Congress faces a long list of priorities and deadlines
Tags: Reconciliation, House Of Representatives, Senate, Politics, Congress

Congress faces a long list of priorities and deadlines

“August recess” or not, September is here, and it arrives with an intense work period on multiple fronts. Government funding, flood insurance, surface transportation, and defense policy programs expire at the end of the month, not to mention the looming debt ceiling debate, infrastructure package, and reconciliation. Federal reserves dry up in just a few weeks. Yet, damage from natural disasters, such as Hurricane Ida and the Caldor Fire, continue to empty the federal coffers, posing a threat to the budget and opportunities for lawmakers to compromise on stopgap funding. The Senate returns to Washington today and is “scheduled” for 13 legislative days. The House has nine days for floor votes in September. All these factors add complexity to an already packed fall agenda.

President Joe Biden recently traveled parts of the country devastated by Hurricane Ida and reiterated the need for Congress to pass the bipartisan infrastructure deal and Build Back Better plan. Biden tied the resiliency measures and support for communities in these proposals to recovery from natural disasters and the impacts of worsening climate change.

Concurrently, congressional committees are marking up sections of the $3.5 trillion budget reconciliation bill containing many of the president’s priorities ranging from education and childcare to climate change. Committees are adhering to a tight September 15 deadline set by Democratic leadership to complete work. Democrats aim to have the package ready by the end of the month, allowing the House to vote on it and the separate bipartisan infrastructure bill negotiated.

The federal fiscal year (FY) also ends on September 30, meaning Congress will need to pass a continuing resolution to keep the government funded. Treasury Secretary Janet Yellen also indicated in a recent letter to Congress that the Treasury’s “extraordinary measures,” which have allowed the country to avoid defaulting on its debt, would likely be exhausted in October. Default would be unprecedented, and the debt ceiling will require congressional action sooner rather than later. Speaker Pelosi said on Wednesday: “We won’t be putting it in reconciliation.”

Given the many competing deadlines and must-pass priorities, congressional Democrats will have to work at a breakneck pace this fall to enact their agenda and avoid major pitfalls. Here is a snapshot of the issues that will drive the congressional agenda for the remainder of the year.

Infrastructure by Tim Martin and Logan Hollers

After months of negotiating, the Senate passed the bipartisan Infrastructure Investment and Jobs Act, which includes over $1 trillion in funding to rebuild the nation’s roads and bridges, freight and passenger rail, mass and public transit, ports and airports, the electric grid, drinking and wastewater systems, and broadband access — all key components of President Biden’s domestic policy platform. The bill, which includes over $550 billion in new spending, would mark the most significant federal infrastructure investment in decades, touching nearly every facet of the American economy and dedicating hundreds of billions of dollars to the maintenance, repair, and replacement of the nation’s aging roads, bridges, and public works facilities. Funding mechanisms include repurposing unused COVID-19 relief funds, expanding eligible uses of state and local funds for coronavirus relief, and incentivizing private sector investment.

The House must still vote on the Infrastructure Investment and Jobs Act, a source of frustration for some moderates in the Democratic Caucus. The House could vote on the bipartisan infrastructure bill by September 27, setting up a delicate balancing act to make headway on the reconciliation package to satisfy progressives who threaten to sink the Senate-passed infrastructure package if reconciliation does not move forward.

Efforts to send the infrastructure package to the president’s desk are buttressed by Congress’s September 30 deadline to reauthorize federal funding for highways, transit, rail, and safety programs. Initially set to expire in 2020, a one-year extension of the Fixing America’s Surface Transportation (FAST) Act of 2015 was tucked inside the short-term continuing resolution last year.

Reconciliation by Noah Kowalski and Logan Hollers

The race is officially on for congressional Democrats to assemble reconciliation legislation to capture many of the remaining investment priorities of Biden’s American Jobs Plan and American Families Plan. After unanticipated delays, the House ultimately passed the budget resolution as part of a rules package by a straight party-line vote 220–212 in mid-August. The resolution gave committees budget allocations and a September 15 deadline to report their pieces of the reconciliation bill back to the House and Senate Budget Committees.

If the House can pass the reconciliation package, expectations are for the Senate to bypass committee markups and bring the legislation straight to the floor where it will be subject to another vote-a-rama process. For a brief overview of how the budget reconciliation process works, please view Invariant’s Reconciliation 101 guide.

While House markups advance, fault lines are emerging in garnering consensus both for topline funding and policy. This month, Senator Joe Manchin (D-WV) published an op-ed in the Wall Street Journal calling for a “strategic pause” to the reconciliation process citing inflation concerns. Senator Manchin also communicated to the White House his willingness to support up to a $1.5 trillion package — significantly lower than the House- and Senate-passed budget of $3.5 trillion. Additionally, diverging health policy preferences will need to be addressed. Some Democrats, including Senate Majority Leader Chuck Schumer (D-NY), support a massive expansion of Medicare to cover vision, dental, and hearing benefits while other Democrats are concerned these efforts will come at the expense of the Affordable Care Act and leave it vulnerable to future Republican rollbacks.

Leaders Schumer and Pelosi both maintain $3.5 trillion is the topline number, but public posturing over the size of the package is a reminder to leadership that work remains in terms of scope and timing.

This weekend we saw a preview of the Democrats’ proposed payfors, which include increases to the top individual and corporate tax rates, modifications to international tax regimes, and additional funding for the Internal Revenue Service (IRS) to step up enforcement on high-income taxpayers.

Debt Ceiling by Carolyn Coda

Congress will soon vote to address the debt ceiling after suspending it for two years in August 2019. Secretary Yellen is urging Congress to act quickly. Last week, she sent another letter to lawmakers warning that without congressional action to raise or suspend the debt ceiling, it is likely the Treasury Department will not be able to pay the government’s bills starting sometime in October.

The debt ceiling, which is a legislative limit on the amount of debt that the U.S. government can take on, can either be raised by a specific dollar amount or be suspended. After the debt ceiling is reached, Treasury has the authority to take “extraordinary measures” to finance its obligations. In years past, extraordinary measures have expanded the timeline for congressional action by a matter of weeks to a few months. Still, due to extensive post-COVID spending, there are concerns about how long that avenue will be available.

This dynamic makes it likely an increase in the debt ceiling will need to be included as part of legislation lawmakers are certain will pass (e.g., bipartisan infrastructure deal, reconciliation package, continuing resolution). To complicate matters, Speaker Pelosi confirmed Democrats will not address the debt ceiling in the reconciliation bill, and Republicans continue to maintain they will not vote for a debt ceiling increase without corresponding cuts in spending.

While Leader Schumer maintains Democrats are looking at “a number of different ways to address the issue,” all indications point toward a showdown between Democrats and Republicans. Congressional Democrats are likely to add a debt ceiling suspension to a government funding bill to pressure Republicans and force their hand.

After facing some delays, the National Defense Authorization Act (NDAA) continues to progress through the House and Senate. The House Armed Services Committee recently wrapped its markup of the measure, reporting out the bill by a 57–2 vote. At the heart of both Senate and House Committee consideration is the topline funding number for the Department of Defense (DOD). During the Senate’s closed-door markup, $25 billion in authorized funding was added to the topline in strong bipartisan fashion. The House followed suit during its markup with an amendment led by Ranking Member Mike Rogers (R-AL) adding $24 billion to the topline, including money for weapons procurement and research, shipbuilding, and over $1 billion for aircraft procurement.

While the plus-up survived committee consideration (by a vote of 42–17), watch for progressive Democrats to wage a battle during House floor consideration, likely the week of September 20. Prior to the House Armed Services Committee’s consideration of the NDAA, two dozen progressive lawmakers sent Chairman Adam Smith (D-WA) a letter urging him against exceeding President Biden’s $715 billion request.

Additionally, the Administration’s decision to withdraw from Afghanistan and whether the withdrawal was properly executed was thoroughly debated during the lengthy markup. With the defense bills headed to the House and Senate floors, we should expect the debate on the decision to depart Afghanistan to continue (more below).

Other issues set off fireworks, including critical race theory, DOD’s diversity training, including women in the draft, and transfer of military equipment to local law enforcement entities. These will be issues to watch during House floor consideration and into conference negotiations with the Senate. The final measure is not expected to be completed for the president’s signature until the end of the year.

Appropriations and FY 2022 Funding by Lindley Kratovil Sherer and Noah Kowalski

The House has passed 9 of the 12 discretionary spending bills for FY 2022, leaving only the Commerce-Justice-Science, Defense, and Homeland Security bills to be considered and passed. The Senate continues to delay consideration of many of the spending bills, moving only three (Agriculture, Energy and Water, and Military Construction and Veterans Affairs) through the committee markup process so far. Partisan funding battles from the last four years perpetually haunt the process, particularly as they relate to border funding, which continues to hold up consideration of the Homeland Security measure.

Passing a continuing resolution this month gives the House and Senate Appropriations Committees, along with congressional leadership, time to work toward a potential omnibus spending deal. It is expected that the continuing resolution will run through December 10 to keep the government open.

Afghanistan by Nick Mikula

On August 31, the final U.S. military forces departed Afghanistan, ending a two-week-long evacuation from Kabul. According to the Pentagon, some 6,000 Americans were evacuated alongside more than 123,000 people, the majority of whom are Afghans, friends, and allies. The departure marks the end of America’s longest war — two decades that witnessed 2,461 U.S. troops sacrifice their lives and tens of thousands of others injured.

The Biden-Harris Administration has endured significant criticism for how it ended the war from the media, Republicans, Democrats, and even unnamed sources within the intelligence community, State Department, and DOD. This fallout was galvanized by the sacrifice of 13 U.S. service members who died while getting those at risk out. Emotions are running high in Washington, playing out across Capitol Hill. Expect this dynamic to continue into the 2022 midterm elections as Republicans look to pick up seats.

Afghanistan played a significant role in the House Armed Services Committee’s NDAA markup, the first major congressional activity since the August 31 deadline. The markup proceedings, which lasted over 16 hours, produced 28 amendments specific to Afghanistan. These legislative efforts ran the gamut, ranging from prohibiting financial or material support to the Taliban to reports on U.S. equipment left behind to a strategy for preserving the rights of women and girls in Afghanistan. Members on both sides of the aisle will continue to seek additional information on the past actions and the strategy going forward, including this week where Secretary of State Anthony Blinken is testifying before the House Foreign Affairs Committee today and the Senate Foreign Relations Committee tomorrow.

National Flood Insurance by Matt Russell

The National Flood Insurance Program (NFIP) expires on September 30. The Senate did not include an extension of the NFIP in the Infrastructure Investment and Jobs Act. A short-term extension of the NFIP is likely to ride with a continuing resolution. Congress passed 16 short-term extensions of the program since 2017 and is likely to take the same approach this year.

Voting Rights by Eric Rosen

Despite repeated attempts by House and Senate Democrats to make progress on legislation to expand access to voting, neither the expansive For the People Act (H.R. 1) nor the recently revised John Lewis Voting Rights Advancement Act (H.R. 4) has been able to secure the support necessary to advance in the Senate. Narrower than H.R. 1, H.R. 4 responds to a 2013 Supreme Court decision limiting the Department of Justice’s (DOJ) authority to “preclear” state-level voting law changes. The House-passed bill would restore that DOJ authority.

While Senators Joe Manchin (D-WV) and Lisa Murkowski (R-AK) have signaled their support for provisions like those in H.R. 4, proponents’ inability to secure 60 Senate votes in favor have spurred calls to reform Senate filibuster rules. Senators will face the issue this fall and examine whether to change the chamber’s rules to ensure voting rights legislation can be enacted before the congressional midterm elections in 2022.

Police Reform by Nicole Venable and Maia Hunt Estes

In the wake of Derek Chauvin’s sentencing and Biden’s announcement of a new initiative designed to reduce gun violence, police reform negotiators on the Hill announced a bipartisan “framework” in late June. However, external stakeholders have not seen the details, and concerns remain whether this framework can stand up against increasingly complex politics and garner enough support from activists on the left and conservative law enforcement groups on the right to advance in the fall.

Senators Tim Scott (R-SC) and Cory Booker (D-NJ), alongside Representative Karen Bass (D-CA) and House Majority Whip Jim Clyburn (D-SC), continue to lead negotiations. Reaching a compromise regarding qualified immunity — the legal doctrine limiting lawsuits against police officers — proved elusive with negotiators recently taking it off the table. Democrats will have to decide whether to pivot to a more incremental approach. This issue is challenged further by soaring crime rates in many cities across the country.

Competition by Eric Rosen

On Capitol Hill, August saw members of the Senate join with some of their House colleagues to introduce bipartisan legislation designed to change the way certain online app stores operate. In the House, Members continued to unpack the Judiciary Committee’s reported package of six “big tech” bills that purport to address alleged anticompetitive conduct revealed in the panel’s October 2020 investigative report into the practices of certain technology companies. While these bills each received bipartisan support in committee, divisions in both the House Democratic Caucus and Republican Conference suggest the proposals may not currently have sufficient support to pass the House.

With Congress debating which, if any, competition policy changes have sufficient votes to be considered by the House or Senate, most of the fall competition action will emanate from the new leadership at the antitrust enforcement agencies. The president’s elevation of Lina Khan, an author of the House Judiciary Committee’s big tech report, to chair the Federal Trade Commission (FTC); his selection of Jonathan Kanter to head the DOJ’s Antitrust Division; and his competition policy executive order signal aggressive enforcement of existing rules and laws going forward.

Expect continued efforts from Members of Congress to highlight a pending lawsuit by the FTC against Facebook (where regulators are challenging the platform’s purchase of WhatsApp and Instagram), as well as the commission’s ongoing investigation into Amazon’s business practices. The Biden-Harris DOJ inherited an antitrust lawsuit against Google. With the trial potentially delayed until 2023, Members and other stakeholders concerned by Google’s business practices will continue to use congressional hearings, proposed legislation, and the media to shine a spotlight on the search giant’s competition record.

China by Sam Love

The Senate-passed U.S. Innovation and Competition Act (USICA) is a comprehensive effort to mobilize U.S. economic, scientific, national security, and diplomatic resources to outcompete China in the 21st century. But USICA is the Senate’s preferred approach, and Speaker Pelosi insists that the House play a role in any final deal on China competition legislation. The House passed a narrower scope in the National Science Foundation for the Future Act and a similar energy-focused research bill, the Department of Energy Science for the Future Act, with overwhelming bipartisan majorities.

The White House broadly supports legislative action on China competition issues. Given bipartisan advancement in both chambers and an Administration eager to add to its China competition agenda, expect leaders to find a path forward for a combined package — most likely informally conferenced and included in a larger, end-of-year legislative package like the NDAA. Congress will also continue to prioritize passage of China competition legislation amid government-wide focus on China’s R&D activity and technology development and deployment.

Tax Extenders by Carolyn Coda and Matt Russell

Temporary tax provisions known as “tax extenders” typically expire at the end of each calendar year and are often extended by Congress as part of a larger spending agreement. Some of these temporary tax provisions receive multi-year extensions, while others are renewed annually. Several business tax provisions expire at the end of 2021, including three COVID-19 related provisions in the Families First Coronavirus Act of 2020.

Reconciliation could shift priorities on some of these items should they, or similar provisions, get extended or made permanent in the $3.5 trillion bill.

Traditional tax extenders:

Rum cover over

Computation of adjusted taxable income without regard to any deduction allowable for depreciation, amortization, or depletion

12.5 percent increase in annual low-income housing tax credit authority

COVID-19 related provisions:

Payroll tax credits for COVID-19 sick and family leave

Employee retention and rehiring credit

Prevention of partial termination of employer-sponsored retirement plans

Individual taxes:

Mortgage insurance premium deduction

Health coverage tax credit

Charitable deduction for non-itemizers

Increased income limit for charitable deductions for itemizers

Flexible spending account rollovers, midyear elections, and other flexibilities

The limitation on business interest deductions could also be included in the tax extender debate. The Tax Cuts and Jobs Act limited the business interest deduction for tax years beginning in 2018. With the onset of the pandemic, Congress loosened the restrictions for 2019 and 2020 in the CARES Act, but the limitations will resume in 2022 without congressional action. A continuing resolution to fund the government into late fall could loop the tax extender discussion into a potential government spending deal at the end of the year. If FY 2022 spending is passed earlier in the fall, the tax extender debate will likely ride with any last-minute legislation before Congress leaves for the winter holiday recess.

Drug Pricing by Lawren Geer and Annabell McWherter

As more Americans are getting vaccinated, the Administration and policymakers on Capitol Hill are shifting their focus to other health care priorities, such as prescription drug pricing. During a speech on August 12, President Biden outlined his vision for reducing prescription drug prices, which builds on his Build Back Better agenda and recent executive order promoting competition in the American economy. Biden’s plan encourages the Food and Drug Administration (FDA) to ensure the expeditious delivery of generic drugs to consumers and to work with states and tribal communities to import prescription drugs safely from Canada. Recognizing that significantly reducing the cost of prescription drugs will likely require congressional action, Biden also called on Congress to pass legislation allowing Medicare to negotiate drug prices, cap out-of-pocket spending for seniors, and implement an inflation cap for drug companies that would limit excessive price increases on prescription drugs.

As committees work on budget reconciliation, Democrats are hopeful some of these policies will be included in the final budget reconciliation bill. The House Energy and Commerce Committee released its reconciliation proposal last week, which included H.R. 3, the Elijah Cummings Lower Drug Costs Now Act. The main part of the proposal would allow Medicare to annually negotiate the price of 25 high-cost drugs in the first year of enactment and 50 in each subsequent year. The universe of eligible drugs for negotiation includes any of the 125 on-patent medications accounting for the highest spending in Medicare Part D or the health care system in total or an insulin product. Progressive Members of Congress and advocates successfully added language stating that drugs presumed to reach that threshold upon launch can also be negotiated. The House bill, however, would not begin Medicare negotiation with drug companies until 2025. Also of note, the Energy and Commerce proposal would require drug manufacturers that increase their prices faster than inflation to pay back the excess amount, cap out-of-pocket-costs at $2,000 for Medicare Part D beneficiaries, and block the implementation of the Trump Administration’s rebate rule that would increase premiums for Part D beneficiaries.

Although many Democrats favor using H.R. 3 as the foundation for drug pricing reform, key moderates have voiced concerns and called for bipartisan, bicameral legislation on the issue. While drug pricing remains top of mind and is expected to offset the cost of other pricey reconciliation initiatives, Democrats will have to prioritize competing health care priorities, such as expanding Medicare to include vision, dental, and hearing benefits and filling the Medicaid coverage gap. While the details are still being developed concerning drug pricing reforms, likely changes could encompass: (1) indexing the Part D caps to CPI-U, (2) repealing the Part D rebate rule, as well as (3) Medicare price negotiations with either international or domestic reference pricing.

COVID-19 Action Plan by Lawren Geer

Last week, President Biden released a six-point COVID-19 action plan outlining the Administration’s strategy for responding to the Delta variant and boosting testing and vaccination efforts. The plan included:

Vaccinating the unvaccinated Further protecting the vaccinated Keeping schools safely open Increasing testing and requiring masking Protecting our economic recover Improving care for those with COVID-19.

Notably, Biden’s plan calls on the Department of Labor (DOL) to issue an emergency rule requiring workplaces with over 100 employees to require staff, including all federal workers and contractors, to either be fully vaccinated or undergo weekly COVID-19 testing. The DOL’s Occupational Safety and Health Administration is expected to release the rule in the coming weeks and is expected to include a fine of up to $14,000 per violation for businesses that fail to comply.