Congress is preparing to tackle a second purely partisan budget bill, starting as soon as this month. This poses risks (from offsetting revenue proposals) as well as opportunities (for proposals like indexing capital gains or a new retirement savings plan (Trump Accounts for Adults)).

During its first week of spring recess, Republican Congressional leadership and the President agreed to a two-part strategy to end the shutdown of the Department of Homeland Security (DHS). The strategy calls for funding all of DHS' agencies and programs except for immigration (ICE and Border Control). ICE and Border Control would then get a three-year funding appropriation in a reconciliation budget bill.

This strategy, if it succeeds, significantly boosts a reconciliation bill's chances for enactment into law. Republicans in particular will be anxious to settle funding for DHS. They will also be grappling with other must-do issues, like for example, funding for the war against Iran. This raises the stakes in terms of finding the votes to pass the bill. So, there will be intense lobbying by many special interests to include their much-wanted provisions in the bill. So, the resulting bill could provide a home for new law—like indexing capital gains or creating Trump Accounts for Adults.

The House Freedom Caucus (a group of conservative Republican House members) have come out in opposition to this strategy, Instead, they say, all of DHS should be funded in the reconciliation bill. There are enough Freedom Caucus members to scuttle the strategy proposed by GOP Congressional leadership and agreed to by President Trump, but whether they will follow up their opposition with “no” votes, should leadership decide to proceed with the strategy, remains to be seen.

Decisions on how to proceed are not yet final, but current thinking suggests that Congressional GOP leadership will try to move at least two (some say three) separate reconciliation bills. The first would be narrow—funding DHS for three years (past the end of this Trump presidency). There is talk of adding the Administration’s supplemental funding request for Iran war expenses to this first package. The second would tackle other priority issues. So, the initial bill may not deal with tax, retirement, revenue-raising or other issues of concern to NAIFA members and their clients. But the subsequent bill would likely be the time and place for those issues.

Congress will be shooting for June 1 as the deadline for enacting the first, narrow bill—if it happens this way. That would set up the second reconciliation bill debate for this summer. Offsetting revenue—in the form of spending cuts and tax increases—will be part of the discussions.

Currently, the issues that could be addressed are a matter of speculation only. But all signs point to at least three that will be priorities for NAIFA. They are:

• Indexing capital gains: this issue has been floated in different forms—for example, providing for indexing gains from the sale of a home, or indexing all capital gains. It has also been discussed as something that could possibly be done by regulation, although the legality of that has been questioned over the years. The issue is not new, but its contours are still emerging, and it is very fluid.
• HSAs: There is still interest in dealing with spiking health insurance premiums and one way to address this for many Republicans (including the President) is to shift payment of premium subsidies from insurers to individuals. This puts in play the possibility of paying those premium subsidies into individual health savings accounts (HSAs).
• Retirement savings plan: President Trump has called for creation of a new retirement savings program for adults whose employers do not offer workplace retirement savings plans. Generally, this idea is nicknamed “Trump Accounts for Adults” and is something that has generated considerable interest among lawmakers. Details are still scarce but could include opening the federal government’s retirement plans for its employees to participants in this new program, expansion of the Saver’s Credit, and/or new individual retirement savings accounts (similar to the now closed MyIRA plans, available from 2014 to 2018).

Also likely in play will be offsetting revenue proposals. So far those under discussion do not impact NAIFA issues, but that could change. NAIFA is watching this closely.

Prospects: There will be intense competition among interests seeking inclusion in whichever bill that would include tax, retirement, revenue-raising and other issues. Many proposals that lawmakers would support will not make it in due to limited resources. Many others will fall by the wayside due to intense opposition. So, it is too soon to predict which issues will be live and of serious concern. But it is near certain that over the course of the next two to four months (or more) there will be active debate—pro and con—on issues that matter to NAIFA members and their clients.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org