Weekly Plurus Strategies Update on Infrastructure, Reconciliation, Appropriations, and the Debt Limit
At long last, it is finally infrastructure week! With the House already out of town for the August recess and the Senate working its way to the summer break, here’s the latest we are hearing on the Senate wrapping up debate on the bipartisan infrastructure bill, the budget resolution and reconciliation, Fiscal Year 2022 (FY22) appropriations, and the debt limit.
Bipartisan Infrastructure Bill/Reconciliation
On Sunday night, Senate negotiators finally unveiled the text of the $1.2 trillion ($550 in new spending), bipartisan Infrastructure Investment and Jobs Act. We had been hearing the goal was to finalize legislative text last Friday, although last minute hiccups led to Senate staff having to give up their weekends.
The bill was on the floor this week, where Sens. Tom Carper (D-DE) and Shelley Moore Capito (R-WV) have been in charge of managing the amendment process. Hundreds of amendments have been filed, although few will actually be called up and receive a vote. So far the Senate has avoided votes on poison pill amendments that might sink the whole package, voting on just 22 amendments, including:
An amendment from Sen. Alex Padilla (D-CA) that would expand authority for renovating certain Indian Health facilities, which passed on a 90-7 vote;
An amendment from Sen. Tammy Duckworth (D-IL) that would require recipients of stations accessibility grants to adopt transportation accessibility plans, which failed on a 48-50 vote;
An amendment from Sen. Roger Wicker (R-MS) to apply the Administrative Procedure Act (APA) to the Broadband, Equity, Access, and Deployment program, which failed on a 43-55 vote;
An amendment from Sen. John Thune (R-SD) to address the workforce needs of the telecom industry, which passed on a 95-1 vote;
An amendment from Sen. Deb Fischer (R-NE) to require a map displaying broadband deployment projects, which passed on 95-0 vote;
An amendment from Sen. John Barrasso (R-WY) that prohibits the use of funds for building codes that restrict the use of natural gas, which failed on a 45-48 vote;
An amendment from Sen. Cynthia Lummis (R-WY) to require a study to determine highway costs by type of user, which passed on a 95-3 vote;
An amendment from Sen. John Kennedy (R-LA) to provide assistance in response to Hurricanes Laura, Delta, and Zeta, which failed by a 19-79 vote;
An amendment from Sen. James Lankford (R-OK) to prohibit the issuance of federal funds to entities that do not and enroll with E-Verify, which failed on a vote of 45-53;
An amendment from Sen. Ron Johnson (R-WI) to provide the canceling of border wall contracts, which failed on a vote of 48-49;
A substitute amendment from Sen. Mike Lee (R-UT), which failed on a vote of 20-78;
An amendment from Sen. Lee related to delivery for water storage infrastructure, which failed on a vote of 47-50;
An amendment from Sen. Ted Cruz (R-TX) to designate additional high priority corridors on the National Highway system, which passed by a voice vote;
An amendment from Sen. Rick Scott (R-FL) to prohibit the obligation of funds if the Congressional Budget Office (CBO) finds it would raise inflation, which failed on a vote of 42-55;
An amendment from Sen. Chris Van Hollen (D-MD) to include payment and performance security requirements for infrastructure financing, which passed on a 97-0 vote;
An amendment from Sen. Jacky Rosen (D-NV) to increase resiliency to mitigate the cost of damages from wildfires on highways, which passed by a voice vote;
An amendment from Sen. Steve Daines (R-MT) to provide additional funds for post-fire restoration activities, which failed on a 48-50 vote;
An amendment from Sen. Gary Peters (D-MI) to modify cybersecurity provisions, which passed on a 96-2 vote;
An amendment from Sen. Ben Cardin (D-MD) to add the Minority Business Development Act, which passed on a voice vote;
An amendment from Sen. Michael Bennet (D-CO) to establish a Joint Chiefs Landscape Restoration Partnership program, which was adopted by a voice vote;
An amendment from Sen. Carper to change the provisions relating to appropriations for the Army Corps of Engineers, which passed on a voice vote; and
An amendment from Leader Chuck Schumer (D-NY) to require limousine compliance with federal safety standards, which passed on a vote of 58-39.
While Leader Schumer had been hoping for a final vote on the bipartisan infrastructure bill by the end of this week, there are a number of factors that will likely have the debate slipping into the weekend, and potentially early next week. First, we are not expecting any votes on Friday, as a number of Senators whose votes will be needed to pass the bill will be traveling to Wyoming for the funeral of their former colleague Sen. Mike Enzi (R-WY). Second, now that Sen. Lindsey Graham (R-SC) has tested positive for a breakthrough case of COVID after socializing with a handful of Senators on Sen. Joe Manchin’s (D-WV) houseboat this past weekend, it is unclear if additional Members may be missing in action if they need to quarantine. Finally, Sen. Kyrsten Sinema (D-AZ) has made clear that she does not intend to change her plans to travel on Saturday to Italy for a recess vacation.
We are hearing it is possible Leader Schumer may move to cut off debate as soon as today, which could bring a final vote as soon as Saturday. However, as conversations are still taking place about how many more amendments will see floor consideration, there is also some probability that a final vote on the legislation could take place on Sunday or Monday. Of course, nothing is final until the votes are counted, but there is optimism the bill will pass the upper chamber and then make its way to the House. In addition to the Gang of 22 (G22) Senators who are likely to vote for the bill (all but Sen. Jerry Moran (R-KS), whose support remains in flux), it is also worth noting that Minority Leader Mitch McConnell (R-KY) has signaled his support, so long as Leader Schumer allows the amendment process to play out. At the moment, Leader Schumer seems comfortable allowing the jet fumes of the looming recess to encourage cooperation.
While conventional wisdom has been that Leader McConnell may be hesitant to give President Biden a win, we have always found him to be a savvy politician. From talking to folks who are close with Leader McConnell, we believe his ultimate political calculation was that supporting the bipartisan infrastructure bill might be the surest way to preserve the filibuster. Additionally, his support may be intended to prevent Republicans from being viewed as obstructionist while simultaneously giving Democrats the opportunity to score a victory alone using reconciliation. Despite his support for the bill, it is our understanding that Leader McConnell is not whipping GOP votes. It will also be interesting to see where the vote count falls as Senators react to the CBO analysis finding that the measure will increase the federal deficit by $256 billion over ten years.
As soon as the infrastructure bill is passed, Leader Schumer plans to turn to the budget resolution that will be used to unlock instructions for Democrats $3.5 trillion reconciliation bill. It is our understanding that committees are beginning to receive their topline numbers for reconciliation, with Sen. Manchin unveiling that the Energy Committee anticipates receiving $198 billion. While $3.5 trillion will be the maximum amount of funding authorized by the reconciliation bill the amount of new spending or tax increases could be closer to $1.5 trillion. Offsets on the table include increases in corporate, capital gains, and the top marginal income tax rates; revoking a Medicare rebate rule enacted under President Trump; and applying prescription drug savings.
We understand the budget resolution is still coming together and the White House has held more than 375 meetings with Hill staff and Members about what should be included in the reconciliation package. Once it is ready, the budget resolution is expected to bypass the Budget Committee and head straight to the Senate floor. A budget resolution typically takes the better part of a week to pass, with 50 hours of debate and the possibility of unlimited amendments being offered. A vote-a-rama is likely to be the last thing that stands between Senators and the August recess. Once the budget resolution passes, the Senate is likely to skip town until September, leaving the reconciliation debate to the fall.
The next steps for consideration of the infrastructure bill and a Senate-negotiated reconciliation package in the House remain unclear, but we have been taking advantage of the House being in recess to connect with senior Democratic House staffers for their insights.
One House chief of staff said the bipartisan infrastructure bill is not being well received, with about three quarters of the House Democratic Caucus “upset to ripshit” about the bill text. We are hearing there may be an effort underway to try to silence Rep. Peter DeFazio (D-OR) as much as possible, as there is now an impression that his rants have set back a lot of efforts. This chief said that how the House proceeds will be all about “sequencing and pairing,” especially as the sentiment of the caucus is to cluster matters together so there isn’t any more back and forth. This makes things “especially fluid.”
Another senior Democratic chief echoed this mood, saying there is a feeling that the House is “being taken advantage of” on both the bipartisan infrastructure bill and reconciliation. He reported that committee staff is especially frustrated by “being on the sidelines” of both legislative packages. Despite the House feeling “left out” and like they would have written the infrastructure bill differently, it was this staffer’s view that the House “ultimately probably has to eat and pass the Senate bills.” However, he admitted there is no real sense yet of when these votes might take place, although it could be as late as September. He outlined an alternative scenario where the House comes back in August for one afternoon of voting, where the House Rules Committee combines pending business into a single vote. In this case, Members may be able to take advantage of remote voting.
Yet another Democratic chief did not rule out the possibility of the House returning to Washington in August. It was her thinking that the first two weeks of the recess will be protected for vacations but come August 16 “who knows.” It was this chief’s impression that House Speaker Nancy Pelosi (D-CA) is holding firm on passing the infrastructure bill and the reconciliation package at the same time. Another factor that could complicate the timing of any House votes is the fact that Speaker Pelosi has her big Napa fundraiser scheduled for August 21.
Similarly, a different Democratic chief of staff shared “rumors” that it is possible the House is back in the week of August 23. There is also some talk of votes being scheduled for the first committee work week that is scheduled for the August 30 – September 3. It was this chief of staff’s view that “if I’m leadership and we’re moving along at I clip, I want to get this done and dusted before there are any surprises.”
One other Democratic chief of staff observed that Speaker Pelosi will have to keep the Democratic coalition in the House together in order to move the bipartisan infrastructure bill and the reconciliation package. While she noted that “everyone has their issue they are willing to break on, the feeling is that Speaker Pelosi will ultimately pull it out.” This chief took the classical view that the House will vote for the bipartisan bill at the same time they see the budget resolution. In other words, she does not see the House voting on the bipartisan infrastructure bill until they also have the opportunity to view the reconciliation plan.
In terms of the House returning for votes during the recess, this chief shared that she was on a call with the White House this morning and they are putting pressure on the House to come back next week to vote on the bipartisan infrastructure bill. However, most folks believe the budget resolution will not be ready at this point. There’s also the problem that, at the moment, there may not be enough votes in the House. In addition, the chief reported that Majority Leader Steny Hoyer (D-MD) had given Members “a wink and a nod” that they will not be called back to vote until after kids go back to school (i.e. likely no sooner than the week of August 16). Her prediction is that the House is likely to be back in for votes during the week of August 30 because it was already scheduled to be a committee work week. Her view is that if Members were called back any earlier, there would be a lot of voting by proxy and “the optics of having 200 people vote by proxy won’t look good.”
Budget/Appropriations
This week the Senate Appropriations Committee voted to advance its FY22 Energy and Water, Agriculture (Ag), and Military Construction-Veterans Affairs (MilCon-VA) Appropriations Bills for 2022 on a bipartisan basis. Notably, the MilCon-VA and Energy and Water bills did not have a subcommittee markup and were only considered by the full committee. Despite the bipartisan approval of these appropriations bills in committee, Republicans warned that they are looking for parity on spending increases between military and non-military spending in order for the appropriations process to move forward.
In particular, Leader McConnell has warned that Republicans will object to moving appropriations bills on the floor if the topline for defense spending is not increased. There seems to be growing pressure to raise defense spending, as the Senate Armed Services Committee (SASC) added $25 billion to its topline authorization during its FY22 National Defense Authorization Act (NDAA) markup and there are rumors that the House Armed Services Committee (HASC) will also authorize spending levels above the president’s budget request when it marks up its NDAA on September 1. During this week’s markups, Sen. Patrick Leahy (D-VT) agreed that bipartisan and bicameral talks need to begin with the White House to determine topline spending levels for all 12 bills.
As you know, before leaving town, the House advanced nine of its 12 FY22 appropriations bills, leaving the more controversial Commerce-Justice-Science (CJS), Defense, and Homeland Security Appropriations Bills awaiting votes. Despite the fact that the end of the fiscal year will be upon us shortly after Congress returns from recess, we are hearing appropriations are unlikely to be urgent enough to bring the House back to Washington for votes in August. While it remains the case that a continuing resolution (CR) is highly likely to fund the government beyond September 30, we are also now hearing it is possible that some of the more controversial spending measures could operate on a CR for the remainder of the fiscal year.
Debt Limit
This week, the suspension of the debt limit that passed in August 2019 expired and the Treasury Department began relying on extraordinary measures to keep the U.S. from defaulting on its debt. So far, Treasury’s extraordinary measures include pauses on investments in some retirement and benefit plans for federal employees. Treasury is also stopping sales of some state and local bonds to help prolong the amount of time Congress has to raise or suspend the debt limit. According to Treasury, the U.S. Government will need to borrow $1.4 trillion to continue to implement legislative programs through the end of 2021.
Republicans have indicated they will be uncooperative on the debt limit if it is not coupled with a serious effort to address federal spending. While Sen. Graham had previously indicated he might introduce a plan to create a commission to explore reforms to entitlements like Social Security and Medicare, he now seems to have abandoned this effort and joined the chorus of Republicans encouraging Democrats to address the debt limit on their own as part of reconciliation.
Within the past 24 hours, Democrats seem to be coalescing around a strategy that would separate the debt limit debate from reconciliation and instead include a new suspension of the debt limit as part of the CR that is expected in September. The thinking is that Leader Schumer does not want to do the debt limit on reconciliation if it means he might lose some centrist votes for a package with a $3.5 trillion price tag. Politically, Leader Schumer seems more inclined to dare Republicans to oppose suspending the debt limit just days before a potential default and run the risk of being viewed to blame for a crisis, especially as they raised the debt ceiling multiple times during the Trump presidency.