The Top 10 Things We’re Watching After the Two-Week Recess
The past two weeks may have been the first break that felt like a recess since the start of the COVID-19 pandemic. While some staffers took advantage of the opportunity to unplug, we know others were processing Fiscal Year 2022 (FY22) appropriations and National Defense Authorization Act (NDAA) requests, combing through the American Jobs Plan, and reviewing the “skinny” budget ahead of what is anticipated to be a busy work period. Once both the House and Senate return this week, Congress plans to be in session through the Memorial Day recess. Here are the “top ten” things we will be watching over the next several weeks:
FY21/FY22 Budget Resolutions and Reconciliation: Last week, the Senate parliamentarian ruled that Section 304 of the Congressional Budget Act of 1974 allows Democrats to revise the FY21 budget resolution to create additional reconciliation instructions. There is some precedent for this, as President Ronald Reagan and Senate Republicans revised the 1981 budget resolution to generate reconciliation instructions that were used to pass the Reagan tax cuts. While Senate Majority Leader Chuck Schumer (D-NY) has made clear that Democrats desire to work on infrastructure in a bipartisan fashion, he has not ruled out reconciliation as a tactic to work around GOP obstruction. Of course, the Byrd rule would limit what Democrats might be able to achieve on policy as part of a reconciliation bill. The press is reporting that Leader Schumer is seeking to use the parliamentarian’s ruling to create more opportunities to move Democratic priorities on a party line vote, especially as each budget resolution can be used to generate reconciliation instructions for three bills (one on revenue, one to address spending, and one on debt). However, we question if Leader Schumer is instead trying to leverage Section 304 to move an infrastructure package more quickly. With President Joe Biden’s FY22 budget request significantly delayed, it is possible the Budget Committees will not be able to draft an FY22 budget resolution and reconciliation instructions until this summer. This means Congress would potentially lose the rest of April and May to work on advancing the American Jobs Plan. Revising the FY21 budget resolution would allow Democrats to act more quickly on infrastructure and to perhaps even pass legislation by the August target laid out by the White House. It would also force Congress to pass something on infrastructure before FY21 budget reconciliation instructions expire on September 30.
FY22 Budget Request and Appropriations: At the end of the recess, the White House released a “skinny” FY22 budget proposal. Appropriators have expressed concern that the document unveiled last week does not provide enough information to begin drafting the FY22 spending bills, although some House Appropriations subcommittees are proceeding with budget hearings with agency heads, including Transportation Secretary Pete Buttigieg. With no confirmed Office of Management and Budget (OMB) Director and rumors that the anticipated May release of the president’s full budget request may still be slipping, it is possible Senate Appropriations budget hearings may not be scheduled until July. Further complicating this year’s appropriations cycle, the president’s full budget request is needed to draft a FY22 budget resolution, which will be used to provide the appropriations cardinals with 302(a) allocations. If Democrats proceed with a second FY21 budget resolution, this will most likely delay action on the FY22 budget resolution, which in turn will delay the unveiling of appropriations bills and the scheduling of markups. While there has long been speculation that we could see a continuing resolution (CR) this year, in our view, these recent developments only increase the odds for a yearlong CR. It also remains to be seen how earmarks will play into this year’s appropriations process. While House Republicans have already voted to include “community projects” in this year’s appropriations cycle, we will be watching for a decision in the Senate Republican conference on Tuesday.
What Comes Next on Infrastructure: Over the recess, President Biden ramped up pressure on Republicans to support his $2.25 trillion infrastructure plan with two major speeches appealing directly to GOP voters while lawmakers were in their districts. After connecting with Congressional staff during the break, it is apparent there was very little coordination between the White House and the Hill on the rollout of the American Jobs Plan. Leader Schumer and Speaker Nancy Pelosi (D-CA) have expressed their desire for a bipartisan infrastructure debate. However, Republican opposition to undoing the Trump tax cuts and the sheer size of President Biden’s proposal will make it hard for any Republicans to get to yes. Action on infrastructure will begin first in the House, although it seems both the House Transportation and Infrastructure and the Senate Environment and Public Works (EPW) Committees are looking to get their more traditional “highway” bills out of committee by Memorial Day. We suspect that neither bill will gain Republican support, and this may be what ultimately forces President Biden and Congressional Democrats to revert to a reconciliation bill. This sort of thinking reinforces some criticism that today’s bipartisan infrastructure meeting at the White House is primarily intended to create the perception that the White House is seeking bipartisan support, especially as key committee leaders and moderates who are likely to provide the deciding votes on infrastructure were not invited to participate. The pivot to reconciliation may take place even before the House Energy and Commerce Committee marks up its piece for the infrastructure package, likely sometime in June. Of course, a reconciliation bill has serious limitations, especially as it does not allow Democrats to accomplish much on policy. An infrastructure package that moves under reconciliation will also not allow for the inclusion of earmarks, which will only increase the challenge for Democratic leadership to keep their Members united. The House is aspiring to pass its complete infrastructure package before the July 4 recess and the Senate wants to finish its work on the infrastructure bill before the August recess. Consensus is that it is unlikely infrastructure can get done on this timeline, especially if there is ultimately a shift to reconciliation.
Senate China Competitiveness Package: There is overwhelming bipartisan concern in Congress about China as it continues growing its influence and economic stronghold in critical sectors, including national security and technology. With an abundance of capital being poured into research and development, China continues to make leading in critical technology sectors, such as AI and semiconductors, a priority. Leader Schumer has directed his Democratic committee chairs to work on the components for a legislative package to ensure U.S. competitiveness over China. While we had hoped to see a comprehensive package introduced before the recess, it is now clear that pieces of the package will roll out of the next month. On Thursday, Leader Schumer unveiled a revised draft of the Endless Frontier Act, which is now drawing pushback from Republican co-sponsor Sen. Todd Young (R-IN) because of Leader Schumer’s decision to include provisions of the American Jobs plan related to supply chain resiliency within the Commerce Department and authorizing funding for semiconductor research and manufacturing. Sen. Young and other Republicans appear to be pushing back on the idea of weighing down this bill with domestic priorities. Regardless, the Senate Finance Committee is ultimately expected to markup the Endless Frontier Act this month. The Senate Commerce Committee will hold a legislative hearing on the bill on April 14 and could also hold its own markup. Sens. Robert Menendez (D-NJ) and James Risch (R-ID) have also unveiled draft language for the Senate Foreign Relations Committee’s contribution to the package. The Strategic Competition Act, which authorizes human rights and civil society measures and imposes sanctions, confronts China’s predatory international economic behavior, and calls for enhanced coordination with allies and arms control, is slated for markup next week. At the end of the day, as many as eight Senate committees could have a hand in shaping the China package. It is possible Congress will pass this anti-China, pro-competitiveness legislation before floor action turns to infrastructure. Overall, we anticipate this bill will focus on investing in U.S. competitiveness, supporting allies and partners, and calling out China for its coercive behaviors.
House Floor Agenda Items: As Congress enters the April legislative work period, the House will consider a number of key bills and a potential infrastructure legislation. In a recent dear colleague, House Majority Leader Steny Hoyer (D-MD) laid out a legislative agenda that includes the Paycheck Fairness Act, which passed in the 116th Congress and would build on the Lily Ledbetter Act of 2009; the Workplace Violence Prevention for Health Care and Social Service Workers Act; the National Origin-Based Antidiscrimination for Nonimmigrants (No BAN) Act; the Access to Counsel Act; and legislation to be introduced by Reps. Grace Meng (D-NY) and Don Beyer (D-VA) on the alarming increase of hate crimes against Asian Americans. Additionally, we anticipate that the House will continue to pass bills that may stall in the Senate, including the Violence Against Women Act (VAWA) Reauthorization Act, which is expected to face Republican opposition over gun control provisions. It is also our understanding the House Financial Services Committee is working on legislation to provide relief from debt collection during the ongoing pandemic. This bill may also find its way to the House floor in the coming weeks.
Other Democratic Priorities: With a massive influx of migrants at the border, a mass shooting in Colorado, and enactment of SB 202, Georgia’s controversial election reform bill signed into law by Republican Gov. Brian Kemp, there are many high-profile issues that could distract from President Biden’s primary objectives to tout the American Rescue Plan Act and sell the American Jobs Plan. The House has already passed the American Dream and Promise Act, which would create a pathway for DREAMers to achieve permanent resident status and ultimately U.S. citizenship, and the Farm Workforce Modernization Act, to establish a system for agricultural workers to earn temporary status with an eventual option to become a permanent resident, only to see these bills stall in the Senate. Similarly, the House has advanced the Bipartisan Background Checks Act and the Enhanced Background Checks Act to expand background checks and close the “Charleston loophole,” with limited prospects for action in the Senate. Though President Biden signed executive orders aimed at curbing gun violence last week, we continue to believe Democrats have an appetite to do more. In addition, the Equality Act, which would prohibit discrimination on the basis of sex, sexual orientation, and gender identity; the Protecting the Right to Organize (PRO) Act, which would provide protections to workers trying to organize; and the For the People Act, a comprehensive voting rights bill, continue to appear in the news as outside groups apply pressure on the Senate to move the legislation forward. While Democrats want to address these various issues, they may be limited procedurally by the filibuster. However, there continues to be some thinking Leader Schumer may choose to put some of these bills on the Senate floor only to see them fail to create a foundation for filibuster reform. If this turns out to be Leader Schumer’s approach, it is unclear in what order these bills might be called up and how the timing would interplay with the infrastructure debate.
Filibuster Reform: It is possible that the recent ruling by the Senate parliamentarian that allows Democrats to revise the FY21 budget resolution and generate new reconciliation instructions will table the debate on filibuster reform for the foreseeable future. However, it has recently been our view that the debate on the filibuster was unlikely to come to a head for a few months. President Biden has expressed support for tweaking the filibuster rule, perhaps by reverting to a talking filibuster, to make its use more painful for the minority. However, he has also indicated that infrastructure is his next priority, and all signs seem to point to Democrats using reconciliation to advance infrastructure if they cannot find ten Republican votes in the Senate. As noted above, a strategy seems to be emerging that before Democrats would attempt to alter the filibuster, Leader Schumer would put popular, House-passed bills, such as those noted above, on the floor only to see them fail without 60 votes. Considering Sen. Manchin’s recent op-ed vowing not to eliminate or weaken the filibuster rule, this step might be necessary to secure support from moderates, including not only Sen. Manchin, but also Sen. Kyrsten Sinema (D-AZ). Alternatively, Democrats could choose to package elements of these bills that comply with the Byrd rule and pass them as part of another potential budget reconciliation measure. With the infrastructure debate expected to span months, we do not anticipate the issue of filibuster reform to return to the spotlight until the fall.
International Affairs: While President Biden has been focused primarily on domestic issues since taking office, we are beginning to see the administration prioritize foreign policy matters. Last week, U.S. national security officials met with their Iranian counterparts in Vienna for talks aimed at reviving the 2015 nuclear agreement. Additionally, Japanese Prime Minister Yoshihide Suga will become the first foreign leader to hold a face-to-face meeting with President Joe Biden in a summit planned for April 16. This summit will be a chance to strengthen the Japan-U.S. alliance and affirm cooperation on a range of issues including efforts to realize a free and open Indo-Pacific region, pandemic response, climate change, China, and recent North Korean missile tests. The timing of the summit also underscores the Biden Administration’s focus on shoring up ties with partners in the region to counter China. Simultaneously, the White House continues to plan for a virtual gathering of global leaders on climate change later this month. President Biden has invited 40 world leaders to the two-day summit to urge action on addressing global climate change. Prior to the event, the U.S. will be releasing its 2030 emissions target as its new Nationally Determined Contribution (NDC) under the Paris Agreement. Expected key themes at the summit include collaboration with private and subnational actors, showcasing innovative technological developments in mitigation and adaptation, and discussing the economic opportunity that could accompany an effective global response.
COVID-19 4th Wave: The U.S. has now hit a milestone of having 22 percent of the adult population vaccinated. About 119 million people have received at least one dose of the COVID-19 vaccine and more than 72 million people in the U.S. have now been fully vaccinated. However, as states ease restrictions and coronavirus variants like B.1.1.7 continue to spread, Dr. Anthony Fauci, the Biden Administration’s chief medical advisor, has warned the U.S. may now be entering a so called “fourth wave.” While ongoing vaccine campaigns are likely to make the fourth wave pale in comparison to the previous three, it could cause struggles for the Biden Administration. For one, the fourth wave is likely to continue to highlight disparities and inequities in the COVID-19 response. While states like New Mexico, South Dakota, Rhode Island, and Alaska have around 30 percent of their total populations vaccinated, Michigan, Florida, and states in the Northeast are not as far along and have seen spikes in cases. Florida is currently the state with the largest concentration of confirmed cases of the U.K. coronavirus variant, B.1.1.7, which is more transmissible and possibly more deadly, presumably due to lifted mask mandates and an influx in students participating in spring break. Further, around the country, businesses, schools, and politicians are asking “what next?” and questioning whether “vaccine passports,” digital proof of vaccinations against COVID-19, are a path to reviving the economy and returning to a new normal. After Texas sought to limit the development of such a technology, the White House has announced that “the government is not now, nor will we be, supporting a system that requires Americans to carry a credential.” Still, some businesses and universities are pushing for people to show proof of vaccination before entering stadiums or returning to campus to safely resume pre-pandemic operations. This debate is likely to increase in volume throughout the fourth wave, prompting a host of legality questions and privacy concerns. As the number of COVID-19 infections again creeps upwards, the Biden White House could come under increased pressure to speed up vaccine distribution and take a harder stance on states reopening.
Politics: Although the 2022 midterm elections are more than a year away, politics are likely to have an impact on policymaking in the days ahead. After the death of Rep. Alcee Hastings (D-FL) on April 6, we are now closely watching the special elections to fill five vacancies in the House. Unlike the Senate, special elections are required to fill vacancies; appointments are not allowed. Rep. Hastings was a Democrat, like Cedric Richmond, Marcia Fudge, and Deb Haaland, all of whom resigned their House seats to accept positions in the Biden Administration. In addition, there is one empty Republican seat previously held by Ron Wright (R-TX), which was vacated by his death in February. As a reminder, 218 seats are needed for a majority in the House. Democrats initially had a 222-213 seat margin in the House following the 2020 elections, but this margin has now shrunk to 218-212, making it even more critical for Speaker Pelosi to keep her caucus unified. The numbers may only improve slightly for House Democrats pending special elections in May (Louisiana and Texas), June (New Mexico), and November (Ohio), with the date of Florida’s special election yet to be announced. At this point in time, it appears the Texas and New Mexico districts are somewhat competitive, but lean Republican and Democratic, respectively. The races in Louisiana, Ohio, and Florida are not considered competitive and Democrats are likely to hold these districts. With a 50/50 Senate, the midterms will also be crucial for control of the upper chamber. The November 2020 elections also create a potential opportunity for Democrats to grow their majority, especially as only 14 Democrats are in cycle, compared to 20 Republicans seats that are up for reelection in 2022, including open seats in North Carolina, Pennsylvania, Ohio, Missouri, and Alabama due to GOP retirements. On the Democratic side, party leadership views Sens. Raphael Warnock (D-GA), Mark Kelly (D-AZ), and Maggie Hassan (D-NH) as having the toughest races. While it is still early in the campaign cycle and candidate fields are in flux, the Cook Political Report has identified North Carolina and Pennsylvania as toss ups, Arizona and Georgia as leaning Democratic, and New Hampshire and Nevada as likely democratic holds.
While it is our impression that the White House and Congressional Democrats would like to focus the next few weeks on scoring some wins while advancing progress on an infrastructure package, there is no shortage of issues requiring attention. We will be monitoring both the Biden Administration and Congress closely and look forward to a busy work period!