House Passes Massive Defense Bill

House Passes Massive Defense Bill

Reuters
By Yuval Rosenberg and Michael Rainey
Wednesday, December 11, 2024

Good Wednesday evening! On this date in 1980, President Jimmy Carter signed into law the Comprehensive Environmental Response, Compensation, and Liability Act, which created a $1.6 billion environmental “Superfund” to pay for cleaning up sites contaminated by hazardous chemical spills and toxic waste.

Here’s what’s happening today.

House Passes Massive Defense Policy Bill With Military Pay Raise, Ban on Transgender Care for Minors

The House on Wednesday afternoon passed an $884 billion defense policy bill for 2025. The measure passed in a bipartisan 281-140 vote despite the late inclusion of a controversial measure by House Speaker Mike Johnson that would ban the Department of Defense from providing gender dysphoria treatments such as hormones and puberty blockers “that could result in sterilization” for transgender children of servicemembers.

Two hundred Republicans and 81 Democrats voted for the bill, while 124 Democrats and 16 Republicans opposed it.

The final defense plan stays within the spending caps set as part of the 2023 Fiscal Responsibility Act. It authorizes $883.7 billion for fiscal year 2025, including $849.9 billion for Pentagon programs and $33.3 billion for programs under the Department of Energy. Another $11 billion in defense funding outside the NDAA would lift total defense funding for the year to $895.2 billion, an increase of $91 billion, or 1%, over 2024 levels.

The package would provide a 14.5% pay raise for junior enlisted servicemembers and a 4.5% increase for other servicemembers, and it includes a host of other provisions intended to improve the quality of life for U.S. troops and their families. It also would deliver $15.6 billion for deterring China and strengthening defense initiatives in the Indo-Pacific region.

An earlier Senate version of the legislation would have pushed past the spending caps and lifted defense spending to $923.3 billion. Some defense hawks were disappointed that the final version of the legislation didn’t reflect the Senate plan.

“I am proud of much of the NDAA,” Republican Sen. Roger Wicker said in a statement this week. “However, the failure to include a topline increase is a tremendous loss for our national defense. Many senior flag officers, defense strategists, and other experts continue to note that this is the most dangerous moment since World War II. Not only does this NDAA thwart the bipartisan will of the Senate, but it signifies a profound missed opportunity to strengthen President-elect Trump’s hand when he takes office.”

At the same time, many Democrats object to the culture war items included in the bill, most notably the speaker’s provision on transgender care — a provision that House Armed Services Committee Chair Mike Rogers, a Republican from Alabama, told reporters did not belong in the NDAA, even as he agrees with the speaker’s position on the issue.

“There is much to celebrate in this bill thanks to the bipartisan commitment that defined the time-honored process,” Rep. Adam Smith of Washington, the top Democrat on the House Armed Services Committee, said in a statement. “However, the corrosive effect of Speaker Johnson’s insistence on including a harmful provision puts the lives of thousands of children at risk by denying them health care and may force thousands of service members to choose between continuing their military service or leaving to ensure their child can get the health care they need. This will be felt for generations to come.”

Smith voted against the bill despite having helped to craft it.

The Senate is expected to pass the NDAA despite similar concerns by some Democrats in that chamber.

FBI Director Chris Wray Announces Plan to Resign

FBI Director Christopher Wray announced today that he intends to resign at the end of President Joe Biden’s term next month, clearing the way for President-elect Donald Trump to install a loyalist in the position. Trump had already announced that he would nominate Kash Patel for the job, making clear that Wray’s tenure would soon be ending one way or another, even as the FBI chief — a Republican picked by Trump for the job in 2017 — still had about three years left in his 10-year term. Congress set the term length for FBI directors in 1976 to insulate the director and the agency from political pressure.

In remarks at an FBI town hall, Wray indicated that he chose to step down to avoid having the agency become to focus of increasing political attacks. “My goal is to keep the focus on our mission—the indispensable work you’re doing on behalf of the American people every day,” he said. “And in my view, this is the best way to avoid dragging the Bureau deeper into the fray, while reinforcing the values and principles that are so important to how we do our work.”

In a social media post, Trump celebrated the news: “The resignation of Christopher Wray is a great day for America as it will end the Weaponization of what has become known as the United States Department of Injustice,” he wrote. “Under the leadership of Christopher Wray, the FBI illegally raided my home, without cause, worked diligently on illegally impeaching and indicting me, and has done everything else to interfere with the success and future of America.”

Democratic Lawmakers Raise Concerns About Medicare Privatization Under Dr. Oz

A group of Democratic lawmakers led by Sen. Elizabeth Warren of Massachusetts are expressing concerns about Dr. Mehmet Oz, President-elect Donald Trump’s choice to lead the Centers for Medicare and Medicaid Services, and his potential financial conflicts of interest.

In a letter Tuesday to Oz, the lawmakers said they were writing to express concerns “about your advocacy for the elimination of Traditional Medicare and your deep financial ties to private health insurers.” Oz co-wrote an op-ed in Forbes in 2020 calling for a significant expansion of Medicare Advantage, the privately-run option for Medicare participants.

In 2022, Oz disclosed that he owned more than $550,000 of stock in UnitedHealth, the largest operator of Medicare Advantage plans. “The company is currently under a sprawling antitrust investigation by the Department of Justice – including for its role in aggressively upcoding Medicare Advantage enrollees to secure higher payments from CMS – and has been sued on multiple occasions for Medicare fraud,” the lawmakers wrote. “Under your plan, UnitedHealth’s revenue from Medicare Advantage would roughly double to $274 billion annually.”

The lawmakers also questioned Oz’s qualifications for the leadership role at CMS, which involves overseeing healthcare for more than 155 million people, including 67 million participating in Medicare. “[A]lthough you were a renowned heart surgeon, you have no management experience relevant to running these critical health care programs,” they wrote.

The letter was co-signed by Democratic Sens. Ron Wyden, Dick Durbin, Richard Blumenthal, Ben Cardin, and Jeff Merkley, and Rep. Lloyd Doggett.

A Trump transition spokesman told The Washington Post that Oz will comply with federal ethics laws, and that he “will work to expand access, improve care, and get Americans the best results in the world for every dollar spent on health care.”

Progress on Inflation Stalls as Prices Tick Higher in November

The rate of inflation edged higher in November as consumer prices rose 2.7% relative to a year ago and 0.3% relative to the month before, the Labor Department announced Wednesday. Both readings were a tenth of a percentage point higher than in October, raising concerns that progress in the battle against inflation has stalled above the Federal Reserve’s 2% target rate.

Major drivers behind the inflationary wave include car insurance, which saw a 12.7% increase in prices year over year, housing and airfares, both up 4.7%, and restaurants, up 3.6%. Prices for appliances fell modestly, down 0.2% annually, and gasoline prices were 8.1% lower than a year ago.

The core measure of inflation, which excludes volatile food and fuel prices, rose 0.3% on a monthly basis for the fourth month in a row. Core prices were up 3.3% on an annual basis.

What the experts are saying: The latest data provide more evidence that the downward path for inflation continues to be bumpy, as most economists predicted, but the November report also suggests that inflation may remain above the Fed’s target rate for longer than many experts had hoped. Economist Tuan Nguyen of RSM said that while some of the latest numbers were likely the result of seasonal factors, there is “no denying the signs of a reversal in the disinflation trend, driven largely by strong underlying growth, robust consumer spending and wage gains.”

Still, investors are betting that Fed officials will go ahead with another rate cut next week at their final meeting of the year, even as the outlook for 2025 becomes a bit hazier. “I think they can safely go ahead and do a 25-basis-point cut in December. The markets are prepared for that,” said Loretta Mester, a former president of the Cleveland Fed, per Bloomberg. “However, they’ve got to be rethinking about next year, because it does look now that the inflation progress has stalled out a bit.”

The threat of inflation remaining above the Fed target rate comes as President-elect Donald Trump prepares to take office, with plans that could complicate the Fed’s effort to cut interest rates amid disinflation. Many economists are concerned that Trump’s plan to raise tariffs, deport millions of undocumented migrants and slash taxes will put upward pressure on prices, risking a reignition of significant inflation in the U.S. economy.

Sarah House, senior economist for Wells Fargo, said it may be difficult to bring inflation all the way back to the target if demand remains strong. “Overall, we’re looking at an environment where the low-hanging fruit has been picked and it’s getting harder and harder to make further inroads into reining in inflation,” she said, per The Wall Street Journal. “Now we’re getting to a point where you really need the demand side of the economy to weaken. That’s what makes the last mile so hard.”

f7b11547-82b3-406e-940d-ec0e56f98da3.png?r=1223858032

Send your feedback to yrosenberg@thefiscaltimes.com.

Fiscal News Roundup

Views and Analysis