The latest, as of THURSDAY, from Washington, DC:

Appropriations

On Wednesday, House Appropriations Chairman Frelinghuysen released the text of an FY18 funding bill (continuing resolution, CR) that would extend non-defense discretionary (NDD) funding through January 19, 2018, and fully fund defense spending for the remainder of FY 2018.  This bill would increase funding for defense spending for the full fiscal year, waiving pending sequestration cuts would be waived for defense spending, while only temporarily delayed for NDD funding.

The bill also includes a fix which would fund the Children’s Health Insurance Plan (CHIP) but that is opposed by Democrats due to the use of the Prevention and Public Health Fund funding as an offset to pay for the bill.

Even if this funding bill were to pass the House, it would likely be blocked by Senate Democrats, whose votes are needed for the bill to pass the Senate. Republicans in both chambers have said that the Senate is more likely to strip out the Defense bill and send back a short-term CR for all 12 spending measures. It is unclear what package that can pass the House AND the Senate, opening the question on the possibility of a pre-Christmas shut down after the current CR runs out on December 22. You can read more on this disagreement here.

Tax Plan

House and Senate conferees have agreed to a tax plan agreement which resolves differences between the two chamber’s versions of the tax bill.  The Senate plans to take up the bill first on Monday, with a final vote on Tuesday.  Below is a list of what is expected to be included in the final version of the bill:

• 37% top income tax rate
• 21% corporate tax
• Up to $10k of state or property taxes can be deducted
• Removes the tax on graduate student tuition waivers
• Maintains estate tax but raises threshold to qualify to about $11 million from $5.49 million
• Pass-throughs get a 20% deduction on their income
• Preserves the individual Alternative Minimum Tax
• Eliminates the proposed corporate AMT
• Mortgage interest deduction cap would be lowered to $750,000 from the current $1 million
• The final agreement would also eliminate the Affordable Care individual mandate.

The road ahead could have been complicated because of this week’s special election results where Democrat Doug Jones won to become the next US Senator representing Alabama.  He could be sworn-in as soon as December 22 when the Alabama board of elections is supposed to officially certify the election results, or as late as January 3.  The current timeline suggests that interim Senator Luther Strange will remain in office long enough to help pass the Republican’s tax reform and another stopgap funding bill before Christmas.