits), but it was changed in 2006 following a World Trade Organization (WTO) panel ruling that found some aspects of the EU’s scheme inconsistent with WTO rules. The new rules came into force in January 2013. GIs are also protected by agreements of the WTO as part of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Some Members of Congress have long expressed their concerns about EU protections for GIs, which they claim are being misused to create market and trade barriers. However, they are also concerned about the implementation of GI protections in other trade agreements that have been or are being negotiated by the EU with other countries.

Jul 7, 2016

The Essential Health Benefits (EHB)

Jul 6, 2016

The Fair Housing Act: HUD Oversight, Programs, and Activities

The federal Fair Housing Act, enacted in 1968 as Title VIII of the Civil Rights Act (P.L. 90-284), prohibits discrimination in the sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, and handicap. The Department of Housing and Urban Development (HUD), through its Office of Fair Housing and Equal Opportunity (FHEO), receives and investigates complaints under the Fair Housing Act and determines if there is reasonable cause to believe that discrimination has occurred or is about to occur. State and local fair housing agencies and private fair housing organizations also investigate complaints based on federal, state, and local fair housing laws. In fact, if alleged discrimination takes place in a state or locality with its own similar fair housing enforcement agency, HUD must refer the complaint to that agency. Two programs administered by FHEO provide federal funding to assist state, local, and private fair housing organizations: The Fair Housing Assistance Program (FHAP) funds state and local agencies that HUD certifies as having their own laws, procedures, and remedies that are substantially equivalent to the federal Fair Housing Act. Funding is used for such activities as capacity building, processing complaints, administrative costs, and training. In FY2016, Congress appropriated $24.3 million for FHAP. The Fair Housing Initiatives Program (FHIP) funds eligible entities, most of which are private nonprofit organizations. Funds are used for investigating complaints, including testing (comparing outcomes when members of a protected class attempt to obtain housing with outcomes for those not in a protected class), education, outreach, and capacity building. In FY2016, Congress appropriated $39.2 million for FHIP. Another provision of the Fair Housing Act requires that HUD affirmatively further fair housing (AFFH). As part of this requirement, recipients of certain HUD funding—jurisdictions that receive Community Planning and Development grants and Public Housing Authorities—go through a process to certify that they are affirmatively furthering fair housing. In July 2015, HUD issued a new rule governing the process, called the Assessment of Fair Housing (AFH). Under the AFH, funding recipients will assess their jurisdictions and regions for fair housing issues (including areas of segregation, racially and ethnically concentrated areas of poverty, disparities in access to opportunity, and disproportionate housing needs), identify factors that contribute to these fair housing issues, and set priorities and goals for overcoming them. HUD will provide data for program participants to use in preparing their AFHs, and will include a tool that helps program participants through the AFH process. Among other activities undertaken by HUD’s FHEO are efforts to prevent discrimination not explicitly directed against protected classes under the Fair Housing Act. This includes a regulation to prohibit discrimination in HUD programs based on sexual orientation and gender identity, and guidance about the use of criminal background checks in screening applicants for housing. FHEO also oversees efforts to ensure that clients with Limited English Proficiency (LEP) have access to HUD programs. Guidance from FHEO helps housing providers determine how best to provide translation services, and HUD also receives a small appropriation through the Fair Housing and Equal Opportunity account for the agency to translate documents and provide translation on the phone or at events. Another requirement overseen by FHEO is Section 3, which provides employment and training opportunities for low- and very low-income persons. Section 3 requirements apply to hiring associated with certain housing projects funded by HUD.

Jul 6, 2016

The Economic Effects of Trade: Overview and Policy Challenges

The United States is considering two comprehensive and high-standard mega-regional free trade agreements: the recently concluded Trans-Pacific Partnership (TPP) among the United States and 11 other countries, and the U.S.-European Transatlantic Trade and Investment Partnership (T-TIP), still under negotiation. The 12 TPP countries signed the agreement in February 2016, but the agreement must be ratified by each country before it can enter into force. In the United States this requires implementing legislation by Congress. For Members of Congress and others, international trade and trade agreements offer the prospect of improving national economic welfare, while also raising questions about the potential cost to the economy. Congress plays an important role in shaping and considering legislation to implement U.S. trade agreements. Discussions of trade and trade agreements often focus on a number of issues, including the role that trade plays in the U.S. economy, the impact of trade agreements on employment gains and losses, and the size of the U.S. trade deficit. This report focusses on some of the major issues associated with trade and trade agreements and the impact of trade on the U.S. economy. The key findings include the following: From the perspective of the U.S. economy as a whole, trade is one among a number of forces that drive changes in employment, wages, the distribution of income, and ultimately the standard of living. Most economists argue that broad macroeconomic forces, including technological advances, are generally considered to be more important than trade. Economists generally conclude that trade provides net overall positive benefits to economies. Changes in trading patterns associated with changes in trading partners and composition or with new trade agreements, however, may entail certain adjustment costs, including changes in employment, which can be highly concentrated with some workers, firms, and communities affected disproportionately. In discussions of trade agreements, both proponents and opponents use the results of a variety of trade models and underlying assumptions to estimate the impact on the U.S. economy. Such models have various strengths and weaknesses, although not always in equal proportion. Most economists argue that such estimates represent a partial accounting of the total economic effects and, therefore, are not representative of the overall impact of trade agreements on the U.S. economy. Some argue that trade, trade agreements, and globalization more broadly contributed to growing wealth and income equality within countries. Growing income inequality domestically is not unique to the United States, or even to developed countries, but is found in both developed and developing countries. Despite intense focus in the academic literature, there is no consensus on the direct impact that trade or trade agreements have on income inequality. Congress faces a number of challenging policy issues relative to trade and the impact of trade agreements on the U.S. economy. These challenges include assessing the quality of data on trade and what, if any, additional resources should be devoted to collecting trade data and analyzing the role of trade in the economy. Congress also has legislative and oversight responsibility over various government programs that assist workers and firms adjust to increased competition from trade.

Jul 5, 2016

The Fair Labor Standards Act (FLSA) Child Labor Provisions

The Fair Labor Standards Act (FLSA) of 1938 prohibits the employment of “oppressive child labor” in the United States, which the act defines—with some exceptions—as the employment of youth under the age of 16 in any occupation or the employment of youth under 18 years old in hazardous occupations. The act includes several exemptions, however, that create a complex set of thresholds that depend on the child’s age, local school hours, the nature of the work (e.g., occupation, industry, and work environment), parental involvement in the child’s employment, and other factors. Notably, exemptions to the act’s child labor provisions create separate rules governing children’s employment in agriculture and in non-agricultural work. For non-exempt children, the minimum age for employment in non-agricultural occupations is 18 years for hazardous occupations; 16 years for employment in non-hazardous occupations; and 14 years for a limited set of occupations, with restrictions on hours and work conditions. With some exceptions, the minimum age for employment in agricultural occupations is 16 years for employment in any agricultural job, including hazardous agricultural occupations, with no restrictions on hours of work; 14 years for employment in non-hazardous agricultural jobs outside of school hours; and any age, for employment in non-hazardous agricultural jobs, outside of school hours, with parental consent, when certain conditions are met concerning farm size, the nature and duration of work, and other requirements. The FLSA provisions prohibit (1) the employment of oppressive child labor for children covered by the act, and (2) the interstate shipment of goods produced in an establishment in or about which oppressive child labor is employed. But not all work performed by underage children is unlawful under the act. The FLSA authorizes the Secretary of Labor to conduct workplace inspections and investigations to determine if oppressive child labor is present and enforce the child labor provisions. The Secretary may assess civil money penalties to employers who violate the provisions or pursue action in federal courts. Employers who violate the FLSA child labor provisions may be assessed a civil penalty of up to $11,000 for each employee who was the subject of a child labor violation, or up to $50,000 for each violation that causes the death or serious injury of a minor employee; a penalty may be doubled if the violation is a repeated or willful violation. Since FY2007, the Department of Labor (DOL) has concluded more than 9,700 cases in which employers violated FLSA child labor provisions. U.S. district courts have jurisdiction to enjoin violations of the FLSA’s child labor provisions. Criminal penalties are also prescribed for willful violations of the FLSA’s child labor provisions. Any person who willfully violates these provisions will, upon conviction, be subject to a fine of not more than $10,000, imprisonment for not more than six months, or both. Since the enactment of the FLSA, various courts have resolved cases involving the meaning and operation of the law’s child labor provisions. Early cases focused on the movement of goods produced by minors and whether an employer’s activities were restricted by the provisions. More recent cases have examined the direct employment of minors in oppressive child labor. Although there do not appear to be a substantial number of recent reported cases, DOL continues to pursue enforcement of the child labor provisions through litigation, as evidenced by court filings in 2015. This report describes the FLSA child labor provisions, accompanying DOL regulations, and their administration. Taken together, these constitute what is commonly known as “federal child labor law.” In addition, all states have child labor laws, compulsory schooling requirements, and other laws that govern children’s employment and activities. No state law may weaken the worker protections provided by the FLSA. However, state laws that impose greater worker protections will supersede those provided by the FLSA. Such state protections are not discussed in this report.

Jun 29, 2016

Slow Growth in the Current U.S. Economic Expansion

Between 2008 and 2015, economic growth has been, depending on the indicator, one-quarter to one-half the long-term average since World War II. Economic performance has been variable throughout the post-war period, but recent growth is markedly weaker than previous low growth periods, such as 1974 to 1995. Initially, slow growth was attributed to the financial crisis and its aftermath. But even after the recession ended and financial conditions normalized, growth has remained below average in the current economic expansion. The current expansion has already lasted longer than average, but growth has not picked up at any point during the expansion. By some indicators, growth began to slow during the 2001 to 2007 period, while other indicators suggest that the slowdown is more recent and abrupt. Although this report focuses on the U.S. economy, the same pattern has occurred across other advanced economies. Economists have offered a number of explanations at various points for the relatively slow recovery. These explanations are not necessarily mutually exclusive, and some economists combine elements from more than one in their diagnoses. Slow growth in the immediate aftermath of the crisis could be attributed to deleveraging (debt reduction) by firms and households and financial disruptions caused by the crisis, but those problems were of a temporary nature. There is historical evidence that recoveries are slower after financial crises. Permanent damage from the crisis, called hysteresis, would affect the subsequent recovery. For example, if long-term unemployment resulting from the crisis eroded workers’ skills, it could be more difficult for them to find a job when the labor market has recovered. This factor was of greater importance early in the recovery and of waning importance as the recovery continues because it would be expected to leave the level of GDP permanently lower, but should not affect the long-term growth rate. Subsequent shocks to the economy during the expansion, called headwinds, could also be temporarily holding back growth. Headwinds identified at various points in the expansion include high energy prices, the European economic crisis, the emerging market slowdown, fiscal contraction, and fiscal policy uncertainty. Headwinds can be easy to identify after the fact, but there has been little systematic attempt to determine whether there have also been offsetting tailwinds or whether recent headwinds have been relatively larger than in the past. Secular stagnation is an explanation for the slowdown of a more long-lasting nature that posits, atypically, this expansion cannot generate a healthy pace of economic activity on its own, even with the help of aggressive monetary stimulus. This explanation has focused on persistently low interest rates and low inflation as keys to understanding what has held back growth. This explanation struggles to explain the recent return to nearly full employment, however. An explanation based on structural factors would suggest a more permanent slowdown. This explanation looks at long-term shifts in the sources of long-term growth—growth in labor supply and quality, investment, and productivity. For example, the aging of the population has reduced the growth rate of the labor supply. While it is unlikely that slow growth is being driven solely by structural factors—that would imply the timing of the financial crisis and onset of the growth slowdown was purely coincidental—the longer that slow growth persists, the more it can be attributed to structural factors. As the duration of the slowdown persists, explanations based on temporary factors become less compelling and permanent factors become more compelling—particularly as the labor market approaches full employment.

Jun 24, 2016

Mileage-Based Road User Charges

A mileage-based road user charge would involve assessing owners of individual vehicles on a per-mile basis for the distance the vehicle is driven. Currently, federal highway and public transportation programs are funded mainly by motor fuel tax receipts that flow into the Highway Trust Fund (HTF). The tax rates, set on a per-gallon basis, have not been raised since 1993, and receipts have been insufficient to support the transportation programs authorized by Congress since FY2008. The long-term viability of motor fuels taxes is also questionable because of increasing vehicle fuel efficiency and the wider use of electric vehicles. Economists have favored the use of mileage-based user charges as an alternative to motor fuels taxes to support highway funding. Congress, in Section 6020 of the Fixing America’s Surface Transportation Act (FAST Act; P.L. 114-94), provided $95 million to fund large-scale pilot studies by states or groups of states to demonstrate “user-based revenue systems” to maintain the solvency of the HTF. Under this user charge concept, motorists would pay based on distance driven and, perhaps, other costs of road use, such as wear and tear on roads, traffic congestion, and air pollution. Mileage-based road user charges could range from a flat cent per mile charge based on a simple odometer reading to a variable charge based on a global positioning system (GPS). Other proposals envision mileage-based road user charges that would mimic the way Americans now pay their fuel taxes by collecting the charge at the pump. Most road user charge systems would require electric vehicle users to pay for their use of the roads. Charging by the mile could in itself provide an incentive to drive less. Such a reaction would reduce revenue, however. Implementation of a mileage-based road user charge would have to overcome a number of potential disadvantages relative to the motor fuels tax, including public concern about personal privacy; the higher costs to establish, collect, and enforce (estimates range from 5% to 13% of collections); the administrative challenge of the billing process given the size of the private vehicle fleet (estimated at roughly 256 million vehicles or points of collection); and the setting and adjusting of the road user charge rates, which would likely face as much opposition as increasing the motor fuels taxes. Experiments with road user charges have been conducted in the United States. Although useful, most of these have been small-scale experiments done at the state or local level. Other countries have implemented full-scale road user charge systems that offer more information on the potential costs and benefits. These include road user charges on trucks in Germany, Switzerland, and Austria, as well as charges on both trucks and automobiles in New Zealand.

Jun 22, 2016

Statements of Administration Policy

Presidents communicate their views on pending legislation in a variety of ways. The Office of Management and Budget (OMB) formally communicates the Administration’s views by way of Statements of Administration Policy. Statements of Administration Policy, or SAPs, are designed to signal the Administration’s position on legislation scheduled on the House and Senate floor. SAPs are often the first public document outlining the Administration’s views on pending legislation and allow for the Administration to assert varying levels of support for or opposition to a bill. While Administrations vary as to how frequently and how many SAPs are released, a SAP’s value comes in its ability to speak for the coordinated executive Administration as a whole. SAPs grant the Administration the opportunity to go on record with its reasons for opposing and potentially vetoing legislation. SAPs also enable the Administration to identify key provisions of the legislation that it objects to or finds particularly favorable. SAPs may also provide Congress insights into the Administration’s position towards possible bill implementation. When a SAP indicates that the Administration may veto a bill, it appears in one of two ways: (1) a statement indicating that the President intends to veto the bill, or (2) a statement that agencies or senior advisors would recommend that the President veto the bill. These two types indicate degrees of veto threat certainty. Statements of Administration Policy have generally adhered to the same structure from Administration to Administration. SAPs are released concurrent with action in the House Rules Committee, or on the floor of the House or the Senate. A SAP is released at such a time in the legislative process so as to maximize the Administration’s influence in the policy outcome.

Jun 21, 2016

Qatar: Governance, Security, and U.S. Policy

The state of Qatar, a member of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, Qatar, United Arab Emirates, Bahrain, and Oman), has employed its ample financial resources to try to “punch above its weight” on regional and international affairs. Qatar has intervened, directly and indirectly, in several regional conflicts—sometimes in partnership with the United States and sometimes as part of a separate initiative of like-minded GCC states. It has also sought to establish itself as an indispensable interlocutor on some issues, such as those involving the Palestinian Islamist organization Hamas and the Taliban insurgent group in Afghanistan. Qatar’s leaders have also sought to promote what they assert are new models of Arab governance and relationships between Islam and the state—in both cases causing strife and dispute with Qatar’s GCC allies. The voluntary relinquishing of power in 2013 by Qatar’s former Amir (ruler), Shaykh Hamad bin Khalifa Al Thani, departed sharply from GCC patterns of governance in which leaders remain in power until they die or are removed by rivals in their ruling families. Qatar’s support for regional Muslim Brotherhood organizations caused significant diplomatic confrontations with Saudi Arabia and the UAE, in particular, which assert that the Brotherhood is a threat to regional security and to the internal security of the GCC states themselves. On Iran, Qatar has generally struck a middle ground within the GCC by supporting efforts to limit Iran’s regional influence while at the same time maintaining consistent channels of communication to Iranian leaders. As do the other GCC leaders, Qatar’s leaders apparently view the United States as the ultimate guarantor of Gulf security. Qatar hosts substantial numbers of U.S. forces at its most sensitive military facilities, including the forward headquarters for U.S. Central Command (CENTCOM). The United States and Qatar have had a formal Defense Cooperation Agreement (DCA) since 1992, which provides for the hosting and other aspects of U.S.-Qatar defense cooperation, including sales of U.S. arms to Qatar. U.S. forces in Qatar are involved in operations all over the region, including against the Islamic State organization in Iraq and Syria. At the same time, organizations such as the Islamic State and Al Qaeda profess ideologies that are apparently attractive to some in Qatar, particularly hardline Islamists and Arab nationalists, and there have been frequent accusations by international observers that some Qataris have contributed funds and services to these groups. Members of Congress generally have taken into account these and all the other aspects of Qatar’s policies in consideration of U.S. arms sales to Qatar. Even though Qatar’s former Amir stepped down voluntarily, U.S. and international reports criticize Qatar for numerous human rights problems, most of which are common to the other GCC states. A recent Gulf-wide trend also apparent in Qatar has been a crackdown on dissent against the ruling establishment on social media networks. Qatar is also the only one of the smaller GCC states that has not yet formed a legislative body, although reportedly such a body, and elections for it, are planned. Qatar is wrestling with the downturn in global crude oil prices since 2014, as are the other GCC states, Qatar appeared to be better positioned to weather the downturn than are most of the other GCC states because of its development of a large natural gas export infrastructure and its small population. However, natural gas prices are also down, and Qatar shares with virtually all the other GCC states a lack of economic diversification and reliance on revenues from sales of hydrocarbon products. For more, see CRS In Focus IF10351, Qatar, by Christopher M. Blanchard.

Jun 20, 2016

Carl D. Perkins Career and Technical Education Act of 2006: An Overview

The Carl D. Perkins Career and Technical Education Act of 2006 (Perkins IV; P.L. 109-270) is the main federal law supporting the development of career and technical skills among students in secondary and postsecondary education. Perkins IV aims to improve academic outcomes and preparedness for higher education or the labor market among students enrolled in career and technical education (CTE) programs, previously known as vocational education programs. The federal government has a long history of supporting programs to develop students’ career and technical skills, dating back to the 19th century. Perkins IV, the most recent federal law targeting CTE, was passed in 2006 and authorized through FY2012. The authorization was extended through FY2013 under the General Education Provisions Act, and Perkins IV has continued to receive fairly constant appropriations through FY2016. The total appropriations for Perkins IV in FY2016 were approximately $1.1 billion. This report provides a summary of Perkins IV. The largest program authorized by Perkins IV is the Basic State Grants program. Key features of this program include the following: formula grants to the states to develop and improve CTE programs at the secondary and postsecondary levels; a state allocation formula that allocates money based on population and per capita income factors; a distribution of at least 85% of the funds from the states to the local level; state flexibility in deciding the allocation of state funds between secondary and postsecondary local CTE providers; requirements for states to develop and implement programs of study, which are nonduplicative sequences of courses that span the secondary and postsecondary levels and lead to an industry-recognized credential, certificate, or postsecondary degree; core indicators of performance for accountability purposes, with target levels of performance negotiated between each state and the Secretary of Education; disaggregation of performance data by special populations and subgroups defined in Title I of the Elementary and Secondary Education Act of 1965, as amended by the Every Student Succeeds Act of 2015; and the requirement for states to prepare and implement program improvement strategies if the target levels on core indicators of performance are not met. Perkins IV also authorizes additional programs: Tech Prep, National Programs, Tribally Controlled Postsecondary Career and Technical Institutions (TCPCTI), and Occupational Employment Information. Of these, only National Programs and TCPCTI received funding for FY2011-FY2016.

Jun 20, 2016

Overseas Contingency Operations Funding: Background and Status

The Department of Defense (DOD) estimates that Congress has appropriated $1.6 trillion for war-related operational costs of the DOD since the terror attacks of September 11, 2001. When combined with an estimated $123.2 billion in related State Department and Foreign Operations appropriations, the DOD, Department of State (DOS), and U.S. Agency for International Development (USAID) have received an estimated $1.7trillion for activities and operations in support of U.S. response to the 9/11 attacks. Funding for these activities has been largely provided through supplemental appropriation acts or has been designated as an “emergency” or “Overseas Contingency Operation/Global War on Terror” (OCO/GWOT) requirement in annual agency budget requests—or both. Funds designated as such are not subject to procedural limits on discretionary spending in congressional budget resolutions or to the statutory discretionary spending limits established by the Budget Control Act of 2011 (BCA). While there is no overall statutory limit on the amount of emergency or OCO/GWOT-designated spending, both Congress and the President have a fundamental role in determining how much OCO/GWOT and emergency spending is provided each fiscal year. Congress must designate any such funding as OCO/GWOT in statute on an account by account basis. The President is also required to designate it as such after it is appropriated in order for it to be available for expenditure. Definitions of what constitutes emergency or OCO/GWOT activities and expenses have shifted over time, reflecting differing viewpoints about the extent, nature, and duration of the wars in Iraq and Afghanistan. Funding designated OCO/GWOT has also been recently used to fund base budget requirements of the DOD and DOS and to provide funding to prevent or respond to crises abroad, including armed conflict, as well as human-caused and natural disasters. The first use of an OCO/GWOT designation in budgetary law was in the 2011 BCA. Prior to the BCA, the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA) only allowed “emergency” requirements to be excluded from budget control limits. The BCA added the designation “Overseas Contingency Operation/Global War on Terror” to the BBEDCA exemption, thereby providing Congress and the President with an alternate way to exclude funding from the BCA limits without using the “emergency” designation. The Bipartisan Budget Act of 2015 (BBA) raised the BCA discretionary spending limits for Fiscal Year (FY) 2016 and FY2017 for both the defense and nondefense categories, and also specified an expected level for OCO spending for those years. The President’s FY2017 OCO budget request of $58.8 billion for defense activities matches BBA-directed levels. DOD’s OCO budget primarily pays for deploying and supporting U.S. troops, conducting and supporting military operations, repairing war-worn equipment, and transporting troops and equipment to and from the war zone. In addition, OCO funding finances training for the Afghan and Iraqi security forces and other counterterrorism and partnership-building activities with key foreign partners around the world. The DOD Comptroller has indicated that the majority of the FY2017 OCO request centers on supporting Operation Freedom’s Sentinel in Afghanistan; Operation Inherent Resolve in Iraq and Syria; and increased efforts to support European allies and deter Russian aggression—all while supporting what is referred to as a “partnership-focused approach to counterterrorism” and complying with the BCA funding caps. However, the President’s FY2017 DOD OCO request also includes $5.2 billion for base budget activities—normal military operations and procurement that could not be funded in the DOD’s base budget due to the BCA statutory limits. The $14.9 billion in FY2017 OCO funds for the State Department is requested to “provide support to, respond to, recover from, or prevent crises abroad, including armed conflict, as well as human-caused and natural disasters.” Specifically, the DOS request includes funding to contribute to peacekeeping missions and special political missions, increase efforts to destroy the Islamic State, and sustain security programs and embassy construction at high risk posts. In its FY2017 budget justification documents, DOS included a request that the BCA caps be further increased, stating that “the FY2017 President’s Budget assumes that further adjustments to the Budget Control Act’s discretionary spending limits will be needed to sustain these activities in FY2018.” In marking-up the National Defense Authorization Act for FY2017, the House Armed Services Committee (HASC) moved an additional $18.0 billion in requirements from the President’s DOD base budget request to the OCO budget. If enacted, the combined actions proposed by the Administration and the HASC would effectively exempt $23.1 billion in FY2017 funding for defense from the spending caps set by the BCA—without providing an equivalent increase in spending for nondefense programs. The Administration and the minority leadership in both congressional chambers have objected to allowing an increase in defense spending by raising the defense cap—or adding OCO spending for defense—without providing a comparable increase for nondefense spending in the overall federal budget. For that reason, the authorization and appropriation of OCO funding for FY2017 looms large over the policy debate as Congress considers the FY2017 federal budget. For additional information on related FY2017 budget issues see CRS Report R44428, The Federal Budget: Overview and Issues for FY2017 and Beyond, by Grant A. Driessen, CRS Report R44454, Defense: FY2017 Budget Request, Authorization, and Appropriations, by Pat Towell and Lynn M. Williams, and CRS Report R44391, FY2017 State, Foreign Operations and Related Programs Budget Request: In Brief, by Susan B. Epstein, Marian L. Lawson, and Alex Tiersky.

Jun 13, 2016

Legislative Branch: FY2017 Appropriations

The legislative branch appropriations bill provides funding for the Senate; House of Representatives; Joint Items; Capitol Police; Office of Compliance; Congressional Budget Office (CBO); Architect of the Capitol (AOC); Library of Congress (LOC), including the Congressional Research Service (CRS); Government Publishing Office (GPO); Government Accountability Office (GAO); Open World Leadership Center; and the John C. Stennis Center. The FY2017 legislative branch budget request of $4.659 billion was submitted on February 9, 2016. By law, the President includes the legislative branch request in the annual budget submission without change. The House and Senate Appropriations Committees’ Legislative Branch Subcommittees held hearings in March to consider the FY2017 legislative branch requests. On April 20, 2016, the House Appropriations Committee Legislative Branch Subcommittee held a markup of the draft bill. The bill was ordered reported to the full committee by voice vote. On May 17, the House Appropriations Committee held a markup of the bill. Seven amendments were considered: two were adopted, four were not adopted, and one was withdrawn. The bill was ordered reported by voice vote. It would provide $3.481 billion, not including Senate items (H.R. 5325, H.Rept. 114-594). On May 19, the Senate Appropriations Committee held a markup of its version of the FY2017 bill. It would provide $3.021 billion, not including House items. The bill was reported by a vote of 30-0 (S. 2955, S.Rept. 114-258). The House- and Senate-proposed totals for legislative branch activities (including all House and Senate items) differ by $37.0 million, with the House proposing $4.436 billion for FY2017 and the Senate proposing $4.399 billion. Legislative branch funding peaked in FY2010, and the FY2016 enacted level of $4.363 billion (P.L. 114-113) remains below the FY2009 level of $4.501 billion. The FY2016 level represented an increase of $63 million (+1.5%) from the FY2015 level of $4.300 billion, and the FY2015 level represented an increase of $41.7 million (+1.0%) from the FY2014 funding level of $4.259 billion. The FY2013 act funded legislative branch accounts at the FY2012 enacted level, with some exceptions (also known as “anomalies”), less across-the-board rescissions that applied to all appropriations in the act, and not including sequestration reductions implemented on March 1. The FY2012 level represented a decrease of $236.9 million (-5.2%) from the FY2011 level, which itself represented a $125.1 million decrease (-2.7%) from FY2010. The smallest of the appropriations bills, the legislative branch comprises approximately 0.4% of total discretionary budget authority.

Jun 2, 2016

Video Broadcasting from the Federal Courts: Issues for Congress

Members of Congress, along with the legal community, journalists, and the public, have long considered the potential merits and drawbacks of using video cameras to record and/or broadcast courtroom proceedings. The first bill to propose video camera use in the federal courts was introduced in the House of Representatives in 1937, and since the mid-1990s, Members of Congress in both chambers have regularly introduced bills to expand the use of cameras in the federal courts and have sometimes held hearings on the subject. Video cameras are commonly used in state and local courtrooms throughout the United States to record and broadcast proceedings. All 50 state supreme courts in the United States allow video cameras under certain conditions, and cameras are allowed in many states for trial and appellate proceedings. Yet video cameras are not widely used in federal circuit and district courts, and they are not used at all in the Supreme Court. While Rule 53 of the Federal Rules of Criminal Procedure has banned photography and broadcasting of any federal criminal proceedings since 1946, the Judicial Conference of the United States conducted pilot programs from 1991 to 1994 and from 2011 to 2015 to study the use of video cameras in federal courtrooms in civil proceedings. As a result of their participation in these pilot programs, two federal circuit courts and 14 federal district courts presently allow video cameras in their courtrooms under certain circumstances. Yet even as the use of cameras in courts has become more widespread during the past few decades, many of the fundamental questions about the use of video cameras in the courts remain relatively unchanged. The debate regarding video cameras in federal courtrooms revolves around these and other issues: the appropriate degree of congressional involvement in matters related to the operation of the federal judiciary; the degree of access the public and media should have to the federal courts; the advantages and disadvantages of additional judicial transparency; the potential effects of cameras in the courtroom on ensuring a fair trial and protecting participants’ privacy; and the possible ways in which cameras may alter the way courts conduct business and affect judicial integrity. Addressing these issues often involves balancing one consideration against another. For example, protections to make sure the accused receives a fair trial might lead to more restricted public or media access to the courts. Generally, while Congress may legislate in this area, to date, considerable deference has been given to the Supreme Court Justices and other officials within the federal judiciary in determining if and how video recording and broadcasting should be implemented in the federal courts. A study based on the Judicial Conference’s 2011-2015 pilot program is expected later this year and may alter considerations in this policy debate.

Jun 1, 2016