CRS Reports

The Impact of the Federal Income Tax on Poverty: Before and After the 2017 Tax Revision (“TCJA”; P.L. 115-97)

The federal individual income tax is structured so that the poor owe little or no income tax. In addition, the federal individual income tax (hereinafter referred to simply as the income tax) increases the disposable income of many poor families via refundable tax credits—primarily the earned income tax credit (EITC) and the refundable portion of the child tax credit, referred to as the additional child tax credit, or ACTC. These credits are explicitly designed to benefit low-income families with workers and children and can significantly boost families’ disposable income, lifting many of these families above the poverty line. Using the federal government’s Supplemental Poverty Measure (SPM), CRS estimates that under current law, the income tax reduced total poverty by 15% (from 14.5% in poverty to 12.3% in poverty). The impact of the income tax on the overall poverty rate was larger than the impact of many needs-tested benefits programs targeted toward the poor. In contrast, the income tax’s ability to lift the poorest Americans out of poverty—to reduce the “poverty gap”—was limited in comparison to many needs-tested programs. (The poverty gap is the difference between the poverty threshold and a family’s disposable income, aggregated over all poor families, and is a measure of the degree of poverty.) CRS estimates that under current law, the income tax reduced the poverty gap by about $13.9 billion annually (from $150.8 billion to $136.9 billion), approximately half the effect of other needs-tested programs. Virtually all of the poverty reduction from the income tax—both in terms of reducing poverty rates and the poverty gap—was concentrated among families with children and workers. For example, CRS estimates that poverty among children who lived in families with workers fell by almost 40% (from 14.7% in poverty to 8.9% in poverty) as a result of the income tax. For nonaged (i.e., nonelderly) adults in families with children and workers, poverty fell by almost a third (from 12.3% in poverty to 8.3% in poverty). (In contrast, CRS estimates that the poverty rates among individuals who lived in families with no workers were unchanged by the income tax.) Similarly, all of the estimated $13.9 billion in poverty gap reduction from the current income tax occurred among families with children and workers. The current income tax includes the effects of legislative changes made by P.L. 115-97, commonly referred to as the Tax Cuts and Jobs Act (TCJA). The TCJA made numerous changes to the federal income tax system, including many that affect individuals and families. A comparison of the effect of the current income tax (i.e., the post-TCJA income tax) and the pre-TCJA income tax on poverty rates and the poverty gap (assuming all else unchanged) provides one measure of the law’s impact on poverty. CRS estimates suggest that the TCJA marginally reduced poverty rates and the poverty gap, with the impact of the post-TCJA income tax similar to the impact of the pre-TCJA income tax. This suggests the law provided relatively small benefits to poor families. Insofar as policymakers are interested in expanding the antipoverty impact of the income tax, they could expand or modify the EITC or ACTC, or create new refundable tax credits targeted toward the poor. However, refundable tax credits are subject to several limitations as a poverty reduction policy: the current credits primarily benefit those who work (and have children), limiting their ability to reduce poverty among those who do not or cannot work; they are received only once a year when income tax returns are filed, limiting their ability to help the poor meet ongoing basic needs; and they are difficult for the IRS to administer, subjecting the credits and their recipients to additional scrutiny. Overview of the Estimated Antipoverty Impact of the Federal Income Tax Estimated Before-Tax and After-Tax Poverty Rates for Selected Individuals After Tax Individual by Family Type Before Tax Current Law Income Tax (Post-TCJA) Prior Law Income Tax (Pre-TCJA) All Individuals Living in Families of All Types 14.5% 12.3% 12.5% Children 17.5% 12.0% 12.3% Nonaged Adults in Families with Children 14.5% 10.6% 10.8% Individuals Living in Families with Workers 10.8% 8.1% 8.3% Children 14.7% 8.9% 9.2% Nonaged Adults in Families with Children 12.3% 8.3% 8.5% Individuals Living in Families with No Workers 34.7% 34.7% 34.7% Children 64.1% 64.1% 64.1% Nonaged Adults in Families with Children 64.3% 64.3% 64.3% Estimated Before-Tax and After-Tax Poverty Gap for Selected Poor Families After Tax Family Type Before Tax ($ in billions) Current Law Income Tax (Post-TCJA) ($ in billions) Prior Law Income Tax (Pre-TCJA) ($ in billions) All Poor Families 150.8 136.9 138.1 Poor Families with Children 52.3 38.3 39.1 With Workers 37.8 23.9 24.7 With No Workers 14.5 14.5 14.5 Poor Families with Aged Adults, but no Children 29.5 29.6 29.6 Poor Families without Children or Aged Adults 69.1 69.0 69.4 Source: CRS estimates using TRIM3 and the ASEC 2017. For methodology, see Appendix A. Note: The 2018 parameters of the current-law income tax (post-TCJA) and the prior-law income tax (pre-TCJA) are modeled. Due to data limitations, the impacts of the federal income tax in effect in 2018 (both pre- and post-TCJA) are modeled as if they were in effect in 2016. Items may not sum to totals due to rounding.

Oct 17, 2019

CFIUS: New Foreign Investment Review Regulations

Oct 16, 2019

Broadband Data and Mapping: Background and Issues for the 116th Congress

Access to high-speed internet, also known as broadband, is increasingly important in the 21st century, as more and more aspects of everyday life, such as job applications and homework assignments, become digital. Some areas of the United States—particularly rural areas—have limited or no access to broadband due to market, geographic, or demographic factors. The gap between those who have access to broadband and those who do not is referred to as the digital divide. The Federal Communications Commission (FCC), National Telecommunications and Information Administration (NTIA), and Rural Utilities Service (RUS) have developed maps to help guide resources toward closing the digital divide. Since 2018, the FCC has had the responsibility for developing a comprehensive map of broadband access in the United States. However, the data available to determine where to invest resources may be incomplete or inaccurate. For example, the FCC’s current methodology considers a census block served if at least one home or business in that census block has broadband access. In addition, the data is self-reported by broadband service providers and not independently verified outside the FCC. On August 1, 2019, the FCC adopted a Report and Order introducing a new process, called the Digital Opportunity Data Collection (DODC), for collecting fixed broadband data. The new process would require broadband service providers to provide geospatial broadband coverage maps—which provide greater granularity than census blocks—indicating where fixed broadband service is actually made available. The new process would also implement a crowdsourcing mechanism for public feedback, as individual consumers will likely know whether they have access to broadband. The FCC also adopted a Second Further Notice of Proposed Rulemaking (FNPRM), seeking comment on issues including the need for additional granularity and the potential sunset of the current data collection process upon complete implementation of the DODC. As the FCC implements the DODC process, Congress has a wide variety of options for oversight and legislation. For example, Congress may continue to consider issues such as the optimal level of data granularity, the process for independent validation, and costs and burdens of broadband data collection on both consumers and broadband service providers. Congress could consider providing federal funding for a broadband mapping pilot to thoroughly assess these factors and assist in determining how to strike the desired balance, as well as exploring what funding levels for ongoing broadband map maintenance would be sustainable and where the necessary funding would come from. Congress may debate whether to leave factors within the proposed DODC, such as the current delegation of broadband data collection authority to the Universal Service Administrative Company, to the discretion of the FCC, or Congress may wish to enact legislation to keep broadband data collection efforts under the purview of the FCC. To assist with future federal action, Congress may take into consideration successful state broadband mapping efforts, which could provide additional insight into models that could be replicated on a national scale. Congress may continue to debate potential short-term and long-term broadband mapping solutions, including whether federal funding for rural broadband expansion should be withheld until mapping issues are resolved. In conjunction, Congress may also contemplate whether to provide oversight over federal agency broadband activities or enact legislation regarding interagency coordination efforts on broadband deployment to reduce the potential for duplicative funding. Another consideration for Congress may be whether the FCC’s Fixed Broadband Deployment Map could be updated more frequently so that data reflects continuing network changes and, if so, whether that would impose a significant burden on broadband service providers. Bills addressing many of these broadband mapping issues have been introduced in the 116th Congress, including the Save the Internet Act of 2019 (H.R. 1644), passed by the House on April 10, 2019, and the ACCESS Broadband Act (H.R. 1328), passed by the House on May 8, 2019.

Oct 16, 2019

Comparing DHS Component Funding, FY2020: In Brief

(TO BE SUPPRESSED) Generally, the homeland security appropriations bill includes all annual appropriations for the Department of Homeland Security (DHS), providing resources to every departmental component. The Tables and Figure show DHS’s new discretionary budget authority enacted for FY2019 and requested by the Administration for FY2020, as well as the House and Senate committee-reported response broken down by component. Department of Homeland Security DHS budget Appropriations FY2019, FY2020 funding analysis baseline comparison components

Oct 15, 2019

The Diversity Immigrant Visa Program

The purpose of the diversity immigrant visa program (DV program, sometimes called “the green card lottery” or “the visa lottery”) is, as the name suggests, to foster legal immigration from countries other than the major sending countries of current immigrants to the United States. Current law weights the allocation of immigrant visas primarily toward individuals with close family in the United States and, to a lesser extent, toward those who meet particular employment needs. The diversity immigrant category was added to the Immigration and Nationality Act (INA) by the Immigration Act of 1990 (P.L. 101-649) to stimulate “new seed” immigration (i.e., to foster new, more varied migration from other parts of the world). The DV program currently makes 50,000 visas available annually to natives of countries from which immigrant admissions were less than 50,000 over the preceding five years combined. The formula for allocating these visas is specified in statute: visas are divided among six global geographic regions, and each region and country is identified as either high-admission or low-admission based on how many immigrant visas were given to foreign nationals from each region and country over the previous five-year period. Higher proportions of diversity visas are allocated to low-admission regions and countries. The INA limits each country to 7% (3,500, currently) of the total and provides that Northern Ireland be treated as a separate foreign state. Because demand for diversity visas greatly exceeds supply, a lottery system is used to select individuals who may apply for them. Those selected by lottery (“lottery winners”), like all other foreign nationals wishing to come to the United States, must undergo reviews performed by Department of State consular officers abroad and Department of Homeland Security immigration officers upon entry to the United States. These reviews are intended to ensure that the foreign nationals are not ineligible for visas or admission to the United States under the grounds for inadmissibility spelled out in the INA. To be eligible for a diversity visa, the INA requires that a foreign national have at least a high school education or the equivalent, or two years’ experience in an occupation that requires at least two years of training or experience. The foreign national or the foreign national’s spouse must be a native of one of the countries listed as a foreign state qualified for the diversity visa program. The distribution of diversity visas by global region of origin has shifted over time, with higher shares coming from Africa and Asia in recent years compared to earlier years when Europe accounted for a higher proportion. Of all those admitted through the program from FY1995 (the first year it was in full effect) through FY2017 (the most recent year for which data are available), individuals from Africa accounted for 40% of diversity immigrants, while Europeans accounted for 31% and Asians for 25%. Some argue that the DV program should be eliminated and its visas re-allocated for employment-based visas or backlog reduction in various visa categories. Critics of the DV program warn that it is vulnerable to fraud and misuse and is potentially an avenue for terrorists to enter the United States, citing the difficulties of performing background checks in many of the countries whose citizens are eligible for a diversity visa. Critics also argue that admitting immigrants on the basis of their nationality is discriminatory and that the reasons for establishing the DV program are no longer germane. Supporters of the program argue that it provides “new seed” immigrants for a system weighted disproportionately to family-based immigrants from a handful of countries. Supporters contend that fraud and abuse have declined following measures put in place by the State Department, and that the system relies on background checks for criminal and national security matters that are performed on all prospective immigrants seeking to come to the United States, including those applying for diversity visas. Supporters also contend that the DV program promotes equity of opportunity and serves important foreign policy goals.

Oct 15, 2019

Capital Markets: Asset Management and Related Policy Issues

The asset management industry is large and complex. Asset management companies—also known as investment management companies, or asset managers—are companies that manage money for a fee with the goal of growing it for those who invest with them. The most well-known product these companies create are investment funds. Many types of investment funds exist, including mutual funds, exchange-traded funds (ETFs), hedge funds, private equity, and venture capital. Their business practices and the types of regulatory requirements to which they are subject are far from standardized. Investment funds differ by, among other things, asset risk profile, investor access, portfolio company operations, and the ease of buying or selling their shares. In addition to investment funds, the asset management industry also consists of entities that connect funds to investors and other services, such as investment advice providers and custodians. Asset managers collectively manage trillions in assets, including investment savings, of nearly half of all U.S. households. The industry has experienced periods of high growth largely attributable to retail investors’ increased reliance on asset managers to invest their money for them rather than investing their own money themselves. The Securities and Exchange Commission (SEC) is the primary regulator overseeing the asset management industry. The industry is governed by a somewhat fragmented regulatory regime stemming from several different statutes. Most of the regulatory framework was created in the 1930s and 1940s, but the business practices and trends affecting the industry are evolving. Examples of this evolution include (1) the rapid growth of the industry; (2) the increasing dependency of American businesses on capital market financing; (3) the shift from active to passive investment style; and (4) the expansion of the private securities markets. Congress has shown interest in issues relating to the asset management industry. During the 116th Congress, lawmakers have held related hearings on asset management, financial innovation, investor protection, financial stability, and leveraged lending. Three areas that have been of particular interest to many are as follows: Whether the asset management industry has any implications for financial stability in the United States. Some financial authorities state that asset management companies did not pose much concern to financial stability during the 2007-2009 financial crisis period, with the exception of money market mutual funds. This is because asset managers are generally agents who provide investment services to clients without taking direct risk of financial loss. But some argue that structural vulnerabilities do exist and could be observed in certain financial instruments. Their implications, however, are uncertain. Whether regulation of the asset management industry provides sufficient access and protection for retail investors. The investor protection concerns center on investor access restrictions, especially for private funds. Private funds are perceived to have a higher risk and return profile relative to public funds, thus leading to discussions of investor protection and equal access to investment opportunities. The impact of financial technology on the industry, and whether the current regulatory framework is adequate to address these new technologies. Financial innovation is an integral part of the asset management industry’s development, and it creates policy and regulatory debates regarding the extent to which the new technologies are appropriately served by the existing regulatory regime. One of the common goals of policymaking in this area is to protect investors without hindering innovation.

Oct 11, 2019

U.S.-China Tariff Actions by the Numbers

Since early 2018, the United States and China have imposed a series of tariffs against one another’s products. These tariffs now affect the majority of trade between the two countries. U.S. tariffs imposed under Section 301 of the Trade Act of 1974 (which followed an investigation on China’s intellectual property rights practices) and China’s retaliatory tariffs affect the largest share of U.S.-China trade. Earlier U.S. tariffs (and Chinese retaliation) on steel and aluminum (Section 232) and solar panels and washing machines (Section 201) also affect U.S.-China trade. The Trump Administration argues that by reducing U.S. demand for Chinese exports, the tariffs are an effective tool to pressure China to change its policies. The tariffs, however, also impose costs on U.S. stakeholders—U.S. tariffs increase the price U.S. firms and consumers pay on imports from China, while China’s retaliatory tariffs disadvantage U.S. exporters by making U.S. products relatively more expensive in the Chinese market.

Oct 9, 2019

The Controlled Substances Act (CSA): A Legal Overview for the 116th Congress

The Controlled Substances Act (CSA) imposes a unified legal framework to regulate certain drugs—whether medical or recreational, legally or illicitly distributed—that are deemed to pose a risk of abuse and dependence. The CSA does not apply to all drugs. Rather, it applies to specific substances and categories of substances that have been designated for control by Congress or through administrative proceedings. The statute also applies to controlled substance analogues that are intended to mimic the effects of controlled substances and certain precursor chemicals commonly used in the manufacturing of controlled substances. Controlled substances subject to the CSA are divided into categories known as Schedules I through V based on their medical utility and their potential for abuse and dependence. Substances considered to present the greatest risk to the public health and safety are subject to the most stringent controls and sanctions. A lower schedule number corresponds to greater restrictions, so substances in Schedule I are subject to the strictest controls, while substances in Schedule V are subject to the least strict. Most substances subject to the CSA are also subject to other federal or state regulations, including the Federal Food, Drug, and Cosmetic Act (FD&C Act). The Drug Enforcement Administration (DEA) is the federal agency primarily responsible for implementing and enforcing the CSA. DEA may designate a substance for control through notice-and-comment rulemaking if the substance satisfies the applicable statutory criteria. The agency may also place a substance under temporary control on an emergency basis if the substance poses an imminent hazard to public safety. In addition, DEA may designate a substance for control under the United States’ international treaty obligations. In the alternative, Congress may place a substance under control by statute. The CSA simultaneously aims to protect public health from the dangers of controlled substances diverted into the illicit market while also seeking to ensure that patients have access to pharmaceutical controlled substances for legitimate medical purposes. To accomplish those two goals, the statute creates two overlapping legal schemes. Registration provisions require entities working with controlled substances to register with DEA and implement various measures to prevent diversion and misuse of controlled substances. Trafficking provisions establish penalties for the production, distribution, and possession of controlled substances outside the legitimate scope of the registration system. DEA is primarily responsible for enforcing the registration provisions and works with the Criminal Division of the Department of Justice to enforce the trafficking provisions of the CSA. Violations of the registration provisions generally are not criminal offenses, but certain serious violations may result in criminal prosecutions, fines, and even short prison sentences. Violations of the trafficking provisions are criminal offenses that may result in large fines and lengthy prison sentences. Drug regulation has received significant attention from Congress in recent years, with a number of bills introduced in the 116th Congress that would amend the CSA in various ways. For example, after Congress passed several bills in recent years in response to the opioid crisis, additional proposals aimed at addressing the crisis are pending before the 116th Congress, including the John S. McCain Opioid Addiction Prevention Act (H.R. 1614, S. 724), which would limit practitioners’ ability to prescribe opioids; the LABEL Opioids Act (H.R. 2732, S. 1449), which would require prescription opioids to bear certain warning labels; and the Ending the Fentanyl Crisis Act of 2019 (S. 1724), which would increase criminal liability for illicit trafficking in the powerful opioid fentanyl. The 116th Congress has also considered measures specifically seeking to address the proliferation of synthetic drugs that mimic the effects of fentanyl, including the Stopping Overdoses of Fentanyl Analogues Act (H.R. 2935, S. 1622) and the Modernizing Drug Enforcement Act of 2019 (H.R. 2580). In addition, multiple recent proposals would seek to address the divergence between federal and state marijuana laws. For example, the Secure And Fair Enforcement Banking Act of 2019 (SAFE Banking Act) (H.R. 1595, S. 1200) would seek to protect depository institutions that provide financial services to cannabis-related businesses from regulatory sanctions, and the Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act) (H.R. 2093, S. 1028) would amend the CSA so that most provisions concerning marijuana do not apply to marijuana-related activities that comply with state law. Other proposals, such as the Legitimate Use of Medicinal Marihuana Act (H.R. 171) and the Marijuana Justice Act of 2019 (H.R. 1456, S. 597) could address the gap between federal and state law in the area of marijuana regulation by moving marijuana from Schedule I to a less restrictive schedule or remove marijuana from the CSA’s schedules. Finally, recent legislative proposals would aim to facilitate clinical research involving controlled substances, particularly marijuana. These various proposals raise a number of legal questions as Congress contemplates whether to change the laws governing controlled substances.

Oct 9, 2019

Brexit: Status and Outlook

After the 2016 referendum in which 52% of voters in the United Kingdom (UK) favored leaving the European Union (EU), Brexit was originally scheduled to occur on March 29, 2019. In early 2019, however, Parliament repeatedly rejected the withdrawal agreement negotiated between Prime Minister Theresa May’s government and the EU without supporting any alternative. In April 2019, the EU granted the UK an extension until October 31, 2019. Recent Developments and Possible Scenarios After becoming Prime Minister in July 2019, Boris Johnson asserted that Brexit will take place on October 31 and that he will not request another extension. Johnson declared his intention to renegotiate a new agreement with the EU that drops the Northern Ireland backstop provision, which would keep the UK in the EU customs union until the two sides agreed on their future trade relationship. The backstop provision was included in the rejected withdrawal agreement as an insurance policy to maintain an open border between Northern Ireland (part of the UK) and the Republic of Ireland (an EU member state) while safeguarding the rules of the EU single market. The backstop was a main reason many Members of Parliament voted against the deal. The UK and EU have sought to avoid a no-deal Brexit, a scenario in which the UK leaves the EU without a negotiated withdrawal agreement, due to concerns that it could cause considerable disruption with regard to the economy, trade, security, Northern Ireland, and other issues. In September 2019, Parliament passed legislation requiring the UK government to request another extension by October 19 if it has not reached a withdrawal agreement with the EU. The dynamics of Brexit are likely to evolve in relation to pivotal events and deadlines in October 2019. Possible scenarios include a new withdrawal agreement, another extension, a no-deal Brexit, and an early general election in the UK. Brexit, Trade, and Economic Impact The various Brexit scenarios have considerable implications for the UK’s trade arrangements. Outside the EU customs union, the UK would regain an independent national trade policy, a major selling point for many Brexit supporters who advocate negotiating new bilateral trade deals around the world, including with the United States. The UK likely would seek to negotiate a free trade agreement (FTA) with the EU. A Brexit in which the UK remains a member of the EU single market or customs union would provide more barrier-free access to the EU, but the UK would have to follow most EU rules without having a say in how they are made. Analysts predict that the disruption resulting from any form of Brexit likely will have at least a short-term negative economic impact on the UK. A no-deal Brexit represents the most disruptive and unpredictable scenario, and many businesses in the UK are taking steps to mitigate potential economic losses. Northern Ireland Many observers have expressed concerns that Brexit could destabilize the Northern Ireland peace process and lead to a hard border with physical infrastructure and customs checks between Northern Ireland and the Republic of Ireland. Although conditions have improved considerably since the 1998 peace accord (known as the Good Friday Agreement or the Belfast Agreement), concerns about the fragility of peace and security in Northern Ireland remain. A Brexit that results in a hard border likely would have negative economic effects for Northern Ireland and constitute a pressure point in the continuing implementation of the peace agreement. U.S.-UK Relations and Congressional Interest President Trump and Administration officials have expressed support for Brexit. Members of Congress hold mixed views. The UK likely will remain a leading U.S. partner in addressing many foreign policy and security challenges, but Brexit has fueled a debate about whether the UK’s global role and influence is likely to be enhanced or diminished. In 2018, the Administration notified Congress of its intention to negotiate a bilateral FTA with the UK after Brexit. Congress would likely need to pass implementing legislation before the potential FTA could enter into force. Many in Congress also are concerned about Brexit’s possible implications for Northern Ireland’s peace process and economy.

Oct 4, 2019

U.S. Farm Support: Compliance with WTO Commitments

As a member of the World Trade Organization (WTO) agreements, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy as spelled out in the Agreement on Agriculture (AoA). Since establishment of the WTO on January 1, 1995, the United States has complied with its WTO spending limits on market-distorting types of farm program outlays (referred to as amber box spending). However, the addition of large, new trade assistance payments to producers in 2018 and 2019, on top of existing farm program support, has raised concerns by some U.S. trading partners, as well as market watchers and policymakers, that U.S. domestic farm subsidy outlays might exceed the annual spending limit of $19.1 billion agreed to as part of U.S. commitments to WTO member countries. CRS analysis indicates that the United States probably did not violate its WTO spending limit in 2018 but could potentially exceed it in 2019. A farm support program can violate WTO commitments in two principal ways: first, by exceeding spending limits on certain market-distorting programs, and second, by generating distortions that spill over into the international marketplace and cause significant adverse effects. Program outlays are cumulative, and compliance with WTO commitments is based on annual aggregate spending levels. Under the WTO’s AoA, total U.S. amber box outlays (that is, those outlays deemed market distorting) are limited to $19.1 billion annually, subject to de minimis exemptions. De minimis exemptions are spending that is sufficiently small (less than 5% of the value of production)—relative to either the value of a specific product or total production—to be deemed benign. Since 1995, the United States has apparently stayed within its amber box limits. However, U.S. compliance has hinged on judicious use of the de minimis exemptions in a number of years to exclude certain amber box spending from counting against the amber box limit. These exemptions have never been challenged by another WTO member. According to CRS analysis, projected U.S. amber box spending for 2018 (inclusive of $8.7 billion in product-specific outlays under the 2018 trade assistance package) could exceed $14 billion. This would be the largest U.S. amber box notification since 2001. However, despite its magnitude, it still would fit within the U.S. spending limit of $19.1 billion. A more ambiguous result is projected for 2019. The expansion of direct payments under a second trade assistance package to $14.5 billion in 2019 and their shift to a non-product-specific WTO classification—when combined with currently projected spending under other non-product-specific programs such as the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs—could push U.S. amber box outlays above $24 billion. This would be in excess of the U.S. amber box spending limit of $19.1 billion. However, this projection hinges on several as-yet-unknown factors, including market prices, output values, and program outlays under traditional countercyclical ARC and PLC programs. If the final price and revenue values are higher than currently projected, then program payments under ARC and PLC could be smaller than those used in this analysis. This could decrease both aggregate non-product-specific outlays and the possibility of exceeding the amber box spending limit. If cumulative payments in any year were to exceed the agreed-upon spending limit, then the United States would be in violation of its commitments and could be vulnerable to a challenge under the WTO’s dispute settlement mechanism. Furthermore, to the extent that such program outlays might induce surplus production and depress market prices, they could also result in potential challenges under the WTO.

Oct 4, 2019

Inherited or “Stretch” Individual Retirement Accounts (IRAs) and the SECURE Act

Oct 3, 2019

Military Space Reform: FY2020 NDAA Legislative Proposals

Oct 2, 2019

Defense Primer: Defense Support of Civil Authorities

Oct 2, 2019

Water Resources Development Acts: Primer and Action in the 118th Congress

Sep 30, 2019

Money Market Mutual Funds: A Financial Stability Case Study

Sep 26, 2019

China’s Retaliatory Tariffs on U.S. Agriculture: In Brief

From 2010 through 2016, China was the top destination for U.S. agricultural exports based on value. In 2017, Canada became the top destination for U.S. agricultural products, and China and Mexico tied for second. However, starting in early 2018 the United States undertook several trade actions against China (and other countries) that precipitated retaliatory trade actions between the two countries. The result of this trade war was a decline in trade between the United States and China. In 2018, U.S. agricultural exports to China declined 53% in value to $9 billion from $19 billion in calendar year 2017. By mid-2019, China’s market had shrunk to become the fourth-largest destination for U.S. agricultural exports behind Canada, Mexico, and Japan. The U.S.-China trade dispute started in March 2018, when President Trump announced tariffs of 25% on steel and 10% on aluminum imports (with some flexibility on the application of tariffs by country) using presidential powers granted under Section 232 of the Trade Expansion Act of 1962. In July 2018, citing concerns over China’s policies on intellectual property, technology, and innovation, the Trump Administration imposed tariffs of 25% on $34 billion of selected imports from China using authority delegated by Section 301 of the Trade Act of 1974. Since then, the United States has expanded the coverage of Section 301 tariffs to $550 billion of imports from China.

Sep 24, 2019

Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers

The William D. Ford Federal Direct Loan (Direct Loan) program is the single largest source of federal financial assistance to support students’ postsecondary educational pursuits. The U.S. Department of Education estimates that in FY2020, $100.2 billion in new loans will be made through the program. As of the end of the second quarter of FY2019, $1.2 trillion in principal and interest on Direct Loan program loans, borrowed by or on behalf of 34.5 million individuals, remained outstanding. For many individuals, borrowing a federal student loan through the Direct Loan program may be among their first experiences in incurring a major financial obligation. Upon obtaining a loan, a borrower assumes a contractual obligation to repay the debt over a period that may span a decade or more. Loans were first made through the Direct Loan program in 1994. Since then, Congress has periodically made changes to the program and the terms and conditions of loans. Changes have impacted program aspects such as the availability of loan types, interest rates, loan repayment, loan discharge and forgiveness, and the consequences of default. Over time, the accumulation of changes—many of which are differentially applicable to borrowers or loan types—has resulted in a set of loan terms and conditions that are voluminous and complex. Congress may contemplate making future changes to loan terms and conditions. This report has been prepared to provide Congress with a comprehensive description of the terms and conditions and borrower benefits that are applicable to loans made through the Direct Loan program. Emphasis is placed on discussing loan types, provisions related to borrower eligibility, amounts that may be borrowed, interest and fees, loan repayment, repayment relief, loan forgiveness benefits, the consequences of default, and the methods used to ensure borrowers are informed about the terms and conditions of their loans and their obligation to repay them. Direct Loan Types Four types of loans are available through the Direct Loan program. Direct Subsidized Loans are available only to undergraduate students with financial need. Direct Unsubsidized Loans are available both to undergraduate students and graduate students. Direct PLUS Loans may be borrowed by graduate students and by the parents of undergraduate students dependent upon them for financial support. Direct Consolidation Loans allow borrowers to combine debt from multiple existing federal student loans into a single new loan. Eligibility and Amounts That May Be Borrowed Whether an individual may borrow a loan and the amount he or she may borrow are determined by the interaction of many factors. Eligibility to borrow varies by loan type, borrower characteristics, program level, and class level. The amount an individual may borrow is subject to annual and aggregate borrowing limits, and federal need analysis and packaging procedures. Loans are made available in amounts constrained by program rules, but—with the exception of Direct PLUS Loans—without consideration of a borrower’s ability to repay. Eligibility to borrow a Direct PLUS Loan depends on an individual’s creditworthiness. Interest on Direct Loan Program Loans Procedures for calculating interest vary by loan type, repayment status, and the period during which a loan was made. In limited circumstances, the federal government subsidizes, or does not charge, interest that would otherwise accrue. Interest subsidies are mostly limited to Direct Subsidized Loans; however, certain interest subsidies may be provided on all loan types. Loan Repayment Plans Numerous repayment plans, each with different payment structures and maximum durations, are available. Among the various plans, income-driven repayment (IDR) plans cap monthly payments at a specific percentage of a borrower’s discretionary income. For most repayment plans, monthly payments must cover the interest that accrues; however, the IDR plans allow for negative amortization, in which case monthly payments may be for less than the interest that accrues. Deferment and Forbearance Periods of deferment and forbearance offer a borrower temporary relief from the obligation to make monthly payments. In certain instances, interest subsidies may be provided during periods of deferment; however, interest subsidies are not available during periods of forbearance. Loan Discharge and Loan Forgiveness A borrower may be relieved of the obligation to repay his or her loans in certain circumstances. Student loan debt may be discharged on the basis of borrower hardship (e.g., death, total and permanent disability, school closure) or may be forgiven following an extended period of repayment according to an IDR plan or completion of a period of public service. Loan Default, Its Consequences, and Resolution If a borrower defaults, the loan becomes due in full and the borrower loses eligibility for many benefits, as well as access to other forms of federal student aid. The government also uses numerous means to collect on defaulted student loan debt. A limited set of options is available for a borrower to bring a defaulted loan back into good standing. Loan Counseling and Disclosures Student borrowers are required to undergo financial counseling, which is designed to provide them with comprehensive information on the terms and conditions of their loans as well as their rights and the responsibilities they assume as borrowers. Loan terms and conditions are specified in a promissory note, which is a contract that establishes the borrower’s obligation to repay the loan, and in a plain language disclosure document that uses simplified terms to explain a loan’s terms and conditions and the borrower’s rights and responsibilities.

Sep 24, 2019

The Contraceptive Coverage Requirement and Legal Challenges Five Years After Hobby Lobby

When Congress enacted the Patient Protection and Affordable Care Act (ACA) in 2010, it required employment-based health plans and health insurance issuers to cover certain preventive health services without cost sharing. Those services, because of agency guidelines and rules, would soon include contraception for women. The “contraceptive coverage requirement,” or “contraceptive mandate” as it came to be known, was heavily litigated in the years to follow. These challenges primarily concerned (1) what types of employers and institutions should be exempt from the requirement based on their religious or moral objections to contraception; (2) what procedures the government can require for an entity to invoke a religious-based accommodation; and (3) how much authority federal agencies have to create exceptions to the coverage requirement. As originally formulated, only houses of worship and similar entities were exempt from the requirement, but the government later added an accommodation process for certain religious nonprofit organizations. On June 30, 2014, the Supreme Court held in Burwell v. Hobby Lobby Stores, Inc. that the contraceptive coverage requirement violated federal law insofar as it did not also accommodate the religious objections of closely held, for-profit corporations. The law at issue in that case—the Religious Freedom Restoration Act of 1993 (RFRA)—prohibits the federal government from “substantially burden[ing] a person’s exercise of religion” except under narrow circumstances. Since Hobby Lobby, the agencies tasked with implementing the ACA have faced numerous hurdles in their attempts to accommodate the interests of sincere objectors while minimizing disruptions to the provision of cost-free contraceptive coverage to women. The lower courts split on whether the accommodation process—which required eligible objecting entities to notify their insurers or the government that they qualified for an exemption—substantially burdened the objectors’ exercise of religion. Initially, most circuit courts rejected the view that such an accommodation triggered, facilitated, or otherwise made objectors complicit in the provision of coverage, denying their RFRA claims. After consolidating some of these cases for review, the Supreme Court ultimately vacated and remanded the decisions when the government and the objecting parties suggested that a solution might be reached so that the objectors’ insurers could provide the required coverage without notice from the objecting parties. However, following a change in presidential administration, the implementing agencies reevaluated and reversed their position on the legality of the then-existing accommodation process, concluding that it violated RFRA when applied to certain entities. The agencies opted to automatically exempt most nongovernmental entities that objected to providing coverage for some or all forms of contraception on religious or moral grounds. These expanded exemptions sparked a new round of litigation based on claims that the agencies exceeded their authority under the ACA or violated federal requirements for promulgating new rules. Federal courts have preliminarily enjoined the government from implementing the expanded exemptions. At the same time, the government is largely precluded from relying on the prior accommodation process as a result of a nationwide injunction issued by a federal district court. From a legal perspective, Congress has several options for clarifying the scope of the contraceptive coverage requirement, including through amendments to the ACA and RFRA. For now, the implementing agencies and the courts will likely continue to grapple with the extent of the mandate and its compliance with RFRA and other legal protections.

Sep 23, 2019

U.S. Payment System Policy Issues: Faster Payments and Innovation

Technological advances in digitization and data processing and storage have greatly increased the availability and convenience of electronic payments. New products and services offer faster, more convenient payment for individuals and businesses, and the numerous options on offer foster competition and innovation among end-user service providers. Currently, many new payment services are layered on top of existing electronic payment systems, which may limit their speed. Most payments flow through both retail and wholesale payment systems before they are completed. Consumers access retail payment systems to purchase goods and services, pay bills, obtain cash through withdrawals and advances, and make person-to-person transfers. Consumers’ financial institutions access wholesale systems to complete the payment. In the United States, systems accessed by consumers are operated by the private sector, whereas systems accessed by banks to complete those transactions are operated by the Federal Reserve (Fed) or the private sector. Regulation of retail payment systems is dispersed across multiple state and federal regulators. For example, payment systems are subject to federal consumer protection regulation under the Electronic Fund Transfer Act (P.L. 95-630), anti-money laundering requirements under the Bank Secrecy Act (P.L. 91-508), and various state licensing, safety and soundness, anti-money laundering, and consumer protection requirements. Private wholesale payment systems are regulated by the Fed, and if they are systemically important, they can be designated as “financial market utilities” and subject to heightened oversight. Although faster and potentially less costly payment systems may benefit consumers and businesses, the use of new technology in existing and new payment systems raise a number of questions for policymakers. Some observers have argued that certain innovative financial technology, or fintech, payment companies would be more effectively regulated through the federal banking regulatory framework, whereas opponents of this idea assert it would result in the preemption of important state-level consumer protections and in an inappropriate combination of banking and commercial activities. The increased prevalence of data generation, collection, and analysis in payment systems has caused observers to question whether existing regulation adequately addresses issues related to data privacy and cybersecurity. Although the traditional high-levels of industry concentration and the recent entry by technology giants have raised concerns over market power and industry competition, competition to date has been robust and certain analysts argue that internet-based payments that do not require a large investment in infrastructure will prevent the market concentration that exists in older payment services. What effect technological innovation in payments will have on consumer access and whether consumers are adequately protected against potential problems, such as fraudulent or erroneous transactions, are also subjects of debate. In August 2019, the Fed announced plans to create an interbank real-time payments (RTP) system by 2023 or 2024. The Fed stated that the new system will be available to all banks with a reserve account at the Fed, and it will require banks using this new system to make those funds available to their customers immediately after being notified of settlement. In addition, several private-sector initiatives are also underway to implement faster payments, some of which would make funds available to the recipient in real time (with deferred settlement) and some of which would provide real-time settlement. Businesses and consumers would benefit from the ability to receive funds more quickly, particularly as a greater share of payments are made online or using mobile technology. The main policy issue regarding the Federal Reserve and RTP is whether Fed entry in this market is desirable, given similar private-sector developments are already underway. There is debate about whether competition from the Fed would be beneficial in terms of cost, efficiency, safety, innovation, ubiquity, and financial stability. In the 116th Congress, H.R. 3951 and S. 2243, among other bills, would require the Fed to create a RTP system and would require banks to make payments to account holders in real time.

Sep 23, 2019

Military Funding for Southwest Border Barriers

Sep 23, 2019

Tax Issues Relating to Charitable Contributions and Organizations

The federal government supports the charitable sector by providing charitable organizations and donors with favorable tax treatment. Individuals itemizing deductions may claim a tax deduction for charitable contributions. Estates can make charitable bequests. Corporations can deduct charitable contributions before computing income taxes. Further, earnings on funds held by charitable organizations and used for a related charitable purpose are exempt from tax. In FY2019, projected tax subsidies for charities, not including the value of the tax exemption on earnings of charities or the estate tax deduction, totaled $51.8 billion. If investment income of nonprofits were taxed at the 35% corporate tax rate in 2015, revenue collected is estimated at $26.7 billion (this amount excludes religious organizations). The cost of deducting bequests on estates is estimated at $4 billion to $5 billion. Charitable organizations include both operating charities (including religious institutions) and organizations that tend to hold assets and make grants to operating charities, most notably private foundations, but also donor-advised funds (DAFs) and supporting organizations. The tax code treats different types of organizations differently. For example, foundations and certain supporting organizations have minimum payout requirements, while DAFs do not. Limits on charitable giving also differ across gifts to different types of organizations. Changes in the tax revision enacted in late 2017, popularly known as the Tax Cut and Jobs Act (TCJA; P.L. 115-97), while not generally aimed at charitable deductions, reduced the scope of the tax benefit for charitable giving. A higher standard deduction and the limit on the deduction for state and local taxes caused more individuals to take the standard deduction, as opposed to itemizing deductions. As a result, many individuals who were able to deduct charitable contributions no longer claim this itemized deduction. Other changes exempted more estates from the estate tax, eliminating the benefit of deducting charitable contributions in these cases. Concerns have arisen that these changes are expected to lead to a reduction in charitable contributions. In 2018, charitable contributions were estimated at $427.7 billion, or 2.1% of gross domestic product (GDP). Charitable gifts come from four sources: individual contributions (accounting for 68%), foundations (accounting for 18%), bequests (accounting for 9%), and corporations (accounting for 5%). In 2018, estimates suggest approximately 54% of individual contributions are expected to have received a tax subsidy. Comparing giving levels in 2017 and 2018 provides some insight into the possible impacts of the 2017 tax revision on charitable giving and the charitable sector. Compared to 2017, 2018 contributions from individuals and bequests declined as a percentage of GDP (by 6% and 5%, respectively), while corporate contributions were virtually unchanged and foundation contributions rose by 2%. In 2017, an estimated 80% of individual contributions benefited from the tax subsidy for itemized deductions. Surveying the literature can also provide some insight regarding the effect of tax subsidies on charitable giving. Based on statistical estimates of the responsiveness of individual giving to tax subsidies, a decrease in individual giving of around 3% to 4% might be expected from the 2017 tax revision. Limitations in the data make the effect on estates difficult to estimate, but it could be a decrease of up to 8%; the small share of bequests in total giving, however, would lead even that effect to reduce overall charitable giving by less than 1%. A number of policy options could be considered with respect to the tax treatment of charitable giving or the tax treatment of charitable entities. The charitable deduction could be modified in ways that could extend charitable giving incentives to taxpayers not itemizing deductions, or with the intent of making charitable giving tax incentives more effective (inducing more giving for each dollar of lost federal tax revenue). There are also options related to the type of treatment of certain types of gifts, such as appreciated property or charitable miles driven. Some proposals have also been made to address concerns about aspects of certain charitable organizations, such as payouts by DAFs and university endowments. Some proposals would reverse certain changes made by the 2017 tax revision to the unrelated business income tax (UBIT) or impose administrative reforms.

Sep 19, 2019

Defense Primer: Junior Reserve Officers’ Training Corps

Sep 19, 2019

USMCA: Intellectual Property Rights (IPR)

Sep 19, 2019

U.S. Farm Income Outlook: August 2019 Forecast

This report uses the U.S. Department of Agriculture’s (USDA) farm income projections (as of August 30, 2019) and agricultural trade outlook update (as of August 29, 2019) to describe the U.S. farm economic outlook. According to USDA’s Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at $88 billion in 2019, up $4 billion (+4.8%) from last year. However, the forecast rise in 2019 net farm income is largely the result of a 42.5% increase in government payments to the agricultural sector valued at $19.5 billion (highest since 2005). USDA’s support outlays forecast for 2019 include nearly $11 billion in direct payments made under trade assistance programs intended to help offset foreign trade retaliation against U.S. agricultural products, as well as payments under traditional farm programs. Without this federal support, net farm income would be lower, primarily due to the outlook for continued weak prices for most major crops. Commodity prices are under pressure from large planted acreage estimates of corn and soybeans in 2019, large carry-in stocks from a record soybean and near-record corn harvest in 2018, and diminished export prospects due to the ongoing trade dispute with China. Should these conditions persist into 2020, they would signal the potential for continued dependence on federal programs to sustain the U.S. agricultural sector in 2020. Since 2008, U.S. agricultural exports have accounted for a 20% share of U.S. farm and manufactured or processed agricultural sales. In 2018, total agricultural exports were estimated up 2% at $143.4 billion. However, abundant supplies in international markets, strong competition from major foreign competitors, and the ongoing U.S.-China trade dispute are expected to shift trade patterns and lower U.S. agricultural export prospects significantly (-6%) to a projected $134.5 billion in 2019. Farm asset value in 2019 is projected up from 2018 to $3.1 trillion (+2%). Farm asset values reflect farm investors’ and lenders’ expectations about long-term profitability of farm sector investments. U.S. farmland values are projected to rise 1.8% in 2019, similar to the increases of 1.9% in 2018 and 2.3% in 2017. Because they comprise such a large portion of the U.S. farm sector’s asset base (83%), change in farmland values is a critical barometer of the farm sector’s financial performance. However, another critical measure of the farm sector’s well-being is aggregate farm debt, which is projected to be at a record $415.7 billion in 2019—up 3.4% from 2018. Both the debt-to-asset and the debt-to-equity ratios have risen for seven consecutive years, suggesting a weakening of the financial situation for the U.S. farm sector. At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, this advantage derives primarily from off-farm income as a share of farm household total income. Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. Furthermore, the farm household income advantage over the average U.S. household has narrowed in recent years. In 2014, the average farm household income (including off-farm income sources) was about 77% higher than the average U.S. household income. In 2017 (the last year with comparable data), that advantage was expected to decline to 30%. USDA Farm Income Projections as of August 30, 2019 This report discusses aggregate national net farm income projections for calendar year 2019 as reported by USDA’s ERS on August 30, 2019. It is an update of an initial forecast made on March 6, 2019, when USDA forecast 2019 net farm income at $69.4 billion. The initial forecast is discussed in CRS Report R45697, U.S. Farm Income Outlook: March 2019 Forecast, by Randy Schnepf.

Sep 19, 2019

The CCC Anomaly in an FY2020 Continuing Resolution

In late August 2019, the Office of Management and Budget (OMB) requested a special provision for the Commodity Credit Corporation (CCC) among its list of appropriations issues for Congress to consider under a continuing resolution (CR). In addition to the general provisions that extend the previous year’s appropriation for a specific term, CRs often include provisions that are specific to certain agencies, accounts, or programs. These “anomalies” are departures from a CR that modify the timing, amount, or purpose for which any referenced funding is extended. OMB cites the need for additional language in the CR to address the CCC anomaly and prevent the corporation from reaching its borrowing limit of $30 billion. The anomaly in a CR would provide CCC with its appropriation immediately upon enactment of the CR, instead of upon the usual schedule (i.e., after the completion of CCC’s annual financial statement, which is typically in November). Without the anomaly in FY2020, CCC would still receive its appropriation under a CR, but it would be one to two months after enactment, which could potentially delay CCC-funded programming, including the Trump Administration’s trade assistance to farmers affected by tariffs and 2018 farm bill payments. CCC Overview CCC is a wholly owned government corporation that exists solely to finance authorized programs that support U.S. agriculture. It is federally chartered by the CCC Charter Act of 1948 (P.L. 80-806; 15 U.S.C. §714 et seq.), as amended, and subject to the supervision and direction of the Secretary of Agriculture at U.S. Department of Agriculture (USDA). CCC is responsible for the direct (mandatory) spending and credit guarantees used to finance the federal government’s agricultural commodity price support and related activities that are undertaken by authority of agricultural legislation (such as farm bills) or the CCC Charter Act itself. Most CCC-funded programs are classified as mandatory spending programs and, therefore, do not require annual discretionary appropriations in order to operate. CCC instead borrows from the U.S. Treasury to finance its programs. CCC has permanent, indefinite authority to borrow up to $30 billion from the Treasury. Congress replenishes the CCC’s borrowing authority through annual appropriations based on the “net realized loss” as provided in the corporation’s financial statement at the close of each fiscal year (15 U.S.C. §713a-11). Timing of Reimbursement Congress annually appropriates CCC funding to cover its net realized losses incurred during a fiscal year (e.g., conservation and farm support program payments). The total amount appropriated is based on the required financial statement and audit of the CCC at the end of the fiscal year that is typically completed in November or December. The appropriated amount for CCC varies each year based on the net realized loss of the previous year. The change in appropriation does not indicate any action by Congress to change program support. Rather, it reflects farm program payments and other CCC activities that fluctuate based on economic circumstances, weather, and Administration initiatives. Therefore, the FY2020 appropriation would provide reimbursement for the net realized losses incurred by CCC in FY2019. Many farm program payments are required to be made annually in October (e.g., farm support programs such as Agricultural Risk Coverage and Price Loss Coverage and conservation programs such as the Conservation Stewardship Program and the Conservation Reserve Program). In most years, CCC has enough room within the borrowing authority limit to make these payments before receiving its annual appropriated reimbursement. In years of high farm program expenditures, however, the CCC could reach its borrowing authority limit before receiving its appropriation. If this were to happen, all functions and operations of CCC would be suspended until the borrowing authority is restored through an appropriation, including those activities authorized in the 2018 farm bill and the trade assistance package. CCC Anomaly The requested OMB anomaly would allow for CCC to receive its reimbursement for net realized losses prior to the completion of required financial reports. Similar language was provided in Section 116 of a FY2019 CR (P.L. 115-245) and Section 118 of a FY2017 CR (P.L. 114-223). This anomaly allows CCC to receive its appropriated reimbursement in the intervening one to two months before the financial statements are complete. Because CCC has a permanent, indefinite funding authority and was funded in the FY2019 Consolidated Appropriations Act (P.L. 116-6), the reimbursement for its previous year’s net realized loss would continue under a regular CR. A CR without the anomaly does not defund the CCC or suspend payments for any one program authorized under CCC. Rather, it would allow existing financial reporting requirements to stand and allow financial statements to be submitted before the reimbursement of net realized loss occurs. This could create a temporary delay in program funding and operation if CCC activities were suspended due to reaching the borrowing authority limit. Losses Reimbursed in FY2020 The exact amount of net realized losses in FY2019 that would be reimbursed in FY2020 is unknown. The House-passed appropriation (H.R. 3055, H.Rept. 116-107 for H.R. 3164) for FY2020 estimates that the reimbursement of CCC’s net realized losses would be $25.6 billion based on the President’s FY2020 budget estimate and the Congressional Budget Office. Losses in FY2019 are high due in large part to an earlier trade assistance package created by USDA. During 2018 and 2019, USDA announced two rounds of trade assistance valued at a combined $28 billion. Both 2018 and 2019 trade aid packages are done at the discretion of USDA using the funding authority of the CCC Charter Act and provide direct and indirect assistance for farmers affected by trade damages from retaliatory tariffs. Trade aid payments in FY2019 would be reimbursed in FY2020 and are mostly from the aid package that was announced in 2018. OMB states that, without the proposed anomaly language, “CCC anticipates it will exceed the statutory limitation on borrowing authority during the period of the CR, and before the close of the fiscal year audit is completed.” This indicates that authorized program payments in October could be delayed—such as conservation and farm program payments and additional trade aid—until financial statements are complete and the annual reimbursement occurs.

Sep 17, 2019

Patent-Eligible Subject Matter Reform in the 116th Congress

The statutory definition of patent-eligible subject matter under Section 101 of the Patent Act has remained essentially unchanged for over two centuries. As a result, the scope of patentable subject matter—that is, the types of inventions that may be patented—has largely been left to the federal courts to develop through “common law”-like adjudication. In the 20th century, the U.S. Supreme Court established that three main types of discoveries are categorically patent-ineligible: laws of nature, natural phenomena, and abstract ideas. Recent Supreme Court decisions have broadened the scope of these three judicial exceptions to patent-eligible subject matter. Over a five-year period, the Supreme Court rejected, as ineligible, patents on a business method for hedging price-fluctuation risk; a method for calibrating the dosage of a particular drug; isolated human DNA segments; and a method of mitigating settlement risk in financial transactions using a computer. These cases established a new two-step test, known as the Alice/Mayo framework, for determining whether a patent claims ineligible subject matter. The first step of the Alice/Mayo test addresses whether the patent claims are “directed to” a law of nature, natural phenomenon, or abstract idea. If not, the invention is patentable. If the claims are directed to one of the ineligible categories, then the second step of the analysis asks whether the patent claims have an “inventive concept.” To have an inventive concept, the patent claim must contain elements that transform the nature of the claim into a patent-eligible application of the ineligible concept, so that the claim amounts, in practice, to something “significantly more” than a patent on the ineligible concept itself. If the invention fails the second step of Alice/Mayo, then it is patent-ineligible. The Supreme Court’s decisions have been widely recognized to effect a significant change in the scope of patentable subject matter, restricting the sorts of inventions that are patentable in the United States. The Alice/Mayo test has been the subject of criticism, with some stakeholders arguing that the Alice/Mayo framework is vague and unpredictable, unduly restricts the scope of patentable subject matter, reduces incentives to invest and innovate, and harms American industry’s competitiveness. In particular, the Alice/Mayo test has created uncertainty in the computer technology and biotechnology industries as to whether innovations in medical diagnostics, personalized medicine, methods of treatment, computer software, and artificial intelligence are patent-eligible. As a result, some patent law stakeholders, including academics, bar associations, industry representatives, judges, and former Patent and Trademark Office (PTO) officials, have called for the Supreme Court or Congress to act to change the law of patentable subject matter. However, other stakeholders defend the legal status quo, arguing that the Alice/Mayo framework provides an important tool for combating unmeritorious patent litigation, or that the revitalized limits on patentable subject matter have important benefits for innovation. Recently, there have been several substantial administrative and legislative efforts to clarify or reform patent-eligible subject matter law. In January 2019, the PTO issued revised guidance to its patent examiners with the aim of clarifying and improving predictability in how PTO patent examiners make Section 101 determinations. In April and May of 2019, a bipartisan and bicameral group of Members released draft legislative proposals that would abrogate the Alice/Mayo framework and transform the law of Section 101 and related provisions of the Patent Act. Following a series of hearings in June 2019, many expect a bill to reform Section 101 to be introduced this fall. These proposed changes could have significant effects as to the types of technologies that are patentable. The availability of patent rights, in turn, affects incentives to invest and innovate in particular fields, as well as consumer costs and public access to technological innovation. Understanding the legal background and context can aid Congress as it debates the legal and practical effects that legislative Section 101 reforms would have if enacted.

Sep 17, 2019

Defense Primer: The National Technology and Industrial Base

Sep 17, 2019

Attacks Against Saudi Oil Rattle Markets

September 14, 2019, saw a successful attack against major oil infrastructure in Saudi Arabia (the largest oil exporter), which disrupted 5.7 million barrels of daily production (mb/d), about half of Saudi oil production and 5% of global supply. This is the largest single disruption to crude oil supplies in history, according to Bloomberg, using International Energy Agency (IEA) data. For context, U.S. crude oil production is approximately 12 mb/d. Global oil markets have responded with an initial price increase. The magnitude and duration of the price rise will depend on many factors, such as repair time, additional supplies, the potential confirmation of the perpetrator, and any related security responses. Implications for Saudi Arabia The September 14, 2019, attacks on the Abqaiq processing facility and the Khurais oil field in eastern Saudi Arabia, claimed by Yemen’s Houthi rebels, were the latest in a series of cross-border attacks on energy and transportation sites in the kingdom apparently linked to the ongoing war in Yemen and the Saudi-U.S. confrontation with Iran. The incidents have demonstrated the vulnerability of critical Saudi infrastructure to missile and drone attacks and raised complicated strategic questions for Saudi and U.S. policymakers concerning attribution and potential responses. Iran’s government denies U.S. charges of responsibility. Saudi Arabia’s military operations in Yemen have created demands on its security and defense capabilities in addition to fiscal pressures that have been amplified by oil prices, which have remained below the kingdom’s budget targets. In response, Saudi leaders may delay a planned initial public offering of shares in their state-owned oil company, Aramco, which operates facilities and infrastructure targeted in recent months. Aramco intends to use its crude oil stockpiles to compensate for reduced output and expects to restore production to pre-attack levels. However, additional attacks, or delays in restoration efforts, could extend negative short-term effects and reduce investor confidence in the security of Aramco assets. Relative export volumes, prevailing market prices, and the extent of security and reconstruction costs will determine the attacks’ fiscal effects on the kingdom, including in the event of any prolonged oil output disruptions. The Abqaiq Oil Facility The Abqaiq facility is the largest oil processing facility in the world, with a capacity of about 13 mb/d, but has been operating below its capacity. Abqaiq is a key processing facility for light and extra light Saudi oil that tend to be high in sulfur. To stabilize the crude, hydrogen sulfide and other contaminants need to be removed. An attempted terrorist attack on the facility in 2006 prompted joint Saudi-U.S. efforts to improve critical infrastructure security in the kingdom. Global Responses Crude oil markets have responded to the attacks. The price of the U.S. benchmark crude, West Texas Intermediate (WTI), on Friday before the attacks was $54.85 per barrel, while the international benchmark, known as Brent, was $60.22. At the market’s close on September 16, WTI was priced at $62.62 and Brent was $68.75, a 14% increase for both. Aramco is working to restore the disrupted supply, but full repairs could take weeks or even months, according to industry experts familiar with the matter. The timeline for the return of the remaining amount had not been officially estimated as of September 16. Saudi officials have invited international observers to investigate the attack, and state that the kingdom “will take the appropriate measures based on the results of the investigation, to ensure its security and stability.” On September 15, President Trump authorized the release of oil from the U.S. Strategic Petroleum Reserve (SPR) in response to the attack against Saudi Arabia’s oil production. The amount of the release has not been announced, but would be based on the necessary volumes to keep the market supplied and to mitigate the impact on oil prices. In the past, presidents have ordered a release in response to severe interruptions in coordination with other IEA member countries. However, the SPR alone has the capacity to replace most of the Saudi barrels. According to a recent announcement, the IEA is monitoring the situation closely and is in close contact with Saudi officials. Commercial stocks are supplying the market, and the IEA has not called for a coordinated member country release. The most recent coordinated release occurred in 2011, after political unrest in Libya led to a production capacity loss of 1.7 mb/d. Libya, at that time, was producing roughly 2% of global supply. On June 23, 2011, the IEA announced a coordinated release of 60 million barrels of crude oil and refined products into the global market. While the attack against Saudi Arabia has removed a larger volume of crude oil from the market, the context for the Libya response was much different. For example, crude oil prices were trading above $100/barrel and the Fukushima disaster had recently occurred, increasing Japanese demand. Today, prices are stabilizing under $70/bbl, and the United States is the top crude oil producer in the world. Possible Additional Oil Market Consequences As new information comes to light and questions are answered, there may be further ramifications for oil markets. For example, if Iran were determined to be the ultimate perpetrator of the attack, and if Saudi Arabia and/or the United States were to attack Iran, risk premiums could rise. Additionally, a military response may raise the risk for oil and natural gas tankers that transit the Strait of Hormuz. Depending on the response from the Organization of the Petroleum Exporting Countries (OPEC) members to any need to replace Saudi exports, it could renew congressional interest in the NOPEC (No Oil Producing and Exporting Cartels) Act of 2019 (H.R. 948 and S. 370). The attacks could also lead some in Congress to explore new means of improving critical infrastructure protection capabilities domestically and in partner countries. China is the largest importer of Saudi crude oil, at 1.5 mb/d, followed by Japan at 1 mb/d. These countries may have incentive to purchase U.S. crude, especially U.S. shale supplies, which tend to be similar to Saudi crude that has been removed from the market.

Sep 16, 2019

The TIGER/BUILD Program at 10 Years: An Overview

The Transportation Investments Generating Economic Recovery (TIGER) grant program is a discretionary program providing grants to surface transportation projects on a competitive basis, with recipients selected by the U.S. Department of Transportation (DOT). It originated in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), where it was called “national infrastructure investment” (as it has been in subsequent appropriations acts); in FY2018 the program was renamed the Better Utilizing Investments to Leverage Development (BUILD) program. Although the program’s stated purpose is to fund projects of national, regional, and metropolitan area significance, in practice its funding has gone more toward projects of regional and metropolitan-area significance. In large part this is a function of congressional intent, as Congress has directed that the funds be distributed equitably across geographic areas, between rural and urban areas, and among transportation modes, and has set relatively low minimum grant thresholds (currently $5 million for urban projects, $1 million for rural projects). The average grant size has been in the $10 million to $15 million range; such sums are only a small portion of the funding requirements for projects of national significance. The TIGER/BUILD program is not a statutory program. Congress has continued the program by providing funding for it each year in the annual DOT appropriations act. It is a popular program in part because for most of its existence it has been one of a few transportation grant programs that offer regional and local governments the opportunity to apply directly to the federal government for funding, and one of a few that offer states additional funding beyond their annual highway and public transportation formula funding. The program is heavily oversubscribed; over the 10-year period FY2009-F2018, the amount of funding applied for totaled around 24 times the amount of money available for grants. The U.S. Government Accountability Office (GAO) has reported that, while DOT has selection criteria for the TIGER grant program, it has sometimes awarded grants to lower-ranked projects while bypassing higher-ranked projects without explaining why it did so, raising questions about the integrity of the selection process. DOT has responded that while its project rankings are based on transportation-related criteria, such as safety and economic impact, it must sometimes select lower-ranking projects over higher-ranking ones to comply with other selection criteria established by Congress, such as geographic balance and a balance between rural and urban awards. Although Congress established the parameters of the program, since the grantees are selected by DOT the Administration controls the grant process. The Obama Administration distributed grants relatively evenly across modes and population areas. The Trump Administration has prioritized grants to road projects in rural areas; in the FY2018 round, 69% of the grant funds went to rural areas. DOT also announced that it would favor projects that provided new nonfederal sources of revenue (“better utilizing investments to leverage development”). Congress subsequently rejected that initiative, directing DOT not to favor projects that provided additional revenue or even projects that requested a low federal share. Congress also capped the share of funding that can go to rural areas in response to the Administration’s tilt toward awarding grants to rural areas. DOT has published two reports on the topic of the performance of projects that received TIGER grants. The reports note that measuring the performance of the array of projects in several modes eligible for TIGER grants is challenging. DOT has required grantees to develop performance plans and measures for each project, beginning before the construction of the project and continuing for years. The reports themselves largely consist of case studies of several projects.

Sep 16, 2019

USMCA: Labor Provisions

Sep 12, 2019

Electricity Portfolio Standards: Background, Design Elements, and Policy Considerations

Electricity portfolio standards, such as renewable portfolio standards and clean energy standards, are policies aimed at changing the energy sources used to generate electricity. Supporters identify multiple policy goals, including greenhouse gas reduction, technology innovation, and job creation. Twenty-nine states, three U.S. territories, and the District of Columbia are currently implementing mandatory portfolio standards. Congress, to date, has not established a national portfolio standard, though bills that would do so have been introduced in every Congress since the 105th. Congressional interest in 2011 and 2012 prompted a variety of analyses about potential impacts of a national portfolio standard. The national electricity generation profile has changed since then in ways that might make previous analyses less relevant to any future policy debate. Between 2012 and 2018, in the U.S. generation from coal fell (from 37% to 27%), generation from natural gas increased (from 30% to 35%), and generation from renewable sources (e.g., hydropower, wind, solar) increased (from 12% to 18%). Many expect these trends to continue, regardless of any new federal policy related to the electric power sector. Portfolio standards are generally envisioned as market-based policies in the sense that they use financial incentives rather than prohibitions to achieve policy goals. Several key concepts in portfolio standards are common to other market-based policies. Credits are an accounting mechanism used for compliance and are tracked in electronic databases sometimes called registries. Lawmakers can choose the degree of flexibility around credit use in a portfolio standard, with potential impacts on overall policy costs and benefits. Procedures to monitor, report, and verify credits can help portfolio standards achieve their policy goals and reduce the risk of fraud. Other concepts are specific to portfolio standards. Choices about these design elements can strongly influence policy outcomes. Generally, choices that would tend to reduce costs would also tend to result in fewer changes in the electricity generation profile. The choice of which energy sources would be eligible for compliance, and therefore would be incentivized by the program, is often central to policy discussions about portfolio standards. Past proposals have included a range of eligible sources, including renewable sources, nuclear, fossil fuel-fired power plants equipped with carbon capture and sequestration technology (CCS), and natural gas combined cycle power plants. Some proposals have included nongenerating sources like energy storage and energy efficiency as well. Other design elements include whether all utilities should have to comply with a portfolio standard or whether some would be exempted; how much generation from eligible sources a portfolio standard is designed to achieve; by when should the desired amount of generation from those sources be achieved; to what share of a utility’s electricity sales should a portfolio standard apply; and whether any provisions should be included that delay or halt compliance under certain circumstances (e.g., undesirably high prices). If established, a national portfolio standard would likely have economic effects, though estimating these in advance is subject to some uncertainty. Any sources and associated industries excluded from the definition of eligible sources would likely experience negative economic effects. At the same time, industries associated with sources included in the standard would likely experience positive economic effects. The net effect on national economic activity would depend on the design details of any portfolio standard and the ways that consumers might respond to potentially higher electricity prices. A national portfolio standard might also have environmental effects compared to a business-as-usual scenario, depending on design choices such as source eligibility and the change from business as usual a portfolio standard is designed to achieve. Potential eligible sources vary in their GHG and air pollutant emissions, as well as other attributes such as water consumption and power density (which can affect land requirements). Implementation could affect environmental outcomes too. For example, deploying small-scale distributed eligible sources might have different effects than deploying large-scale eligible sources. Another policy consideration is potential interaction with state energy policies like existing portfolio standards, electricity infrastructure siting, and the use of competitive markets to influence electricity investment decisions. Such interactions may generate debate regarding preemption and highlight potential federalism concerns.

Sep 10, 2019

Retaliatory Tariffs and U.S. Agriculture

Sep 5, 2019

New U.S. Sanctions on Venezuela

In August 2019, the Trump Administration expanded Venezuela-related sanctions by blocking all assets and interests of the Nicolás Maduro government in the United States. It also authorized sanctions against those who materially support the Maduro government or others already designated for sanctions, with exemptions for humanitarian aid. Since recognizing Juan Guaidó, head of the National Assembly, as interim president of Venezuela in January 2019, the Administration has increased sanctions on the Maduro government in an effort to compel Maduro to leave office so a Guaidó-led transition government can convene free and fair elections. Sanctions have put economic pressure on the Maduro government, primarily by accelerating the decline in Venezuela’s oil production and making it difficult for the Maduro government to sell oil in international markets. Sanctions, however, have not yet led to a political transition and arguably have contributed to deteriorating humanitarian conditions. New Sanctions Executive Order (E.O.) 13884, signed by President Trump on August 5, 2019, blocks all property of the Maduro government within the United States and prohibits all transactions within the United States involving the Maduro government. Several parts of the Maduro government, including specific government officials, the central bank, and the state-owned oil company, Petróleos de Venezuela, S.A. (PdVSA), were subject to sanctions under earlier U.S. actions. E.O. 13884 applies sanctions to all Venezuelan government entities and state-owned enterprises. According to U.S. National Security Adviser John Bolton, the new sanctions strive to “cut off Maduro financially, and accelerate a peaceful democratic transition.” E.O. 13884 also calls for sanctions against non-U.S. individuals or entities determined by the Secretary of the Treasury, in consultation with the Secretary of State, to have “materially assisted, sponsored, or provided financial, material, or technological support for, or goods, or services to or in support of” the Maduro government. The order calls for sanctions on those determined to have “acted or purported to act for or on behalf of, directly or indirectly” of the Maduro government. These sanctions on foreign individuals and entities include blocking U.S. assets and denying entry into the United States. Simultaneously with the signing of E.O. 13884, Treasury’s Office of Foreign Assets Control (OFAC) amended 12 previously issued Venezuela-related general licenses and issued 13 new general licenses. The licenses permit transactions involving humanitarian support, the Venezuelan National Assembly and Guaidó-led interim government, and Venezuela’s mission to the United Nations, among others. Some analysts characterized the new sanctions as a U.S. embargo against Venezuela. However, an embargo refers to a complete ban on trade with a particular country; E.O. 13884 is narrower and targets the Maduro government rather than transactions with Venezuelan individuals or private companies. Potential Implications Because many parts of the Maduro government already are subject to sanctions and several licenses have been granted, there are questions about the latest sanctions’ potential impact. The sanctions could have implications for CITGO, a U.S.-based subsidiary of PdVSA; foreign companies that transact with PdVSA; and humanitarian conditions in Venezuela. CITGO. Following January 2019 sanctions on PdVSA, the National Assembly voted to appoint a new CITGO board of directors. The new board has taken over payments on bonds previously issued by PdVSA. The bonds are collateralized by a majority ownership position in CITGO, a valuable asset in the PdVSA portfolio. If the bonds enter into default, the bondholders could potentially seize CITGO. After President Trump signed E.O. 13884, Guaidó argued that the latest sanctions shield CITGO from seizure by creditors. However, the law firm Clearly Gottlieb, which represents some Venezuelan bondholders, issued a report that it does not see a basis for such statements, maintaining that bondholders are still authorized to collect on collateral in the event of default. Nevertheless, speculation remains that OFAC could provide additional guidance on the sanctions’ implications on CITGO before a $913 million bond payment comes due in late October 2019. Foreign Entities Engaged in Transactions with PdVSA. Many foreign companies conduct business with PdVSA, including joint venture oil production, petroleum trade, and oilfield services. PdVSA’s joint ventures include companies in France, Norway, Spain, China, Japan, India, and Russia. Additionally, Venezuelan crude oil is increasingly exported to foreign countries, following January 2019 sanctions prohibiting U.S.-Venezuela petroleum trade. Most Venezuelan crude oil exports are destined for China and India, and nearly all exports to India go to refineries owned by Russia’s Rosneft. Recent exports also have gone to Malaysia, Spain, Germany, and Sweden. PdVSA has been acquiring diluents—blended with Venezuelan crude oil to facilitate transportation and processing—from Russia. Should this cooperation with the Maduro government continue, these companies could be subject to E.O. 13884 sanctions. Humanitarian Conditions in Venezuela. With oil comprising 95% of Venezuela’s exports, declining oil production caused by years of corruption and mismanagement has contributed to a humanitarian crisis. The combined effects of U.S. sanctions imposed from 2017 to 2019 likely accelerated that decline. The Maduro government has retained the military’s loyalty thus far by distributing revenue from licit and illicit enterprises and repressing internal dissent. Some analysts, however, speculate that the stronger U.S. sanctions could worsen the humanitarian crisis without hastening Maduro’s departure. Others argue that the sanctions’ impact on the Venezuelan people may be somewhat minimized by OFAC’s authorizations to permit personal remittances, humanitarian-related transactions, and support from international organizations. Effects on Negotiations. Since May 2019, Guaidó and Maduro have engaged in talks, facilitated by Norway, to try to end the standoff, but prospects for a negotiated solution to the crisis remain uncertain. The most recent U.S. sanctions resulted in the Maduro government temporarily walking away from the talks. Many analysts caution that U.S. sanctions could prolong the current stalemate by not allowing Maduro a dignified way to leave power. Others assert that U.S. assurances that Maduro could go into exile without facing prosecution if he allowed free and fair elections to occur could help move negotiations forward. For recently updated information on Venezuela, see CRS In Focus IF10230, Venezuela: Political Crisis and U.S. Policy, and CRS In Focus IF10715, Venezuela: Overview of U.S. Sanctions.

Sep 5, 2019

Recent Recommendations by the Judicial Conference for New U.S. Circuit and District Court Judgeships: Overview and Analysis

Congress determines through legislative action both the size and structure of the federal judiciary. Consequently, the creation of any new permanent or temporary U.S. circuit and district court judgeships must be authorized by Congress. A permanent judgeship, as the term suggests, permanently increases the number of judgeships in a district or circuit, while a temporary judgeship increases the number of judgeships for a limited period of time. Congress last enacted comprehensive judgeship legislation in 1990. Since then, there have been a relatively smaller number of district court judgeships created using appropriations or authorization bills. The Judicial Conference of the United States, the policymaking body of the federal courts, makes biennial recommendations to Congress that identify any circuit and district courts that, according to the Conference, require new permanent judgeships to appropriately administer civil and criminal justice in the federal court system. In evaluating whether a court might need additional judgeships, the Judicial Conference examines whether certain caseload levels have been met, as well as court-specific information that might uniquely affect a particular court. The caseload level of a court is expressed as filings per authorized judgeship, assuming all vacancies on the court are filled. The Judicial Conference’s most recent recommendation, released in March 2019, calls for the creation of five permanent judgeships for the U.S. Court of Appeals for the Ninth Circuit (composed of California, eight other western states, and two U.S. territories). The Conference also recommends creating 65 permanent U.S. district court judgeships, as well as converting 8 temporary district court judgeships to permanent status. In making its recommendations to Congress, the Judicial Conference also identifies any courts that might have the most urgent need for new judgeships. These courts are considered, by the Conference, to have extraordinarily high and sustained workloads. In its most recent recommendations, the Conference identified six U.S. district courts it considers to have the most urgent need for new judgeships to be authorized by Congress.

Sep 3, 2019

Surface Transportation Reauthorization and the America’s Transportation Infrastructure Act (S. 2302)

Sep 3, 2019

Climate Change and the America’s Transportation Infrastructure Act of 2019 (S. 2302)

Sep 3, 2019

The U.S. Land-Grant University System: An Overview

With the passage of the first Morrill Act in 1862, the United States began a then-novel policy of providing federal support for post-secondary education, focused on agriculture and the mechanical arts. The national system of land-grant colleges and universities that has developed since then is recognized for its breadth, reach, and excellence in teaching, research, and extension. Land-grant institutions are located in every U.S. state and many territories. These institutions educate the next generation of farmers, ranchers, and citizens, and form the backbone of a national network of agricultural extension and experiment stations. The land-grant university system has continued to evolve through federal legislation. The federal government provides funds, often with state matching requirements, to execute the system’s three-fold mission of agricultural teaching, research, and extension. The U.S. Department of Agriculture’s (USDA) National Institute of Food and Agriculture (NIFA) distributes these funds to the states as capacity grants, on a formula basis as determined by statute, or to participating institutions on a competitive basis. The Morrill Acts of 1862 (12 Stat. 503) and 1890 (26 Stat. 417), and the Equity in Educational Land-Grant Status Act of 1994 (P.L. 103-382 §531-535), established the three institutional categories of the land-grant system, now known as the 1862, 1890, and 1994 Institutions. The 1862 Institutions are the first land-grant institutions; 1890 Institutions are historically black colleges and universities (HBCUs); and 1994 Institutions are tribal colleges and universities (TCUs). Later legislation also recognized additional institutional categories, including non-land-grant colleges of agriculture (NLGCAs) and Hispanic-serving agricultural colleges and universities (HSACUs), for specific programs. The Hatch Act of 1887 (24 Stat. 440), Evans-Allen Act of 1977 (P.L. 95-113 §1445), and provisions of the Agricultural Research, Extension, and Education Reform Act of 1998 (AREERA, P.L. 105-185) provide the framework for funding research at land-grant institutions. State Agricultural Experiment Stations (SAES) associated with 1862 Institutions receive federal research capacity funds with a one-to-one non-federal matching requirement. The 1890 Institutions also receive federal research capacity funds with this matching requirement, yet USDA can waive up to 50% of their matching requirement. The 1994 Institutions can receive federal research funds through competitive grants programs. They may also use interest distributions from the Native American Institutions Endowment Fund, allocated on a formula basis, at their discretion. The land-grant university system operates the U.S. Cooperative Extension Service (CES) in partnership with federal, state, and local governments. The CES provides non-formal education to agricultural producers and communities through its network of offices located in most of the more than 3,000 U.S. counties and territories. The Smith-Lever Act of 1914 (38 Stat. 372), National Agricultural Research, Education, and Teaching Policy Act of 1977 (NARETPA, P.L. 95-113 §1444-1445), and AREERA extension provisions guide agricultural extension funding in the land-grant university system. The 1862 and 1890 Institutions receive federal capacity funds, according to separate formulas with non-federal matching requirements. USDA may waive up to 50% of the matching requirement for 1890 Institutions. The 1994 Institutions may receive federal extension funding through competitive grants. Looking forward, the scheduled fall 2019 relocation of NIFA from its current location in Washington, D.C.; the decades-long shifting balance of public and private investment in agricultural research; disparities in state matching funds among the different classes of land-grant institutions; and the funding of TCU land-grant institutions may invite congressional engagement.

Aug 29, 2019

U.S.-China Relations

Aug 29, 2019

DHS Border Barrier Funding

Congress and the Administration are debating enhancing and expanding border barriers on the southwest border in the context of border security. The purpose of barriers on the U.S.-Mexico border has evolved over time. In the late 19th and early 20th centuries, fencing at the border was more for demarcation, or discouraging livestock from wandering over the border, rather than deterring smugglers or illegal migration. Physical barriers to deter migrants are a relatively new part of the border landscape, first being built in the 1990s in conjunction with counterdrug efforts. This phase of construction, extending into the 2000s, was largely driven by legislative initiatives. Specific authorization for border barriers was provided in 1996 in the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), and again in 2006 in the Secure Fence Act. These authorities were superseded by legislation included in the Consolidated Appropriations Act, which rewrote key provisions of IIRIRA and replaced most of the Secure Fence Act. The result of these initiatives was construction of more than 650 miles of barriers along the nearly 2,000-mile border. A second phase of construction is marked by barrier construction being an explicit part of the White House agenda. On January 25, 2017, the Trump Administration issued Executive Order 13767, “Border Security and Immigration Enforcement Improvements.” Section 2(a) of the E.O. indicates that it is the policy of the executive branch to “secure the southern border of the United States through the immediate construction of a physical wall on the southern border, monitored and supported by adequate personnel so as to prevent illegal immigration, drug and human trafficking, and acts of terrorism.” As debate over funding for, and construction of, a “border wall system” in this phase continues, putting border barrier funding in its historical context has been of interest to some in Congress. There has not been an authoritative compilation of data over time on the level of federal investment in border barriers. This is in part due to the evolving structure of the appropriations for agencies charged with protecting the border—account structures have shifted, initiatives have come and gone, and appropriations typically have not specified a precise level of funding for barriers as opposed to other technologies that secure the border. Funding was not specifically designated for border barrier construction until FY2006. The more than $3 billion in appropriations provided by Congress for border barrier planning and construction since the signing of the EO exceeds the amount provided for those purposes from FY2007-FY2016 by more than $618 million. Almost all of this funding has been provided for improvements to the existing barriers at the border; a portion of the funds are available for new construction. CBP announced on August 8, 2019, a contract award for building 11 miles of levee wall system (steel bollard on top of a concrete wall) in areas where no barriers currently exist in the Rio Grande Valley Sector. The Administration has taken steps to secure funding beyond the levels approved by Congress for border barriers, including transferring roughly $601 million from the Treasury Forfeiture Fund to CBP; using $2.5 billion in Department of Defense funds transferred to the Department’s counterdrug programs to construct border barriers; and potentially reallocating up to $3.6 billion from other military construction projects using authorities under the declaration of a national emergency. This report provides an overview of the funding appropriated for border barriers, based on data from CBP and congressional documents, and a primer on the Trump Administration’s efforts to enhance the funding for border barriers, with a brief discussion of the legislative and historical context of construction of barriers at the U.S-Mexico border. It concludes with a number of unanswered questions Congress may wish to explore as this debate continues. An appendix tracks barrier construction mileage on the U.S.-Mexico border by year.

Aug 27, 2019

A Brief Overview of FEMA’s Individual Assistance Program

Aug 23, 2019

Supreme Court October Term 2018: A Review of Selected Major Rulings

The Supreme Court term that began on October 1, 2018, was a term of transition, with the Court issuing a number of rulings that, at times, suggested but did not fully adopt broader transformations in its jurisprudence. The term followed the retirement of Justice Kennedy, who was a critical vote on the Court for much of his 30-year tenure and who had been widely viewed as the Court’s median or “swing” Justice. As a result, the question looming over the October 2018 Term was how the replacement of Justice Kennedy with Justice Kavanaugh would alter the Court’s jurisprudence going forward. Notwithstanding the alteration in the Court’s makeup, observers have generally agreed that the October 2018 Term largely did not produce broad changes to the Court’s jurisprudence. Although a number of cases presented the Court with the opportunity to rethink various areas of law, the Court largely declined those invitations. In other cases, a majority of the Justices did not resolve potentially far-reaching questions, resulting in the Court either issuing more narrow rulings or simply not issuing an opinion in a given case. Nonetheless, much of the low-key nature of the October 2018 Term was a product of the Court’s decisions to not hear certain matters. And for a number of closely watched cases that it did agree to hear, the Court opted to schedule arguments for the next term. While the Supreme Court’s latest term generally did not result in wholesale changes to the law, its rulings were nonetheless important, in large part, because they provide insight into how the Court may function following Justice Kennedy’s retirement. For the fourth straight year at the Court, the number of opinions decided by a bare majority increased, with 29% of the Court’s decisions being issued by a five-Justice majority. While a number of decisions saw the Court divided along what are perceived to be the typical ideological lines, the bulk of the Court’s closely divided cases involved heterodox lineups in which Justices with divergent judicial philosophies joined to form a majority in a given case. Collectively, the voting patterns of the October 2018 Term have led some commentators to suggest that the Court has transformed from an institution that was largely defined by the vote of Justice Kennedy to one in which multiple Justices are now perceived to be the Court’s swing votes. Beyond the general dynamics of the October 2018 Term, the Court issued a number of opinions of importance for Congress. Of particular note are five opinions from the October Term 2018: (1) Kisor v. Wilkie, which considered the continued viability of the Auer-Seminole Rock doctrine governing judicial deference to an agency’s interpretation of its own ambiguous regulation; (2) Department of Commerce v. New York, a challenge to the addition of a citizenship question to the 2020 census questionnaire; (3) Rucho v. Common Cause, which considered whether federal courts have jurisdiction to adjudicate claims of excessive partisanship in drawing electoral districts; (4) American Legion v. American Humanist Association, a challenge to the constitutionality of a state’s display of a Latin cross as a World War I memorial; and (5) Gundy v. United States, which considered the scope of the long-dormant nondelegation doctrine.

Aug 23, 2019

International Food Assistance: Food for Peace Nonemergency Programs

The U.S. government provides international food assistance to promote global food security, alleviate hunger, and address food crises among the world’s most vulnerable populations. Congress authorizes this assistance through regular agriculture and international affairs legislation, and provides funding through annual appropriations legislation. The primary channel for this assistance is the Food for Peace program (FFP), administered by the U.S. Agency for International Development (USAID). Established in 1954, FFP has historically focused primarily on meeting the emergency food needs of the world’s most vulnerable populations; however, it also manages a number of nonemergency programs. These lesser-known programs employ food to foster development aims, such as addressing the root causes of hunger and making communities more resilient to shocks, both natural and human-induced. Nonemergency activities, which in FY2019 are funded at a minimum annual level of $365 million, may include in-kind food distributions, educational nutrition programs, training on agricultural markets and farming best practices, and broader community development initiatives, among others. In building resilience in vulnerable communities, the United States, through FFP, seeks to reduce the need for future emergency assistance. Similar to emergency food assistance, nonemergency programs use U.S. in-kind food aid—commodities purchased in the United States and shipped overseas. In recent years, it has also turned to market-based approaches, such as procuring food in the country or region in which it will ultimately be delivered (also referred to as local and regional procurement, or LRP) or distributing vouchers and cash for local food purchase. The 115th Congress enacted both the 2018 farm bill (P.L. 115-334) and Global Food Security Reauthorization Act of 2017 (P.L. 115-266), which authorized all Food for Peace programs through FY2023. In the 116th Congress, Members may be interested in several policy and structural issues related to nonemergency food assistance as they consider foreign assistance, agriculture, and foreign affairs policies and programs in the course of finalizing annual appropriations legislation. For example, The Trump Administration has repeatedly proposed eliminating funding for the entire FFP program, including both emergency and nonemergency programs, from Agriculture appropriations and instead fund food assistance entirely through Department of State, Foreign Operations, and Related Programs appropriations. The Administration asserts that the proposal is part of an effort to “streamline foreign assistance, prioritize funding, and use funding as effectively and efficiently as possible.” To date, Congress has not accepted the Administration’s proposal and continued to fund the FFP program in Agriculture appropriations, which is currently authorized through FY2023. USAID’s internal reform initiative, referred to as Transformation, calls for the merger of the Office of FFP with the Office U.S. Foreign Disaster Assistance (OFDA) into a new entity called the Bureau for Humanitarian Assistance (HA) by the end of 2020. While the agency has indicated that the new HA will administer nonemergency programming, there are few details on how it will do so. FFP programs fall into two distinct committee jurisdictions—Agriculture and Foreign Affairs/Relations—making congressional oversight of programs more challenging. No one committee receives a comprehensive view of all FFP programming, and the committees of jurisdiction sometimes have competing priorities. For additional information, see CRS Report R45422, U.S. International Food Assistance: An Overview.

Aug 21, 2019

Small Business Credit Markets and Selected Policy Issues

Small businesses are owned by and employ a wide variety of entrepreneurs—skilled trade technicians, medical professionals, financial consultants, technology innovators, and restaurateurs, among many others. As do large corporations, small businesses rely on credit to purchase inventory, to cover cash flow shortages that may arise from unexpected expenses or periods of inadequate income, or to expand operations. During the Great Recession of 2007-2009, lending to small businesses declined. A decade after the recession, it appears that while many small businesses enjoy increased access to credit, others might still face credit constraints. Congress has demonstrated an ongoing interest in credit availability for small businesses, viewing them as a medium for stimulating the economy and creating jobs. In general, Congress’s interest in the small business credit market focuses on quantity and price—specifically (1) whether small businesses can reasonably obtain loans from private lenders and (2) whether the prices (lending rates and fees) of such credit are fair and competitive. Congress passed legislation to facilitate lending to small businesses that are likely to face hurdles in obtaining credit: The Small Business Act of 1953 (P.L. 83-163) established the Small Business Administration (SBA), which administers several types of programs to support capital access for small businesses that struggle to obtain credit on reasonable terms and conditions from private-sector lenders. The Community Reinvestment Act (CRA; P.L. 95-128) encouraged banks to address persistent unmet small business credit demands in low- and moderate-income (LMI) communities. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203) required the Bureau of Consumer Financial Protection (CFPB) to collect data from small business lenders concerning credit applications made by women-owned, minority-owned, and small businesses with the goal of better understanding their financing needs. The CFPB has not yet implemented this requirement. Data that capture small business borrowers’ characteristics and lenders’ underwriting processes (i.e., their processes for determining whether borrowers are creditworthy) could help to accurately determine whether small businesses have sufficient and fairly priced access to private credit. Various government agencies and financial institutions define small business using factors that may be based upon annual revenues, number of employees, market scope, market share, and some or all of the above factors. Because no consensus definition of a small business exists, data to analyze the small business credit market’s performance are limited and fragmented. Moreover, certain small businesses face additional challenges that may force them to seek financing outside of traditional business credit markets. Many new start-up firms, for example, do not have the financial track records to qualify for standard business loans and frequently must rely on mortgage and consumer credit. In addition, many small businesses rely on customized lending products, thus limiting their choice of lenders to those with specialized underwriting methodologies or business models. The lack of a consensus definition of small business, along with the wide variety of idiosyncratic business risks, hinders the availability of conclusive evidence on the small business credit market’s overall performance and, therefore, the ability to assess the effectiveness of various policy actions designed to increase small business lending. In 2017, the CFPB issued a request for information on the small business lending market to solicit feedback on how to implement the Dodd-Frank requirement to collect data from financial institutions on small business credit applications. Final rulemaking, however, has been delayed. In addition, various bills regarding the small business credit market have been introduced in the 116th Congress. For example, H.Res. 370 would express “the sense of the House of Representatives that small business owners seeking financing have fundamental rights, including transparent pricing and terms, competitive products, responsible underwriting, fair treatment from financing providers, brokers, and lead generators, inclusive credit access, and fair collection practices.” H.R. 3374 would amend the Equal Credit Opportunity Act to require the collection of small business loan data related to LGBTQ-owned businesses. H.R. 1937 and S. 212, the Indian Community Economic Enhancement Act of 2019, among other things, would require the Government Accountability Office to conduct a study to assess and quantify the extent to which federal loan guarantees, such as those provided by the SBA, have been used to facilitate credit access in these communities.

Aug 20, 2019

Interior, Environment, and Related Agencies: Overview of FY2020 Appropriations

The Interior, Environment, and Related Agencies appropriations bill contains funding for more than 30 agencies and entities. They include most of the Department of the Interior (DOI) as well as agencies within other departments, such as the Forest Service within the Department of Agriculture and the Indian Health Service within the Department of Health and Human Services. The bill also provides funding for the Environmental Protection Agency (EPA), arts and cultural agencies, and other organizations and entities. Issues for Congress include determining the amount, terms, and conditions of funding for agencies and programs. For FY2020, President Trump requested $32.47 billion for Interior, Environment, and Related Agencies, including $2.25 billion for DOI and Forest Service wildfire suppression under a discretionary cap adjustment. For the 10 major DOI agencies in Title I of the bill, the request was $11.75 billion, or 36.2% of the $32.47 billion total requested. For EPA, funded in Title II of the bill, the request was $6.22 billion, or 19.2% of the total. For the 23 agencies and other entities currently funded in Title III of the bill, the request was $14.50 billion, or 44.7% of the total. The President’s FY2020 request would be $3.14 billion (8.8%) lower than the FY2019 regular enacted appropriation of $35.61 billion (in P.L. 116-6, Division E), and $4.72 billion (12.7%) lower than the FY2019 total appropriation of $37.19 billion, which included $1.58 billion in emergency supplemental appropriations for disaster relief (in P.L. 116-20, Title VII). On June 25, 2019, the House passed H.R. 3055 with $39.59 billion (in Division C) for agencies in the Interior bill. This total included $2.25 billion for wildfire suppression under the cap adjustment, as requested by the President. The FY2020 House-passed total would be $2.40 billion (6.4%) higher than the FY2019 total of $37.19 billion in regular and emergency appropriations, and $3.98 billion (11.2%) higher than the FY2019 total of $35.61 billion in regular appropriations. It would also be $7.12 billion (21.9%) higher than the President’s FY2020 request of $32.47 billion. For individual agencies and programs in the bill, there are many differences among the funding levels enacted for FY2019 and those requested by the President for FY2020 and approved by the House for FY2020. This report highlights funding for selected agencies and programs that have been among the many of interest to Congress, stakeholders, and the public. They include the Bureau of Land Management, EPA, U.S. Fish and Wildlife Service, Forest Service, Indian Affairs, Indian Health Service, Land and Water Conservation Fund, National Park Service, Payments in Lieu of Taxes Program, Reorganization of DOI, Smithsonian Institution, U.S. Geological Survey, and Wildland Fire Management.

Aug 19, 2019

DHS Final Rule on Public Charge: Overview and Considerations for Congress

Aug 16, 2019

Asylum Bar for Migrants Who Reach the Southern Border through Third Countries: Issues and Ongoing Litigation

Aug 16, 2019

Farm Policy: USDA’s 2019 Trade Aid Package

On May 23, 2019, Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) would undertake a second trade aid package in 2019 valued at up to $16 billion—similar to a trade aid package initiated in 2018 valued at $12 billion—to assist farmers in response to trade damage from continued tariff retaliation and trade disruptions. Under the 2019 trade aid package, USDA will use its authority under the Commodity Credit Corporation (CCC) Charter Act to fund three separate programs to assist agricultural producers in 2019 while the Administration works to resolve the ongoing trade disputes with certain foreign nations, most notably China. The three programs are similar to the 2018 trade aid package but are funded at different levels: The Market Facilitation Program (MFP) for 2019, administered by USDA’s Farm Service Agency, is to provide up to $14.5 billion in direct payments to producers of affected commodities (compared with up to $10 billion in 2018). A Food Purchase and Distribution Program, administered through USDA’s Agricultural Marketing Service, will use $1.4 billion (compared with $1.2 billion in 2018) to purchase surplus commodities affected by trade retaliation such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by USDA’s Food and Nutrition Service to food banks, schools, and other outlets serving low-income individuals. The Agricultural Trade Promotion Program, administered by USDA’s Foreign Agriculture Service, will be provided $100 million ($200 million in 2018) to assist in developing new export markets on behalf of U.S. agricultural producers. The broad discretionary authority granted to the Secretary under the CCC Charter Act to implement the trade aid package also allows the Secretary to determine how the aid is to be calculated and distributed. Some important differences between the 2018 and 2019 trade aid packages include the following. The 2019 package includes an expanded funding commitment of $16 billion versus $12 billion under the 2018 package. The 2019 package focuses on the same three commodity groups—non-specialty crops (grains and oilseeds), specialty crops (nuts and fruit), and animal products (hogs and dairy)—but includes an expanded list of eligible commodities (41 eligible commodities in 2019 compared with nine in 2018). The MFP payment formula for 2019 is modified for non-specialty crops to be a single county payment rate rather than commodity-specific rates that were applied in 2018. This is done to minimize influencing producer crop choices and avoid large payment-rate discrepancies across commodities. MFP payments for non-specialty crops will be based on planted acres in 2019, not harvested production as in 2018. This change will avoid having MFP payments reduced by the lower yields that are expected across major growing regions due to the widespread wet spring and delayed plantings. The 2019 package includes expanded payment limits per individual per commodity group ($250,000 versus $125,000 under the 2018 initiative) and an expanded maximum combined payment limit across commodity groups ($500,000 versus $375,000). It continues the expanded adjusted gross income (AGI) criteria (no restriction if at least 75% of AGI is from farming operations) adopted under the 2019 Supplemental Appropriations for Disaster Relief Act (P.L. 116-20) and applied to 2018 MFP payments retroactively. Payments may be made in up to three tranches, with the second and third tranches dependent on market developments. The first payment—to go out in mid-to-late August—is to consist of the higher of either 50% of a producer’s calculated payment or $15 per acre. The second and third payments would depend on USDA’s evaluation of market and trade conditions. If deemed necessary, they would occur in November 2019 and January 2020, respectively. USDA’s use of CCC authority to initiate and fund agricultural support programs without congressional involvement is not without precedent, but the scope and scale of its use for the two trade aid packages—at $28 billion—has increased congressional and public interest. Some have questioned whether MFP payments have established a precedent that might persist as long as trade disputes remain unresolved. Others have questioned the equity of their distribution across commodity sectors and regions. Finally, some economists worry that large MFP payments might contribute to a violation of U.S. trade commitments to the World Trade Organization.

Aug 12, 2019

Tax Policy and Disaster Recovery

The Internal Revenue Code (IRC) contains a number of provisions intended to provide disaster relief. Following certain disasters, Congress has passed legislation with temporary and targeted tax relief policies. At other times, Congress has passed legislation providing tax relief to those affected by all federally declared major disasters (disasters with Stafford Act declarations) occurring during a set time period. In addition, several disaster tax relief provisions are permanent features of the IRC. This report discusses the following permanent provisions: disaster casualty loss deductions; deferral of gain from involuntary conversions of property destroyed by a disaster; disaster relief for owners of low-income housing tax credit properties; income exclusion for disaster relief payments to individuals; income exclusion for certain insurance living expense payments; and IRS administrative relief in the form of extended deadlines and waiving of certain penalties. Congress began enacting tax legislation generally intended to assist victims of specific disasters in 2002 in the wake of the September 11, 2001, terrorist attacks. Laws targeting specific disasters contained provisions that were temporary in nature. Two acts, however—the Heartland Disaster Tax Relief Act of 2008 (P.L. 110-343) and the 2017 tax act (P.L. 115-97)—provided more general, but still temporary, relief for any federally declared disaster occurring during designated time periods. The acts providing temporary relief include the following: The Job Creation and Worker Assistance Act of 2002 (P.L. 107-147), which provided tax benefits for areas of New York City damaged by the terrorist attacks of September 11, 2001; The Katrina Emergency Tax Relief Act of 2005 (KETRA; P.L. 109-73), which provided tax relief to assist the victims of Hurricane Katrina in 2005; The Gulf Opportunity Zone (GO Zone) Act of 2005 (P.L. 109-135), which provided tax relief to those affected by Hurricanes Katrina, Rita, and Wilma in 2005; The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill; P.L. 110-234), which provided tax relief intended to assist those affected by severe storms and tornadoes in Kansas in 2007; The Heartland Disaster Tax Relief Act of 2008 (P.L. 110-343), which provided tax relief to assist recovery from both the severe weather that affected the Midwest during summer 2008 and Hurricane Ike (this act also included general disaster tax relief provisions that applied to federally declared disasters occurring before January 1, 2010); The Disaster Tax Relief and Airport and Airway Extension Act of 2017 (P.L. 115-63), which provided tax relief to those affected by Hurricanes Harvey, Irma, and Maria in 2017; 2017 tax act (P.L. 115-97, commonly referred to using the title of the bill as passed in the House, the “Tax Cuts and Jobs Act”) responded to major disasters occurring in 2016; and The Bipartisan Budget Act of 2018 (BBA18; P.L. 115-123), which provided relief to those affected by the 2017 California wildfires. This report provides a basic overview of existing, permanent disaster tax provisions, as well as past, targeted legislative responses to specific disasters. The report also includes a discussion of economic and policy considerations related to providing disaster tax relief to individuals and businesses, and encouraging charitable giving to support disaster relief.

Aug 9, 2019

U.S.-China Trade Relations

Aug 7, 2019

Labor, Health and Human Services, and Education: FY2019 Appropriations

This report offers an overview of actions taken by Congress and the President to provide FY2019 appropriations for accounts funded by the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) appropriations bill. This bill includes all accounts funded through the annual appropriations process at the Department of Labor (DOL) and Department of Education (ED). It also provides annual appropriations for most agencies within the Department of Health and Human Services (HHS), with certain exceptions (e.g., the Food and Drug Administration is funded via the Agriculture bill). Finally, the LHHS bill provides funds for more than a dozen related agencies, including the Social Security Administration (SSA). FY2019 Supplemental Appropriations for the Southern Border: During the 116th Congress, on July 1, 2019, the President signed into law P.L. 116-26, a supplemental appropriations act for FY2019 focusing primarily on the provision of humanitarian assistance and security at the southern border. The bill was passed by the House on June 27 and by the Senate on June 26. (An earlier version of the bill had passed the House on June 25. A related bill, S. 1900, had passed the Senate on June 19; this bill was substantially similar to the final version of P.L. 116-26.) As enacted, the bill contained nearly $2.9 billion in emergency-designated LHHS appropriations for the Refugee and Entrant Assistance account at HHS. The FY2019 enacted levels presented throughout this report are based on amounts provided by the FY2019 LHHS omnibus (P.L. 115-245, see below) and do not include these supplemental funds, which were provided in addition to the annual appropriations. FY2019 Supplemental Appropriations for Disaster Relief: During the 116th Congress, on June 6, 2019, the President signed into law P.L. 116-20, a supplemental appropriations act for FY2019 focusing primarily on certain expenses arising from hurricanes, typhoons, wildfires, earthquakes, tornadoes, floods, and other natural disasters or emergencies. The bill was passed by the House on June 3 and by the Senate on May 23. (An earlier version of the bill had passed the House on May 10.) As enacted, the bill included roughly $611 million in emergency-designated LHHS appropriations for accounts at DOL, HHS, and ED. The FY2019 enacted levels presented throughout this report are based on amounts provided by the FY2019 LHHS omnibus (P.L. 115-245) and do not include these supplemental funds, which were provided in addition to the annual appropriations. FY2019 LHHS Omnibus: During the 115th Congress, on September 28, 2018, the President signed into law the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 (H.R. 6157, P.L. 115-245). This law contained full-year LHHS appropriations in Division B. This is the first occasion since the FY1997 appropriations cycle that full-year LHHS appropriations were enacted on or before the start of the fiscal year (October 1). The FY2019 LHHS omnibus contained discretionary appropriations totaling $189.4 billion. This amount is 1.5% more than FY2018 enacted levels and 8.9% more than the FY2019 President’s budget request. The omnibus also provided $869.8 billion in mandatory funding, for a combined LHHS total of $1.059 trillion. The distribution of discretionary funding was as follows: DOL: $12.1 billion, 0.8% less than FY2018. HHS: $90.5 billion, 2.6% more than FY2018. ED: $71.4 billion, 0.8% more than FY2018. Related Agencies: $15.3 billion, 0.1% more than FY2018. FY2019 LHHS Senate Action: The Senate Appropriations Committee reported its version of the FY2018 LHHS appropriations bill on June 28, 2018, by a vote of 30-1 (S. 3158). Instead of taking up the committee-reported vehicle, the Senate chose to take up a different appropriations vehicle (H.R. 6157) and amend it to contain FY2019 LHHS appropriations as well. (Those LHHS appropriations, which were added as Division B of H.R. 6157, were substantially the same as S. 3158.) During floor consideration of H.R. 6157, the Senate also adopted 31 amendments to the new LHHS division of the bill (see Appendix B for a summary of these amendments). The Senate passed an amended H.R. 6157 by a vote of 85-7 on August 23, 2018. The Senate-passed bill would have provided $189.4 billion in discretionary LHHS funds. This would have been 1.5% more than FY2018, and 8.9% more than the FY2019 President’s request. In addition, the Senate-passed bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.059 trillion for LHHS as a whole. The distribution of discretionary funding would have been as follows: DOL: $12.1 billion, 0.8% less than FY2018. HHS: $90.5 billion, 2.7% more than FY2018. ED: $71.4 billion, 0.8% more than FY2018. Related Agencies: $15.4 billion, 0.5% more than FY2018. FY2019 LHHS House Action: The House Appropriations Committee’s version of the FY2019 LHHS appropriations bill was ordered reported by the full committee on July 11, 2018, by a vote of 30-22, and reported to the House on July 23 (H.R. 6470). This bill would have provided $187.2 billion in discretionary LHHS funds, a 0.3% increase from FY2018 enacted levels. This amount would have been 7.6% more than the FY2019 President’s request. In addition, the House committee bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.057 trillion for LHHS as a whole. The distribution of discretionary funding would have been as follows: DOL: $11.9 billion, 2.4% less than FY2018. HHS: $89.3 billion, 1.3% more than FY2018. ED: $71.0 billion, 0.2% more than FY2018. Related Agencies: $15.0 billion, 2.2% less than FY2018. The House committee-reported version of the LHHS bill did not receive floor consideration. FY2019 President’s Budget Request: On February 12, 2018, the Trump Administration released the FY2019 President’s budget. The President requested $173.9 billion in discretionary funding for accounts funded by the LHHS bill, which would have been a decrease of 6.8% from FY2018 levels. In addition, the President requested $869.8 billion in annually appropriated mandatory funding, for a total of $1.044 trillion for LHHS as a whole. The distribution of discretionary funding was as follows: DOL: $10.9 billion, 11.1% less than FY2018. HHS: $86.7 billion, 1.6% less than FY2018. ED: $63.2 billion, 10.8% less than FY2018. Related Agencies: $13.2 billion, 14.0% less than FY2018.

Aug 5, 2019