House Approves Bicameral 2016 Budget Deal

Thursday the US House of Representatives agreed to a $1.12 trillion bicameral 2016 budget deal that seeks to repeal the Affordable Care Act and broadly cut federal spending over the long-term, with the exception of defense spending.

House lawmakers voted 226-196 on the measure — officially, a conference report to accompany the Senate budget resolution — which was brought to the floor quickly after House and Senate negotiators announced Wednesday that they had reached a final compromise between their competing budget plans. The Senate is expected to vote on the plan on Monday.

The plan is intended to “get Washington’s fiscal house in order” through imposing necessary limits on spending while still ensuring investment in national priorities and shoring up national defense and other important programs, House Budget Committee Chairman Tom Price, R-Ga., said on the House floor Thursday. (Credit AP).

But the compromise deal, put together with limited Democratic input, was slammed by Democratic House lawmakers, who criticized its spending priorities and alleged use of “gimmicks” to help bolster defense spending, among other issues.

Under the compromise budget resolution, federal discretionary spending for fiscal year 2016 would be $1.12 trillion, closer to the proposed House budget than the Senate one, which had floated a discretionary spending level of about $1.16 trillion.

Baseline defense spending would be capped at $523 billion and nondefense spending at $493 billion, with an additional $96 billion going toward defense Overseas Contingency Operations, or OCO, funding. Overall spending, including mandatory programs and interest on outstanding debt, would be about $3.87 trillion.

Over the long-term, the compromise budget seeks to bring the federal budget back into surplus by 2024 and ensure those surpluses continue by calling for a constitutional balanced budget amendment.

This would be the result of more than $5 trillion in planned spending cuts over the next decade, across a wide variety of federal programs, although defense spending would receive a significant boost over that period.

These cuts include the repeal of the ACA in order to “start over with patient-centered reforms,” Republican budget negotiators said Wednesday, with a policy statement in the budget plan arguing the health care bill is “unaffordable, intrusive [and] overreaching.”

Planned cuts and changes to federal funding would not be limited to discretionary spending, with changes planned for mandatory spending programs such as Social Security and Medicare, although a plan to effectively privatize Medicare by using a voucher system, included in the House budget, was removed from the final bicameral plan.

Although not binding and not strictly necessary for the congressional spending process, the budget resolution is intended to be used as broad template for the appropriations bills Congress considers each year.

It also offers the congressional majority the benefits of using the budget reconciliation process, allowing the passage of certain spending-related policy measures without the opportunity of filibuster by the minority party.

The House has already started its appropriations process and began debate on Wednesday on 2016 funding bills covering military construction and the U.S. Department of Veterans Affairs, as well as energy and water development, having used its own budget plan as a guide to allow the process to move forward before lawmakers had agreed to the bicameral deal.


House Passes Two Dodd-Frank Loan Rules Bills

The U.S. House of Representatives on Tuesday passed a pair of bills designed to loosen Dodd-Frank Act, rules that had purportedly discouraged lending for manufactured homes and exempt certain insurance and other fees from the limits imposed by the “qualified mortgage” rule.

Lawmakers voted 286-140 to pass H.R. 685, the Mortgage Choice Act, and 263-162 on H.R. 650, the Preserving Access to Manufactured Housing Act, amid opposition to both bills from a number of Democratic lawmakers. The Mortgage Choice Act would roll back important Dodd-Frank protections and undermine the work of the U.S. Consumer Financial Protection Bureau by driving up the cost of mortgages, helping to “fatten the pockets of those who would gouge our constituents,” argued House Financial Services Committee ranking member Rep. Maxine Waters, D-Calif.

But Financial Services Committee Chairman Jeb Hensarling, R-Texas, said it would help cut through unintended consequences of Dodd-Frank as well as subsequent “bad and dumb” regulatory overreaches that have harmed access to credit.

“We’ve got to quit protecting consumers right out of their homes,” Hensarling said.

The Mortgage Choice Act would ament the Truth in Lending Act to exclude charges levied by a title insurance provider affiliated with a lender from the fee caps included under the CFPB’s qualified mortgage, or QM, definition, bringing them in line with the current treatment of third-party title insurers. Fees and taxes held in escrow to be passed on to the government or other third parties would also be excluded from the fee cap.

For a loan to qualify as a QM, lenders must meet certain criteria, such as keeping the loan within certain debt-to-income ratios for borrowers and capping the points and fees that are charged at 3 percent of loan principal.

In return, lenders receive “safe harbor” or “rebuttable presumption” protections, giving them defenses in legal actions brought by borrowers over certain issues with their mortgages.

Under PAMHA, the fee and interest rate thresholds under which loans for manufactured homes are considered “high cost” under the Home Ownership and Equity Protection Act would be raised, with that exemption extended to apply to homes worth up to $75,000, up from a ceiling of $50,000.

This is because the cost, and thus fees, associated with originating and servicing a low-value loan are typically higher in percentage terms than for a larger loan, meaning that under HOEPA they are wrongly considered “high-cost” loans that come with a range of drawbacks for lenders, according to the bill’s sponsors, who argue that these small-value loans are not the sort of predatory loans HOEPA is intended to protect against.

The White House has made clear it will veto both bills if they come to the president’s desk, saying in statements Monday that it believed each would “weaken key consumer protections and provisions” included in Dodd-Frank.

In addition to the two bills passed Tuesday, lawmakers also easily passed a group of six bills from the House Financial Services Committee on Monday, including several other changes to lending law.

The legislation passed included the Capital Access for Small Community Financial Institutions Act, which would allow private credit unions to become part of the Federal Home Loan Bank System, giving them broader access to low-cost credit for lending, and the Helping Expand Lending Practices in Rural Communities Act.

Under that bill, individuals would be able to apply for a rural area designation if they are outside the official U.S. Department of Agriculture rural area definitions now used by the CFPB to possibly take advantage of the looser QM standards that apply for rural loans.

Lawmakers also agreed to the passage of the SAFE Act Confidentiality and Privilege Enhancement Act, which would enable public officials overseeing the financial services industry to share information submitted to the Nationwide Mortgage Licensing System and Registry — which keeps track of certain financial services licensing and registration information — without losing privilege or confidentiality protections.