Plurus Strategies Weekly Update: FY22 Omnibus, Ukraine, KBJ Confirmation, & Build Back Better
FY22 Omnibus/Emergency Supplemental
Early Wednesday morning, appropriators finally struck a deal on the $1.5 trillion Fiscal Year 2022 (FY22) omnibus appropriations bill. The package unveiled before dawn on Wednesday included all 12 FY22 spending bills, along with $13.6 billion for Ukraine aid and $15.6 billion for COVID relief. However, on Thursday, House Democrats yanked all COVID funding from the bill after it became clear the new aid would be paid for in part by reallocating roughly $7 billion previously appropriated for state and local COVID relief. The package was finalized too late to guarantee Congress can clear it before federal funding runs out at midnight on Friday, so Congressional leaders also prepared a four-day spending patch to move the deadline to Tuesday.
Before House Democrats’ delayed departure for Philadelphia to begin their yearly planning retreat, the House passed both the omnibus and the short-term continuing resolution (CR). The House had to do so in a series of votes at the demand of progressives who requested separate votes on the defense and nondefense spending components. The defense portion passed by a 361-69 vote and the non-defense portion passed by a 260-271 vote. Worth noting, the overall package included a 5.6 percent increase in defense spending and a 6.7 percent increase in nondefense spending.
House Speaker Nancy Pelosi (D-CA) has indicated the House may vote on the standalone COVID relief bill that Rep. Rosa DeLauro (D-CT) introduced yesterday without the state and local funding offset. However, it is unclear the Senate will pass or even take up the bill. Our instincts tell us that the elimination of supplemental COVID funds from the overall spending package might allow the bill to pick up some additional GOP support in the Senate.
Senate leaders will now attempt to clear the legislation for the president’s signature before Friday night. When we connected with a senior Democratic Senate Appropriations Committee staffer earlier this week, he said he “would not be surprised” if the omnibus dragged into next week or if Senate Republicans force a brief government shutdown over the weekend. If the Senate cannot overcome the procedural hurdles to pass the omnibus by tomorrow night’s deadline, the Senate could also pass the short-term CR to mitigate the threat of a government shutdown.
Our best guess is that the Senate might be in session this weekend voting on the omnibus, as a unanimous consent agreement would be needed to move the package before Friday’s night’s deadline. Sen. Rick Scott (R-FL) has led a GOP letter to Congressional Budget Office (CBO) requesting additional information on how the omnibus will impact inflation before a vote. Additionally, not unlike other bills that have recent come to the floor, Sen. Mike Lee (R-UT) has indicated he might delay the process for another vote on rejecting federal vaccine mandates. In all likelihood, the omnibus will be signed into law next week. Following passage of the omnibus, we anticipate a quick pivot to the FY23 appropriations cycle.
War in Ukraine
Russia’s assault on Ukraine is now in its second week. With the Russian military encountering unanticipated logistical failures and strong Ukrainian resistance, Russian President Vladimir Putin’s forces have increasingly engaged in indiscriminate shelling, including along civilian evacuation routes. Ukraine and Russia have held four peace meetings with no real progress.
Ukrainian President Volodymyr Zelenskyy continues to make emotional pleas to the U.S. and Western Europe to enforce a no-fly zone over Ukraine, provide military fighter aircraft, and ban imports of Russian oil and gas. While these first two requests continue to raise concerns about NATO involvement escalating the conflict, on Tuesday, President Joe Biden signed an executive order to ban the import of Russian oil, liquified natural gas (LNG), and coal to the U.S. The president had been coming under pressure from both sides of the aisle to make such a move, with Republicans motivated by the opportunity to increase drilling in the U.S. and Democrats looking to fill the void with clean energy. Ironically, Putin has driven Democrats and Republicans together.
Despite executive action, yesterday the House overwhelmingly passed a bill to ban Russian oil, LNG, and coal imports by a vote of 414-17. The legislation would require the ban to go into effect within 45 days, but also creates a waiver to allow for imports that are in the national interest. Beyond the ban on Russian energy imports, the bill directs a reassessment of Russia’s World Trade Organization (WTO) membership and strengthens Magnitsky Act authorities for going after human rights offenders. The Senate appears unlikely to take up legislation. In the meantime, we continue to see numerous Russia bills dropped daily.
Between the actions taken by the U.S. Government and its allies, Russia has now outpaced Iran as the most sanctioned country in the world, and the West continues to explore ways it might tighten the screws. Given the sanctions activity, there has been a mass exodus of global companies from Russia. This is due in large part to lawyers spiking fears about criminal liability and the associated reputational risks of continuing to operate in the country.
While Ukraine will continue to consume the Biden Administration and Congress, early polling shows that the president may be experiencing a slight popularity bump from his leadership on this issue. While Republicans have sought to criticize President Biden for being weak or slow to respond, these jabs cannot be reconciled with data that suggests GOP and independent support for the president is rising. It is unclear, however, how much of this might be the result of the traditional post-State of the Union (SOTU) popularity boost.
Supreme Court Confirmation
Judge Ketanji Brown Jackson, President Biden’s nominee to replace retiring Supreme Court (SCOTUS) Justice Stephen Breyer, continued courtesy meetings this week with members of the Senate Judiciary Committee, including Sens. Mazie Hirono (D-HI), Cory Booker (D-NJ), Richard Blumenthal (D-CT), Sheldon Whitehouse (D-RI), Chris Coons (D-DE), Jon Ossoff (D-GA), Alex Padilla (D-CA), and John Cornyn (R-TX). She also met with Sen. Susan Collins (R-ME), the Republican who is thought to be most likely to support her nomination, as well as Sen. Joe Manchin (D-WV). Both Sens. Collins and Manchin have said they will wait until after Judge Jackson’s confirmation hearings to determine how they will vote on the floor, although both supported her nomination to serve on the D.C. Circuit Court last year.
As you know, Judge Jackson’s confirmation hearings are slated to begin on March 21, and we are expecting her nomination on the Senate floor the week of April 4. Because the ideological balance of the court is not in jeopardy, we are expecting Republicans to be cordial during the confirmation process, even as they characterize Judge Jackson as far left and soft on crime. We also anticipate Republicans will seek to use upcoming confirmation hearings to solicit Judge Jackson’s commitment to oppose court packing. However, assuming all Democrats stick together, it is highly likely Judge Jackson will be confirmed.
Build Back Better/Building a Better America
While we are not expecting any major breakthroughs on Build Back Better (BBB), Building a Better America, or President Biden’s domestic policy agenda by any other name during this work period, Democrats may be taking incremental steps to try to move the ball forward. As you know, last week Sen. Manchin suggested that he could be open to supporting a reconciliation package that decreases prescription drug prices, reforms the tax code, combats climate change, and reduces the deficit. While Sen. Manchin has indicated he is not involved in any formal BBB negotiations, most Democrats tell us they believe there is still a path to a deal.
In the meantime, Senate Majority Leader Chuck Schumer (D-NY) appears to be leveraging opportunities to bring the more conservative members of his caucus to the table for deal making on a reconciliation measure, as evidenced by his recent direction for the Senate Finance Committee to convene a hearing on drug pricing. This may be an effort to comply with Sen. Manchin’s demand for regular order. Finance Committee leadership, however, is reluctant to hold additional BBB hearings, as they feel like they have already held a hearing and a markup on their BBB component. We have also been told the White House is wary of reopening the tax package it previously negotiated with Sen. Kyrsten Sinema (D-AZ). Regardless, we could see additional hearings scheduled on the BBB agenda in other committees. For example, we are hearing that the Senate Aging Committee is interested in receiving testimony on home- and community-based care.
As the September 30 expiration of the reconciliation vehicle approaches, with the midterm elections looming not far behind, there appears to be growing recognition that getting something done, even a narrow package, could bolster Democrats’ prospects in November. We expect this to be a topic of conversation at this week’s House Democratic retreat, which will be attended by President Biden and several other cabinet officials. Of course, the elephant in the room might be today’s newly released figures showing that inflation is up 7.9 percent in the past year.
Political Tidbits
Texas' primary last Tuesday marked the beginning of a lull ahead of a busy spring. Mark your calendar now for the slew of May primaries:
May 1: Texas Runoff - The Congressional race to watch is in TX-28 between incumbent Rep. Henry Cuellar (D-TX) and progressive Jessica Cisneros. In the first 24 hours after last Tuesday's primary, Cisneros raised $240,000. Rep. Cuellar has not reported his cash-on-hand since the election, and he will have to rely on his own money if independent expenditures do not come back since several allies came off TV for him earlier this year. However, being a runoff, the electorate likely favors Rep. Cuellar a bit more than the March electorate did.
May 10: Nebraska and West Virginia - We're keeping an eye on the race in WV-02 between incumbent Reps. David McKinley (R-WV) and Alex Mooney (R-WV).
May 17: Idaho, Kentucky, North Carolina, Ohio, and Pennsylvania - North Carolina, Ohio, and Pennsylvania all have open Senate seats. Democratic candidates have cleared the field in the first two states, and the race to watch is in the Keystone State between Rep. Conor Lamb (D-PA) and Lieutenant Governor John Fetterman. On the Republican side, President Donald Trump endorsed Rep. Ted Budd (R-NC) in North Carolina while outgoing Sen. Richard Burr (R-NC) has thrown his support behind former Governor Pat McCrory. Former Rep. Mark Walker (R-NC) trails in the polls but boasts a handful of endorsements from national Republicans. Ohio is in a similar position. Retiring Sen. Rob Portman (R-OH) has tapped former party chair Jane Timken as his replacement, but with President Trump not yet endorsing a candidate, there are still a several other viable candidates including State Sen. Matt Dolan, former State Treasurer Josh Mandel, and commentator J.D. Vance.
May 24: Alabama, Arkansas, and Georgia - Races to watch include the Republican primary to replace retiring Sen. Richard Shelby (R-GA) and GA-07 between incumbent Reps. Carolyn Bourdeaux (D-GA) and Lucy McBath (D-GA).