House Rule Changes Point to Gridlock During 116th Congress

While much of Washington has been focused on the government shutdown, House Democrats kicked off the 116th Congress by implementing a series of changes to the standing rules that will will make it harder for Congress and President Trump to agree on major legislation.

Perhaps one of the more consequential changes is the reinstatement of the so-called “paygo” rule to establish a point of order against any legislation that has a net effect of increasing the federal government’s budget deficit over a 10-year budget window.

In short, this means that under the new House rules, any legislation that cuts taxes, increases spending or decreases revenues would have to be “paid for,” unless Congress votes to waive the point of order. To put this in perspective, the net revenue effect of the Tax Cuts and Jobs Act was a $1.45 trillion tax cut over the period 2018-2027. It seems safe to say that a tax cut of that magnitude certainly would not happen under this new rule.

Many of the retirement savings provisions in the Retirement Enhancement and Savings Act (RESA) had a negligible revenue effect, but the purported revenue loss from the MEPs/PEPs provision is estimated at $3.7 billion over a 10-year period. Additionally, the popular proposal to ease the requirement minimum distribution rules for individuals with certain account balances is estimated at $6.2 billion. Under just these two provisions, the House would have to find $10 billion in revenue increases to approve the legislation. And many times in the past, retirement policy provisions – such as decreases to the contribution limits – are targeted as “pay fors.”

Additional House rule changes remove the requirement that the Congressional Budget Office and Joint Committee on Taxation incorporate “dynamic scoring” into revenue estimating. Under this scoring, the revenue estimators take into consideration the economic effects that tax cuts would have on the economy for budget scoring purposes, which can reduce the overall estimated cost of tax cuts, for example. House Democrats also removed a requirement that the House agree by at least a three-fifths supermajority in order to raise revenue through additional federal income taxes.

While these rule changes may seem like Capitol Hill “inside baseball,” they are significant. They do not carry over to the Senate, which has its own set of rules, but it suggests that compromises between the House, Senate and President Trump to enact major legislation will be more difficult.

Key Retirement House Committee Gets New Name

As part of the rule changes, House Democrats also agreed to change the name of a significant committee that deals with retirement issues. What had previously been called the “Committee on Education and the Workforce” has now been renamed the “Committee on Education and Labor.”

The committee is now chaired by Rep. Bobby Scott (D-VA); Rep. Virginia Foxx (R-NC) is the ranking Republican member.

Other Committee Changes

The key retirement and tax policy committees underwent a number of changes as of the start of the new Congress.

As expected, Rep. Richie Neal (D-MA) is the new Chairman of the House Ways & Means Committee. Neal, who has long been a champion of retirement policy, plans to make retirement security legislation a priority this year, and in late 2017 introduced two pieces of ambitious legislation that seek to shore up retirement savings.

As one of the most powerful committees in Congress, numerous members are jockeying for the open slots on the Ways & Means Committee, but House leaders have not yet made an announcement on who will fill those seats.

In the Senate, Sen. Charles Grassley (R-IA) will take over as Chairman of the Senate Finance Committee, replacing former Chairman Sen. Orrin Hatch (R-UT), who retired at the end of the 115th Congress. Grassley previously chaired the Finance Committee in the early-to-mid 2000s, when the Pension Protection Act of 2006 was signed into law.

There are four new senators on the Finance Committee:

  • James Lankford (R-OK)
  • Steve Daines (R-MT)
  • Todd Young (R-IN), who spoke at the July 2018 NAPA Fly-In Forum
  • Catherine Cortez Masto (D-NV)

Sen. Lamar Alexander (R-TN) will remain chair of the Senate Health, Education, Labor and Pensions Committee, which oversees retirement and workforce policy issues, including ERISA. Sen. Patty Murray (D-WA) will remain as the ranking Democrat.

There are three new senators on the HELP Committee:

  • Mitt Romney (R-UT)
  • Mike Braun (R-IN)
  • Jacky Rosen (D-NV), replacing Sen. Michael Bennet (D-CO)

Additional changes to the committees and their related agendas for the 116th Congress are expected to be announced in the next couple of weeks.

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