Plurus Strategies Weekly Update: Appropriations, America COMPETES, and Voting Rights
FY22 Appropriations/Emergency Supplemental/FY23 Budget
Before leaving town this week, the House voted 272-162 to pass a continuing resolution (CR) to fund the government through March 11, buying appropriators a few more weeks to draft an omnibus spending bill. Aside from a handful of anomalies, including funding for the Department of Defense (DoD) to address the Red Hill water crisis in Hawaii, adjustments to allow the Interior Department to roll out its cybersecurity system, and monies that will allow the Navy to procure the Columbia-class submarine on time, the CR is relatively clean. The Senate is expected to pass the CR next week before government funding expires on February 18. However, the CR may not pass as quickly as some hope, as Sen. Marsha Blackburn (R-TN) has a hold on the bill over concerns that a newly announced Department of Health and Human Services (HHS) program would pay for crack pipes for cocaine users.
On Wednesday, the “big four” (Sens. Patrick Leahy (D-VT), Richard Shelby (R-AL), Rosa DeLauro (D-CT), and Kay Granger (R-TX)) announced a breakthrough in negotiations on fiscal year 2022 (FY22) appropriations, indicating that an agreement on topline numbers for defense and non-defense spending is finally within reach. In fact, Senate Majority Leader Chuck Schumer (D-NY) publicly expressed confidence this week that an omnibus will be ready by the time the next CR expires. With positive reports coming out of closed door talks this week, most staffers who we talk to are optimistic that Sens. Shelby and Leahy will get the job done. With both Senators retiring, this appropriations cycle is likely to be the last one completed on their watch. Aside from the omnibus being a legacy issue for Sens. Leahy and Shelby, the fact that appropriations are needed to fund the bipartisan infrastructure framework (BIF) is also likely to be a motivator to get to yes.
Supplemental emergency appropriations remain under consideration to be attached to an omnibus bill. Even though the omicron surge appears to be waning, in the past week or so, there has been greater recognition that critical accounts, such as those tied to testing, vaccines, and therapeutics, are running low. While the White House has yet to officially request additional COVID relief funding, it is our understanding that there have been some preliminary talks between the Office of Management and Budget (OMB) and Congressional leadership. Natural disaster relief could also be part of a supplemental appropriations package.
We continue to hear that President Joe Biden will not release his FY23 budget request until after the State of the Union (SOTU) and after the FY22 appropriations cycle has concluded. This seems to suggest the earliest we might get insights into the FY23 budget request is mid-March. The prospects for seeing an FY23 budget sooner rather than later also got brighter this week with both the Senate Budget Committee and Senate Homeland Security and Governmental Affairs Committee (HSGAC) advancing Shalanda Young’s and Nani Coloretti’s nominations to serve in the top two posts at OMB.
USICA/America COMPETES Act
As you know, last week the House passed the America COMPETES Act, mostly along party lines, by a vote of 222-210. The partisan nature of the vote was unsurprising given the fact that the package included foreign policy and trade provisions that lacked GOP support. Republicans also criticized the House package as being too weak to stand up to China and characterized it as a fallback for the lack of progress on President Biden’s other domestic policy priorities. Meanwhile, House Democrats highlighted that the package included pieces of 63 different bills with Republican cosponsors.
The America COMPETES Act now heads to a conference with the Senate-passed U.S. Innovation and Competition Act (USICA) bill. While we understand that paperwork still needs to be transmitted for there to be a formal motion to go to conference, informal discussions are already taking place between the committees that will be involved about what the process will look like. Committee staffers tell us they are hopeful about formal conference proceedings but given the partisan nature of parts of the House bill, as well as the sprawling scope of the package, there is some decision making that is likely to be bumped up to the leadership level. At the end of the day, the politics likely mean that the product looks a lot more like the Senate-passed USICA bill than the House-passed America COMPETES Act.
Regardless of what transpires in conference, most staffers are confident that a compromise bill gets done, even though it could be a difficult process to get there. While Democrats ideally would like to have a final version by the March 1 SOTU, we are hearing that Memorial Day is a more realistic timeframe. We are convinced Republicans will leverage every opportunity to deny President Biden a victory before the SOTU. Once there is a compromise bill, it will also need to be approved by both the House and Senate, and it could be even harder to find GOP votes as the midterms get closer. For this reason, it is relatively safe to assume that the conference report will not be open for amendments on the floor.
BBB
With appropriations and the global standoff with Putin over his intentions along the border with Ukraine in the spotlight, there was relatively light chatter on Build Back Better (BBB) this week. This could also be an indicator that BBB is not as much on the near-term priority list as other agenda items. However, on Wednesday, the White House convened a meeting of energy companies that would likely be involved in shaping the climate provisions of any BBB bill. President Biden is also increasingly expected to spend time on the road promoting BBB, including a pitstop today in Rep. Abigail Spanberger’s (D-VA) district where he addressed prescription drug price controls.
Sen. Manchin continues to try to deflect attention from BBB. As you may know, Sen. Jon Tester (D-MT) has been tapped to tease out Sen. Manchin’s red lines for a BBB bill. After a meeting with Sen. Joe Manchin (D-WV) late last week, Sen. Tester reaffirmed Sen. Manchin’s position that any reconciliation package should move through the normal committee process. This means it could be months before BBB is truly resurrected, although the silver lining might be that Sen. Manchin remains open to passing something. We are hearing it could be April before BBB talks get serious again. Of course, Democrats would like to see a BBB bill across the finish line sooner rather than later to maximize their ability to campaign on it.
We are still in the camp that a narrow BBB bill gets done. It’s likely to be in the $1 - $1.5 trillion range and include just clean energy tax breaks, drug pricing controls, ACA expansion, childcare subsidies, and universal pre-kindergarten. The scope of the bill is likely to depend on what trends we see in inflation in the weeks ahead, and it’s not a good sign for President Biden that inflation is now at a 40-year high. Ultimately, we could see BBB renamed and we do not see it moving until after the Supreme Court (SCOTUS) nomination, FY22 appropriations, and USICA/COMPETES Act have made it across the finish line. As a reminder, the reconciliation vehicle for BBB will expire at the end of the fiscal year.
Voting Rights
Instead of negotiating with the White House on BBB, it seems that Sen. Manchin has now gone all in on Electoral Count Act (ECA) reform. Sen. Manchin made a recent round of appearances on political shows where he expressed optimism that the Senate can pass legislation that protects states’ slates of electors, prohibits states from appointing electors after Election Day, and allows states more time to conduct recounts.
While Sen. Manchin comes across as upbeat, our instincts tell us that attracting Republican support for any kind of federal electoral reform gets more difficult as former President Trump continues to make comments that attempt to legitimize January 6. Simultaneously, Republicans have been challenged in trying to navigate the Republican National Committee’s (RNC) decision this week to censure Reps. Liz Cheney (R-WY) and Adam Kinzinger (R-IL) for their participation on the House select committee investigating the insurrection.
Regardless of what the bipartisan working group on electoral reform can achieve, we expect to see more legislation at the state-level aimed at either expanding or restricting voting rights, depending on the state.
SCOTUS Confirmation
We are expecting President Biden to announce his SCOTUS nominee in late February. President Biden has already committed to making good on his campaign pledge to nominate a Black woman and the names we are hearing most often are Ketanji Brown Jackson and J. Michelle Childs. The thinking is that a candidate like Jackson could unify the Democratic caucus, while a more moderate pick like Childs might allow the president’s nominee to pick up a few GOP votes. At this point, it’s unclear which path the White House may be considering. However, President Biden and Vice President Kamala Harris are meeting with Senate Judiciary Committee Democrats this afternoon to solicit their guidance.
Leader Schumer is hoping to condense the entire confirmation process to about one month. While there were concerns about the 50/50 Senate being able to confirm a new justice quickly following last week’s news of Sen. Ben Ray Lujan’s (D-NM) stroke, we are hearing recent, positive reports regarding Sen. Lujan’s prognosis. Sen. Lujan’s staff believes he could be back in DC to carry out some of his Senate responsibilities in just 3-4 weeks. He is expected to receive follow up treatment for his stroke in DC. Judiciary Committee proceedings could begin in March even before Sen. Lujan has returned to DC, potentially teeing up full Senate confirmation before the Easter recess.
Political Tidbits
There were no new major retirement announcements this past week. Data from the past few election cycles shows a leveling off in announcements around eight months out from an election (roughly in the February/March timeframe). Those years saw an average of six retirements in the Senate and 44 in the House. If 2022 follows suit, we should not see too many more announcements. However, it is possible the midterms could be a wave election, so we are not ruling anything out.
Notably not on the list of retirement announcements is House Speaker Nancy Pelosi (D-CA). She announced in late January her intentions to run for re-election this fall. We recalled then-Speaker Paul Ryan’s (R-WI) announcement in April of the 2018 election cycle, which saw Democrats pick up 41 seats in the House six months later. As Rep. Ro Khanna (D-CA) said at a Punchbowl event this week, “Speaker Pelosi has earned a place in American history… the Speaker cares more about the Democratic Party and the country than her own aspirations, and she’ll know when it’s time for that transition.”
While none of the six Senate retirees are running for other offices, eight House Democrats and six House Republicans are seeking another office:
Rep. Mo Brooks (R-AL) is running for the open Senate seat vacated by Sen. Shelby (R)
Rep. Karen Bass (D-CA) is running for Mayor of Los Angeles
Rep. Val Demings (D-FL) is running to take on Sen. Marco Rubio (R), who is seeking re-election
Rep. Charlie Crist (D-FL) is running for Governor
Rep. Jody Hice (R-GA) is running for Georgia Secretary of State
Rep. Anthony Brown (D-MD) is running for Maryland Attorney General
Reps. Vicky Hartzler (R-MO) and Billy Long (R-MO) are running for the open Senate seat vacated by Sen. Roy Blunt (R)
Rep. Ted Budd (R-NC) is running for the open Senate seat vacated by Sen. Richard Burr (R)
Reps. Tom Suozzi (D-NY) and Lee Zeldin (R-NY) are running for Governor
Rep. Conor Lamb (D-PA) is running for the open Senate seat vacated by Sen. Pat Toomey (R)
Rep. Louie Gohmert (R-TX) is running for Texas Attorney General
Rep. Peter Welch (D-VT) is running for the open Senate seat vacated by Sen. Leahy (D)
Last week, we reported on the state of New Hampshire. This week, we look to the other coast and focus on California. A special election to replace Rep. Devin Nunes (R-CA), who is now the head of the Trump Media and Technology Group, will be held in CA-22 on June 7. This district will likely only be around for six months due to California losing a seat in redistricting.
Down a seat, California’s House district lines are already making waves. Some districts, like CA-16 (Rep. Jim Costa (D-CA)) or CA-23 (Leader Kevin McCarthy (R-CA)), are expected to become even more solidly Democratic or Republican. Rep. Jerry McNerney (D-CA) likely could have won in CA-9, which he has represented for 16 years, but the district is becoming more conservative, meaning a tougher re-election prospect.
What we’ll be watching is how the California map spreads out the Democratic population. The DCCC put out its battleground plan in late January and named CA-13 (Open), CA-22 (Rep. David Valadao), CA-27 (Rep. Mike Garcia), CA-40 (Rep. Young Kim), CA-41 (Rep. Ken Calvert), and CA-45 (Rep. Michelle Steel) as Republican-held districts in play. We are hearing the races in CA-22 and CA-27 have been generating a lot of buzz with strong Democratic candidates and that ASPIRE PAC, the Asian American Pacific Islander (AAPI) Caucus’ campaign arm, is making a play in CA-40.