Plurus Strategies Weekly Update Appropriations, Build Back Better, and America COMPETES
SCOTUS Nomination
After much speculation, it’s now official that Justice Stephen Breyer will retire at the end of this term. Despite the expectation that the SCOTUS nomination will distract from President Joe Biden’s agenda, compared to the SCOTUS confirmations during the Trump Administration, we anticipate this confirmation will cause less heartburn. Although Senate Majority Leader Chuck Schumer (D-NY) has indicated that he plans to push President Biden’s nominee forward at an aggressive pace, perhaps using Justice Amy Coney Barrett’s confirmation as a model, the fact that the ideological balance of the court is not hanging in balance may eliminate some pressure.
Even though the upcoming SCOTUS confirmation does not create an opportunity for President Biden to replace a conservative justice with a liberal one, our instincts tell us this may be a lucky break for the president. Since Build Back Better (BBB) negotiations unraveled at the end of last year, the SCOTUS vacancy pulls some of the attention away from the agenda items that are not getting done and opens a window for the president to rack up some political points. For example, President Biden has already made clear that he intends to uphold his campaign promise to nominate a Black woman. This should enhance his credibility with progressives.
The confirmation process might also afford the president a chance to rally Democrats at a time when caucus unity is desperately needed. Many of the SCOTUS candidates who are thought to be under consideration, such as Ketanji Brown Jackson and J. Michelle Childs, are likely to easily attract the support of all 50 Senate Democrats. We’ll be curious to see if the SCOTUS confirmation process can reset the political dynamics in a way that might reinvigorate progress on the president’s domestic agenda as we head towards November.
Additionally, some potential candidates may even be able to secure votes from moderate Republicans, such as Sens. Susan Collins (R-ME) and Lisa Murkowski (R-AK), demonstrating that bipartisanship remains possible, even in a midterm election year. Though there are some outliers (think 2024 presidential contenders), it seems like most Republicans are holding their fire on the SCOTUS process, perhaps as part of a broader strategy that is focused on keeping attention elsewhere as they aim to flip control of the chamber in November.
The possibility that President Biden’s nominee wins some GOP support is especially important, as one COVID infection or other illness, such as Sen. Ben Ray Lujan’s (D-NM) recent stroke, could keep Democrats from getting to 50 votes on the Senate floor. We are hearing that Sen. Lujan’s office anticipates he could be back in Washington in 4-6 weeks, which seems unlikely to impede the SCOTUS confirmation timeline if a nominee is announced in late February.
America COMPETES Act
On Tuesday, the House Rules Committee met to consider just over 600 amendments filed to the America COMPETES Act. Ultimately, 261 amendments were made in order. Commerce Secretary Gina Raimondo, who has been a leading advocate for passage of a China competitiveness package and the $52 billion in CHIPS Act funding attached to the bill, joined yesterday’s House Democratic caucus meeting to continue to plug the importance of the bill just as it came to the floor. She has continued to highlight the package as one of the administration’s top priorities.
We are expecting final House passage of the America COMPETES Act tomorrow. Due to the partisan nature of some parts of the House package, primarily the House Foreign Affairs Committee’s EAGLE Act and other trade and climate provisions, we anticipate the America COMPETES Act will pass the House with only Democratic votes, paving the way for a potentially bruising conference process. Some House Democrats are also frustrated that the America COMPETES Act side-skirted the formal committee process.
As a reminder, the Senate passed its U.S. Innovation and Competition (USICA) bill last June on a 68-32 vote, and many staffers tell us the level of bipartisanship in the Senate bodes well for a compromise bill. While some House staffers have said they are optimistic about there being a real conference process, it remains possible that decision-making on controversial issues could get bumped up to the leadership level. Democrats would love to get the bill done before the March 1 SOTU, but we’re hearing that passage just before the Memorial Day recess might be more likely just due to the thorny conference proceedings ahead.
FY22 Appropriations/Emergency Supplemental/FY23 Budget
Appropriators are facing a February 18 deadline to break the logjam on Fiscal Year 2022 (FY22) funding bills. As has been reported, the “big four” (Sens. Patrick Leahy (D-VT) and Richard Shelby (R-AL) and Reps. Rosa DeLauro (D-CT), and Kay Granger(R-TX)) have been meeting throughout the week. When we reached out to one senior Senate Appropriations Committee staffer, he responded that he had hoped to have a sense of how FY22 would get resolved after Tuesday’s big four meeting. However, despite another meeting of appropriations leaders yesterday, the standoff continues. Another gathering of the big four is possible today.
House and Senate Appropriations Committee leadership has yet to agree on topline numbers and a process for handling policy riders. Earlier this week, we heard a rumor that Republicans have provided their toplines (which envision parity between defense and non-defense increases) and are waiting for Democrats to respond. Meanwhile, Democrats claim they have made their position clear and are waiting for Republicans to put forward a counteroffer. Our sense is that is that Republicans may be trying to slow-walk appropriations to deny President Biden any kind of legislative victory ahead of the SOTU. We attended an event this week with a senior Democratic Senator appropriator who insinuated that as many as half of the appropriations subcommittees might have already reached consensus on their bills. This Member described deals like this as being “held hostage” by the bigger picture spending politics.
While we are not hearing much concern about a government shutdown, we are wary that even if there is progress in talks among the big four, the timeline to assemble a full omnibus is getting tight. Our current thinking is that we could see a monthlong clean continuing resolution (CR), with a potential omnibus in mid-March. Appropriations staffers who we have been in touch with cited March 11 or 12 as the potential date for the expiration of the next CR. While there are some who worry that an inability to finish the FY22 cycle this month will mean default to a CR through the end of the fiscal year, we are optimistic that significant GOP earmarks will drive Republicans to the negotiating table after the SOTU. An omnibus might also become the vehicle for other priorities, such as the Senate Health Education, Labor and Pensions (HELP) Committee’s pandemic preparedness package and the Senate Finance Committee’s mental health bill.
In the meantime, it remains uncertain if an omnibus will carry an emergency supplemental. The White House has yet to make a formal request and Republicans continue to shine a spotlight on rising inflation, falling omicron numbers, and COVID relief funds that have yet to be spent. Senate Minority Leader Mitch McConnell (R-KY) has also said it is time to “wind down” the COVID state of emergency. While it remains possible that there could be a request for emergency appropriations for natural disaster relief, it is increasingly sounding like any emergency supplemental will be smaller and more narrowly tailored than the potential funding being discusses a few weeks ago at the peak of the omicron surge.
While resolution of FY22 appropriations remains outstanding, we are already starting to look ahead to FY23 and are keeping our fingers crossed that we won’t be dealing with both fiscal years at the same time. The Federal Budget and Accounting Act of 1921 envisions the president submitting his budget request to Congress by the first Monday in February, a target that President Biden is once again likely to miss. In fact, even though Acting Office of Management and Budget (OMB) Director Young said this week that the FY23 budget release will follow the SOTU, we are hearing that the president might not unveil his full FY23 budget proposal until FY22 appropriations are signed into law. Considering that we are hearing that some agencies have yet to receive their passbacks from OMB, there’s some chatter that budget details could now be slipping even further. Regardless of when the budget comes out, Congressional offices have already started posting their FY23 request forms and acknowledge that deadlines could be fluid.
BBB
One thing complicating the administration’s efforts to prepare the FY23 budget request is that the fate of BBB remains up in the air. This week, Sen. Joe Manchin (D-WV) continued to reiterate his belief that BBB is “dead” and that in the absence of any real conversations taking place with the White House, negotiations on a slimmed down package will need to start from a “clean slate.” Simultaneously, Leader Schumer has insisted that there is a long-term prognosis for a narrow BBB bill and that Democrats remain committed to moving as much of the BBB framework has possible.
What this means in reality is that the stalemate on BBB continues and we have been hard pressed to find anyone who realistically believes there will be a package that is signed into law by March 1. We have heard that Sen. Manchin’s staff is under explicit orders not to engage on BBB and Sen. Manchin himself seems distracted, including by the bipartisan group that has come together to focus on Electoral Count Act (ECA) reform. Sen. Manchin is also likely to be worried about negative polling on BBB in West Virginia and stepping back to consider how potential backlash from any new Russian sanctions may worsen the administration’s inflation problem.
While the White House may not be engaging directly with Sen. Manchin on BBB at the moment, we know that other moderates, including Sens. Warner and Tester, have been tasked with trying to tease out his redlines for a narrower BBB bill. The idea is that the ball is in the White House’s court and they will likely need to put something in front of Sen. Manchin for him to react to in order to get BBB moving again. In the meantime, there are rumors that all potential revenue raisers remain on the table and those that are not ultimately integrated into a BBB package as direct pay-fors could be used for deficit reduction.
What this means in reality is that the stalemate on BBB continues and we have been hard pressed to find anyone who realistically believes there will be a package that is signed into law by March 1. While we have to agree with the White House and House Speaker Nancy Pelosi that getting some kind of BBB bill enacted by the March 1 SOTU is a bit of a longshot, we still think there is a pathway to getting some kind of package through Congress before the midterms. We continue to believe that a package in the $1 - $1.5 trillion range that includes clean energy tax breaks, drug pricing controls, Affordable Care Act (ACA) expansion, child care subsidies, and universal pre-kindergarten might still be achievable. However, this likely comes after the SCOTUS nominee, FY22 appropriations, and USICA/COMPETES Act have made it across the finish line.
Election Reform/Voting Rights
Now that Leader Schumer’s failed attempt to tweak the filibuster and advance voting rights legislation is in the rearview mirror, Democratic leadership seems to be warming up to the bipartisan gang that has come together to focus on elections reform. To be clear however, Democrats in no way view the work of this group as a substitute for passage of bills like the Freedom to Vote Act and the John Lewis Voting Rights Advancement Act, which seek to pushback against efforts in red states that Democrats argue will result in voter suppression.
The bipartisan group includes nine Republicans (Sens. Collins, Mitt Romney (R-UT), Thom Tillis (R-NC), Roger Wicker (R-MS), Rob Portman (R-OH), Murkowski, Todd Young (R-IN), Ben Sasse (R-NE), and Shelley Moore Capito (R-WV)) and seven Democrats (Sens. Manchin, Jeanne Shaheen (D-NH), Kyrsten Sinema (D-AZ), Chris Coons (D-DE), Mark Warner (D-VA), Ben Cardin (D-MD) and Chris Murphy (D-CT)). The good news is that several of these Members have a track record of working together on a bipartisan basis, for example, as part of the bipartisan gang that produced the framework for the bipartisan infrastructure framework (BIF). We are even hearing that like the bipartisan infrastructure group, this new gang has organized itself into subgroups. The bad news is that even if the group is successful, assuming that Democrats unanimously support the proposal, they would still need to pick up at least one more Republican to reach the 60-vote threshold that is needed to overcome a filibuster on the Senate floor. President Donald Trump’s recent comments on January 6 could make this even more difficult.
We are hearing that the bipartisan group is getting closer to an agreement and that the release of some high-level principles could be imminent. These might include ECA reforms intended to minimize the possibility of rogue electors, raise the bar for protesting electoral slates, and leverage federal judges to quickly resolve disputes about which candidates win a state. The group is also reportedly working on policy proposals related to protecting poll workers and election officials, strengthening the Election Assistance Commission (EAC), and smoothing presidential transitions.
Political Tidbits
With the midterm elections just around the corner, we will increasingly begin to share political insights as part of our weekly update. Following last week’s news regarding new Congressional maps in Tennessee, Rep. Jim Cooper (D-TN) announced he will not run for reelection this fall, bringing the number of total retirement announcements to 33. As of today, the breakdown is:
1 Senate Democrat (1 full committee chair)
5 Senate Republicans (5 full committee ranking members)
21 House Democrats (3 full committee chairs)
6 House Republicans (2 full committee ranking members)
We have also been following the six incumbents who will face off in primaries as a result of redistricting. The key dates and races we’re watching are:
May 10: David McKinley (R) v. Alex Mooney (R) in WV-02
May 24 (with June 21 runoff date): Carolyn Bourdeaux (D) v. Lucy McBath (D) in GA-07
June 28: Sean Casten (D) v. Marie Newman (D) in IL-06
June 28: Rodney Davis (R) v. Mary Miller (R) in IL-15
August 2: Bill Huizenga (R) v. Fred Upton (R) in MI-04
August 2: Andy Levin (D) v. Haley Stevens (D) in MI-11