No revolt this time: House easily passes budget deal that restores defense, domestic cuts


A political shift among House Republicans helped the GOP pass a budget deal with overwhelming support that might have never seen the light of day earlier this year.

In a 332-94 vote, the House approved a measure that would spend $1.014 trillion in fiscal 2014 and restore over the next two years a significant portion of sequester cuts that GOP conservatives fought to achieve during the past decade.

Most Republicans voted for the bill — just 62 said "no."

The measure now moves to the Senate, where it is expected to pass.

The House and Senate still must work out a spending measure, but the budget deal eliminates much of the fight. Lawmakers will have until Jan. 15 to pass a government funding measure for fiscal 2014.

Many of the GOP supporters noted that half of the sequester cuts that were eliminated — more than $30 billion — would be used to fund defense budgets depleted by the 2011 Budget Control Act, which mandates nearly $1 trillion in sequester cuts spread over the next decade. The nation's defense budget was scheduled for a $52 billion sequester cut next year.

"I'm very pro-defense," said Rep. John Fleming, R-La., explaining his decision to support the budget deal.

The deal is a victory for Rep. Paul Ryan, R-Wis., the former vice presidential candidate and chairman of the House Budget Committee, who authored the deal with Sen. Patty Murray, D-Wash.

Ryan said after the vote he was surprised it passed by such a wide margin, but over the course of the week, it became increasingly clear the GOP resistance of October had largely melted away, partly because of the desire to restore defense cuts and out of fear that another government shutdown would sent their poll numbers plunging.

The measure is a scaled-down version of a hoped-for "grand bargain" on entitlement spending and taxes. That larger deal never materialized and the two sides settled on the much smaller agreement.

— Susan Ferrechio, Chief Congressional Correspondent



The Obama administration announced that it was cracking down on companies and individuals U.S. officials say used deceptive practices to help Iran advance its nuclear program.

The enforcement measures come amid lawmaker skepticism of a diplomatic deal between the U.S. and Iran requiring Tehran to freeze some aspects of its nuclear program in exchange for some sanctions relief. The White House managed to stave off efforts in Congress to pass further sanctions to heighten pressure on Iran, and officials have sought to reassure lawmakers they will stay tough on Tehran and enforce the remaining sanctions.

The Treasury and State departments said they were targeting businesses that evaded international sanctions designed to cripple Iran’s nuclear ambitions. The actions would freeze the assets of those individuals and companies that allegedly violated the sanctions and would bar U.S. entities from doing business with them.

U.S. officials said the six-month nuclear agreement between the U.S. and Iran won’t interfere with the administration’s continued efforts to “expose and disrupt those supporting Iran's nuclear program or seeking to evade our sanctions.”

“These sanctions have isolated Iran from the international financial system, imposed enormous pressure on the Iranian economy, and motivated the Iranian leadership to make the first meaningful concessions on its nuclear program in over a decade,” said Treasury Under Secretary for Terrorism and Financial Intelligence David S. Cohen.

— Susan Crabtree, White House Correspondent



The Federal Reserve struck a blow in favor of the dollar bill, saying that replacing it with a coin would be a money-loser for the government and raise costs for businesses.

In past years, some lawmakers, such as Sens. Tom Harkin, D-Iowa, and John McCain, R-Ariz., have introduce bills to phase out the $1 bill in favor of $1 coins. The move is favored by some vendors and other businesses that have a high volume of coin transactions. Other countries have already taken that step. For instance, the United Kingdom, Australia and Canada switched out their lowest-denominated bill for coins in the 1980s.

The Government Accountability Office estimated in 2012 that switching to coins would save the government $4.4 billion over 30 years through increased seigniorage — that is, the difference that would accrue to the government between the face value of the coins and the cost to produce them.

But the Fed disagrees, saying that using a $1 coin exclusively wouldn't be cost-effective. Officials at the Fed's Board of Governors noted in a new study that it would take more than one coin to replace every bill because of the different ways coins and bills are used and that the higher cost of producing coins would not be offset by the longer life of the coins.

Part of that analysis involves the increasing durability of U.S. dollars. The Fed says that the average lifespan of a dollar has increased from 18 months in 1990 to 70 months today thanks to the introduction of new technologies such as sensors that can distinguish between dirt and blemishes caused by ink or folds, preventing the Fed from prematurely destroying many bills.

The Fed also surveyed retailers to learn what costs handling large quantities of coins might impose on them. Society "would likely bear costs in the hundreds of millions of dollars per year" to make the switch, losses that would outweigh any possible government savings.

Without a law phasing out the dollar bill, dollar coins are not likely to gain much traction. Despite efforts by Federal Reserve banks and the U.S. Mint to promote the dollar coins in existence, low consumer demand has left regional Fed banks with a 40-year inventory of the coins.

— Joseph Lawler, Economics Writer



Mike Huckabee ended his daily radio show heard on 200 stations across the nation, the first sign that he is considering another presidential bid in what is shaping up to be a jammed 2016 GOP primary.

He has hosted the “Mike Huckabee Show” on Cumulus Media since April 2012, but said that it takes up to nine hours a day to prepare. “As for the new endeavors, at this time, it would best for me to say, Stay tuned!'" he wrote on his Facebook page.

Evangelical political operative David Lane told Secrets: “Huckabee is obviously gearing up to run. This is the most aggressive I've seen him since 2007.” That year, the former Arkansas governor ran for president and was aided by Lane.

Lane told Washington Secrets that Huckabee plans to participate in four upcoming “Pastors and Pews” events to be held in North Carolina, Ohio, Florida and Texas.

The events are aimed at energizing the evangelical base and getting the estimated 40 million churchgoers to register to vote. “This is a sleeping giant if it ever engages,” Lane said.

Huckabee would have different strengths than those expected to run in the GOP primary. A long-serving governor, he has long-standing ties to evangelicals and is also a popular media star.

— Paul Bedard, Washington Secrets columnist



The Department of Health and Human Services said 258,497 Americans had signed up for coverage under Obamacare in November, but critics said the figures were well short of the administration’s targets.

According to HHS, 364,682 have now signed up for insurance during the two-month enrollment period, with 137,204 through the federal online exchange and 227,478 cumulatively through state exchanges.

In October, only 106,000 consumers signed up for insurance coverage, with only a quarter coming through the faulty website. The administration started a “tech surge” to fix the website, as the first month’s enrollment figures threatened to unravel support for President Obama’s signature achievement.

“Evidence of the technical improvements to can be seen in the enrollment numbers. More and more Americans are finding that quality, affordable coverage is within reach,” Sebelius said in touting the November numbers.

Critics, though, noted that while the number of enrollees through the federal website had grown four-fold, the overall number of consumers who had signed up had only doubled, and questioned if the administration was on pace to meet its goal of 7 million enrollees.

Insurers have also raised questions about back-end problems with 834 transmission forms they say are providing them with inaccurate or incomplete information on enrollees, which could delay many Americans from receiving coverage.

The administration said that one in four enrollments was affected by technical bugs over the first two months, and after working on the problem in December the error rate for 834 forms is now one in 10. The Centers for Medicare and Medicaid Services says it has a dedicated team working with insurers to quickly resolve those issues.

— Meghashyam Mali, Assistant Managing Editor



MetLife Stadium, in East Rutherford, N.J., is hosting the Super Bowl in February.

Or is it?

Apparently, Vice President Joe Biden doesn’t think so.

During an online immigration forum hosted by Skype and Bing, Biden fielded a question from a New Jersey resident. The man told the vice president that he lives near the stadium that is the site of the next Super Bowl.

Biden replied, “Maybe not this year.”

The NFL awarded the 2014 Super Bowl to MetLife Stadium — home of the New York Giants and Jets — back in 2010.

The exchange was just the latest example of what friends and foes have dubbed “Joe being Joe.”

And it’s not the first time Biden has been confused about the Super Bowl.

At a San Francisco fundraiser in 2012, Biden told the crowd that the “Giants are on their way to the Super Bowl.”

After a few boos, Biden realized his error and said the 49ers were destined for the Super Bowl.

— Brian Hughes, White House Correspondent



The Senate's Democratic majority, taking advantage of weakened filibuster rules, pushed through Rep. Mel Watt's nomination to head the Federal Housing Finance Agency weeks after Republicans initially blocked his confirmation.

The Senate voted 57-41 to confirm the North Carolina congressman to run the agency that oversees the government-controlled mortgage lenders Fannie Mae and Freddie Mac. The tally was mostly along party lines, with Sens. Richard Burr of North Carolina and Rob Portman of Ohio the only Republicans to support Watt and no Democrats opposing him.

President Obama had lobbied hard for Watt since he nominated him in May. Watt, who has served in the House since 1993, also received strong backing from civil rights and minority groups.

"He’s the right person to protect Americans who work hard and play by the rules every day, and he’ll be the right regulator to make sure the kind of [housing] crisis we just went through never happens again," the president said following Watt's confirmation.

The soft-spoken Watt rarely if ever has been portrayed as a partisan ideologue. He has served for years on a committee dealing with housing matters, which supporters said made him an ideal candidate to head the FHFA.

But Republicans, who used a filibuster in October to block Watt's nomination, said he didn't have the proper work experience to run the agency.

“America needs someone with technical expertise and experience to run Fannie and Freddie's conservator and ensure that we don't repeat the same mistakes that led to the last financial crisis," Senate Minority Leader Mitch McConnell, R-Ky., said in October. “This is the second FHFA nominee that President Obama has sent who did not meet those standards."

Watt's confirmation was made possible because of new Senate rules unilaterally ushered in by Majority Leader Harry Reid, D-Nev. Frustrated with the minority Republicans' repeated blocks of Obama nominations, Reid in November invoked the "nuclear option" to change the chamber's rules so that the confirmation of judicial and other White House nominees — excluding Supreme Court nominees — would require only a simple majority vote in the 100-seat chamber rather than the 60 votes previously needed.

— Sean Lengell, Congressional Correspondent



President Obama hailed anti-apartheid icon Nelson Mandela as a “giant of history who moved a nation toward justice, and in the process moved billions around the world” at a memorial service in South Africa for the departed world leader.

Obama praised Mandela as “the last great liberator of the 20th century” in remarks at FNB Stadium in Johannesburg, where tens of thousands of South Africans were joined by dozens of leaders from around the world to pay tribute.

“To the people of South Africa — people of every race and walk of life — the world thanks you for sharing Nelson Mandela with us,” Obama said. “His struggle was your struggle. His triumph was your triumph. Your dignity and hope found expression in his life, and your freedom, your democracy is his cherished legacy.”

Mandela, who died Dec. 5 at the age of 95, fought to end South Africa’s apartheid system and spent 27 years in prison. After being released, he helped negotiate the end of white minority rule and was elected the country’s first black president.

Obama was greeted by huge cheers when television cameras showed him arrive at his seat for the service.

But the president's comments later were overshadowed by controversies over his shaking Cuban leader Raul Castro's hand; taking a "selfie" picture of himself, British Prime Minister David Cameron and Danish Prime Minister Helle Thorning-Schmidt; and reports that a sign language interpreter standing on stage with the speakers wasn't actually using sign language.

Obama was joined at the service by first lady Michelle Obama and former Presidents Bill Clinton and George W. Bush. Bush, former first lady Laura Bush and former Secretary of State Hillary Clinton traveled with Obama on Air Force One to South Africa.

— Meghashyam Mali, Assistant Managing Editor



Federal regulators approved the final draft of a long-awaited provision of the Dodd-Frank financial reform law that would prohibit banks from making speculative bets for their own profit.

Dubbed the "Volcker Rule" after former Federal Reserve chairman and prominent financial reform advocate Paul Volcker, the measure has been at the rule-writing stage for three years, after being included in the 2010 Dodd-Frank law. The vote marks a major step in what has been a long and drawn-out struggle between the rule's proponents and bank lobbyists who have tried to shape the final result.

The rules include some measures that bank critics had pushed for since the original proposal was released in October 2011.

They bar banks from engaging in speculative trading for their own books, a practice called "proprietary trading." It also defines exemptions from the ban to allow banks to fulfill traditional banking services. Among the allowed activities is market-making — holding positions on both sides of a trade to facilitate customers' trading in that asset. They also include hedging, that is, buying or selling a security or derivative to mitigate risk.

The rules tighten those exemptions by requiring banks to demonstrate that any market-making activities be designed to meet, not exceed consumer demand. They also would have to document a specific rationale for any hedging trade. These measures are intended to ensure that banks are not indirectly engaging in trades for profit, as opposed to for client services.

The rules also would aim to prevent traders from being paid based on profits they generate, in an effort to eliminate incentives for bank employees to make risky bets on the bank's behalf. The rules would take effect in April and banks would be required to conform by July 2015.

— Joseph Lawler, Economics Writer



The U.S. Court of Appeals for the D.C. Circuit, considered the nation's second-most influential court behind the Supreme Court, now tilts Democratic, thanks to the Senate's new filibuster rules.

The Senate confirmed President Obama's nominees Patricia Ann Millett and Nina Pillard to the appeals court, a long-delayed move that brings the bench's judicial lineup to 10 — with six judges appointed by Democratic presidents and four by Republicans.

And with the Senate expected to soon confirm Obama's final nominee to the 11-member bench, the court is poised to have a solid 7-4 Democratic majority.

The court has been evenly split with eight active judges since Sri Srinivasan was confirmed in May, ending the court's GOP dominance that has stood since 1986. But Senate Republicans, eager to keep the court from slipping to Democratic control, repeatedly filibustered Obama's nominees for the remaining three vacancies.

With Obama's nominees locked in limbo, Senate Majority Leader Harry Reid, D-Nev., last month invoked the "nuclear option" to change the body's rules so that the confirmation of judicial and other White House nominees — excluding Supreme Court nominees — would require a simple majority vote in the 100-seat chamber rather than the 60 votes previously needed.

The effect of the new appointees on the D.C. appeals court's pending lineup may not be drastic immediately, as the court rarely meets as a group to issue opinions, relying instead on three-judge panels to render most decisions.

Still, judicial experts say the additions will play a key role in turning back the court's conservative bent of past years.

The court is considered second only to the Supreme Court in level of importance because it handles challenges to most federal rule-making and oversees federal agencies based in Washington.

— Sean Lengell, Congressional Correspondent



Legislation has been introduced in both the House and the Senate to ban cellphone calls during airline flights.

House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., introduced the "Prohibiting In-Flight Voice Communications and Mobile Wireless Devices Act," which would outlaw most cellphone calls during commercial domestic flights.

On the Senate side, Lamar Alexander, R-Tenn., and Dianne Feinstein, D-Calif., introduced the Commercial Flight Courtesy Act.

“Keeping phone conversations private on commercial flights may not be enshrined in the Constitution, but it is certainly enshrined in common sense,” Alexander said. “This legislation is about avoiding something nobody wants: nearly 2 million passengers a day, hurtling through space, trapped in 17-inch-wide seats, yapping their innermost thoughts.”

The bills were drafted in response to the Federal Communications Commission's decision to consider allowing cellphones to be used on planes flying above 10,000 feet.

There has been much resistance to the FCC proposal, including pushback from airline flight attendants who fear being forced to police passengers angered by a neighbor's loud cellphone call.

Shuster said that would distract flight attendants and pilots focused on passenger safety.

“For those few hours in the air with 150 other people, it’s just common sense that we all keep our personal lives to ourselves and stay off the phone,” Shuster said.

— Susan Ferrechio, Chief Congressional Correspondent, and Paul Bedard, Washington Secrets columnist



A Senate subcommittee is exploring consolidating some of the dozens of tiny federal entities that are littered across the bureaucracy, and first on its list of targets are international programs, including the U.S. Trade and Development Agency and the Overseas Private Investment Corp.

“We're going to continue to pursue, to the extent we can, consolidation of programs where it makes sense. Coming in from the outside as I did, I kind of went, 'Wow, this is a labyrinth,' ” said Sen. Claire McCaskill, the Missouri Democrat who led a hearing of the Senate Financial and Contracting Oversight subcommittee.

Her staff compiled a chart of federal agencies active internationally, such as the U.S. Agency for International Development, the U.S. International Trade Commission, the Export-Import Bank and the Small Business Administration.

“Left to right is all these agencies, and top to bottom is the responsibilities, and you see the X's all over the place. It’s a mess,” she said.

“Think about this for a minute and don’t immediately say no. What if we combined your agency with Ex-Im? Is there any real compelling reason they could not be combined?” she asked.

Leocadia Zak of the Trade and Development Agency responded by expressing hesitance at the idea, coupled by a faith in the president and asking Congress to support his budget.

“Unfortunately for the president, it's not up to him,” McCaskill said.

— Luke Rosiak, Senior Watchdog Reporter



President Obama touted the auto industry bailout as the U.S. government sold its remaining shares in General Motors.

“Today, that bet has paid off,” said Obama heralding the government's $80 billion bailout of two of Detroit's “Big Three” carmakers. “The American auto industry is back.”

The Treasury announced that it had sold its final shares of GM stock, following its 2011 exit from Chrysler.

“When I took office, the American auto industry — the heartbeat of American manufacturing — was on the verge of collapse,” Obama said. "As president, I refused to let that happen. I refused to walk away from American workers and an iconic American industry.”

“Today, we’re closing the book by selling the remaining shares of the federal government’s investment in General Motors,” he added. “GM has now repaid every taxpayer dollar my administration committed to its rescue, plus billions invested by the previous administration.”

The auto industry bailout was started by former President George W. Bush, but expanded under Obama.

Critics pointed out that the Treasury Department lost $10 billion on its GM investment, but Obama said the bailout had helped turn around the struggling industry.

“Less than five years later, each of the Big Three automakers is now strong enough to stand on its own,” the president said. “They’re profitable for the first time in nearly a decade. The industry has added more than 372,000 new jobs — its strongest growth since the 1990s.”

— Meghashyam Mali, Assistant Managing Editor



Vice President Joe Biden announced $100 million in government spending on mental health services, trumpeting the investment during a meeting with family members of victims of the Newtown, Conn., massacre.

The Department of Health and Human Services will spend $50 million to “establish or expand behavioral health services for people living with mental illness or addiction,” and the Department of Agriculture will finance another $50 million “for the construction, expansion or improvement of mental health facilities in rural areas over the next three years,” according to a White House official.

The HHS funding is being made available through the Affordable Care Act. An agency direct loan program will facilitate the USDA spending.

On Dec. 14, 2012, 20 students and six adults were shot and killed at Connecticut's Sandy Hook Elementary, relaunching a fierce gun-control debate in Washington.

In April, lawmakers rebuffed President Obama’s call for an assault weapons ban, expanded background checks and a prohibition on high-capacity magazines. The administration has vowed to renew its push for additional gun restrictions after the embarrassing legislative defeat.

But both Republicans and Democrats agree that bolstering mental health services could potentially reduce more cases of mass violence.

— Brian Hughes, White House Correspondent

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