Legislative Outlook: Post August Recess Update
Introduction
With 17 legislative days before the end of fiscal year 2023 (FY23) and 61 legislative days until the end of the calendar year, Congress still has a lot of unfinished business. As Members return from the August recess, the to-do list remains lengthy. There are multiple reauthorizations that must be finalized before they expire, plus a growing list of new policy issues to address. The deadlines for the “Big Four” – FY24 appropriations, the FY24 National Defense Authorization Act (NDAA), the Federal Aviation Administration (FAA) Reauthorization, and the Farm Bill – loom over the Hill.
When Congress left for the recess, there were significant disagreements between the parties and chambers on government funding bills, and little to no progress was made during August. A government shutdown and a continuing resolution (CR) are likely as the September 30 end of the fiscal year approaches. And while there might be other agenda items on the table, the appropriations fight is sucking the oxygen out of the room, making it challenging for other measures to get across the finish line.
Additionally, House Speaker Kevin McCarthy (R-CA) reportedly told his caucus earlier this year that he is not interested in bringing bipartisan measures to the floor, further complicating paths forward for legislation dealing with matters such as privacy, permitting reform, artificial intelligence (AI), and the Pandemic and All-Hazards Preparedness Act (PAHPA). Instead, Speaker McCarthy is entertaining a Biden impeachment inquiry to placate his right flank and get them on board with a spending deal.
In such a tense political environment, it is possible that several legislative priorities will get punted into the election year. With Members on the campaign trail wanting to push specific party agendas, it is likely to become increasingly challenging for legislation to gain traction. The caveat may be that we may see Members leveraging current events to get certain legislation passed before the end of the year. For example, a late summer rise in COVID cases could shift some attention to reauthorizing PAHPA and peak hurricane season and other natural disasters could prompt efforts to provide emergency supplemental funding.
Although there is a long list of priorities, included below is our analysis of a select few topics that had new developments over the August recess and their impact on the Congressional agenda for this fall and beyond. We also continue to track issues that are likely to attract attention from lawmakers, even if their prospects for being addressed legislatively in this next work period or even before the end of this year remain uncertain.
Must-Pass Legislation: The “Big Four”
FY24 Appropriations
FY24 appropriations are Congress’s most significant “to-do,” but not much has changed in the status of negotiations. The Senate is lining up its schedule to move its spending bills through regular order, while the House Republicans maintain that they need to limit spending to FY22 spending levels. During the recess, Speaker McCarthy met with key Republicans to strategize on appropriations. Hoping to avoid a government shutdown, he is urging the House to approve a short-term stopgap funding measure. The Freedom Caucus has been complicating Speaker McCarthy’s efforts to pass spending bills marked to the agreed-upon levels in the debt limit deal. The Speaker appears willing to move forward with a Biden impeachment effort to appease these Members.
Senate appropriators managed to report all 12 spending bills out of committee before the recess. When the Senate returns, Majority Leader Chuck Schumer (D-NY) aims to bring a minibus to the floor. The package will likely include the Military Construction-Veterans Affairs (MilCon-VA); Transportation, Housing and Urban Development, (THUD); and Agriculture bills. Before leaving town in late July, the House passed just its MilCon-VA bill.
The two chambers remain misaligned on timelines, as well as adequate spending levels for FY24. While there is still potential for stalemate and a government shutdown come October 1, our sources believe that Congress will likely use a CR – or perhaps more than one – to fund the government through the rest of 2023. As a reminder, the debt ceiling deal enacted in June would trigger an automatic one percent spending cut next year should lawmakers fail to pass all 12 appropriations bills by the end of 2023. The threat of a spending cut, to be administered by the Office of Management and Budget (OMB) in the spring, could be exactly the motivation Congress needs to wrap up FY24 appropriations before the end of the calendar year.
In addition to routine appropriations, emergency spending will also be part of the debate this fall. While Members were away, President Joe Biden requested an additional $40.1 billion in emergency spending. The supplemental would provide additional aid for Ukraine, disaster relief, efforts to slow fentanyl entering the U.S., and other security needs at the southern border. Given the wide gap between Democrats and Republicans on spending levels, the emergency request will likely only exacerbate the appropriations fight. While Speaker McCarthy has not commented on the request, he previously expressed disapproval for utilizing emergency funding to sidestep spending limits enacted as part of June’s debt ceiling deal. On the other hand, Leader Schumer claims there is strong Senate support for the emergency supplemental spending request.
On the Thursday before Labor Day Weekend, the Biden Administration petitioned Congress to pass a short-term funding package to prevent a government shutdown. Leader Schumer and Speaker McCarthy previously agreed on a stopgap funding measure to buy more time for negotiating key legislation. However, the probability of a government shutdown depends on House conservatives, who claim they will not support the stopgap measure unless their demands are met. Speaker McCarthy may soon have to decide between maintaining his role as House Speaker or avoiding a government shutdown.
2024 National Defense Authorization Act (NDAA)
The House passed its NDAA in mid-July by a vote of 219-210. A departure from the past two NDAA cycles where the Senate never passed its own version of the bill, the Senate advanced its defense bill in late July with overwhelming bipartisan support, as evidenced by the 86-11 vote margin. Because the NDAA has been signed into law for the past 62 consecutive years, conventional wisdom tells us that a defense bill will ultimately reach the President’s desk. However, given the atypically partisan nature of the bill coming out of the House, this year’s NDAA conference committee proceedings could prove difficult to navigate for Speaker McCarthy.
Though many House Armed Services Committee (HASC) and Senate Armed Services Committee (SASC) staffers took advantage of the August recess to take time off, they are expected to convene this week to begin staff-level negotiations aimed at reconciling the differences between the House and Senate bills. There are rumors that the committees will aim to wrap up preconference talks by mid-September, but no one is under the impression that the final conference report will move forward that quickly given that appropriations will be a huge distraction for the foreseeable future. In all likelihood, it could be November or December before the NDAA conference report gets floor time in either chamber.
Getting to this point could be quite painful not only for the Speaker, but also for hawks and fiscal conservatives in his conference. As the NDAA moved through the House, the right flank of the Republican party succeeded in adding amendments that would reverse the Pentagon’s policy granting service members leave and reimbursing travel expenses to access abortions, block funding for transgender troops’ gender-affirming care, and limit spending on diversity, equity, and inclusion (DEI) initiatives. HASC Chairman Mike Rogers (R-AL) has acknowledged that these provisions allow Republicans key message points for campaigning, even though they are on the chopping block in conference proceedings. However, it is unlikely that Freedom Caucus Members, who may see their demands steamrolled on appropriations, will allow their priority provisions in the House NDAA to go down without a fight. We are undoubtedly in for a colorful conference committee, especially with Members like Rep. Marjorie Taylor Greene (R-GA) promised a seat at the conference table in exchange for her vote for the bill.
Beyond the culture war issues that have crept into the NDAA process, the conference committee will need to address differing views on issues that are more germane to the defense bill. While both the House and Senate NDAAs authorize defense spending at $886 billion, the Senate NDAA includes nonbinding report language leaving the door open for supplemental funding requests. At the same time, there are Republicans who would support deeper cuts than the toplines set forth by the debt ceiling deal. Other big discrepancies between the House and Senate remain over establishing a special inspector general for Ukraine assistance, the future of the Pentagon’s Cost Assessment and Program Evaluation (CAPE) Office, and the president’s unilateral authority to remove the U.S. from NATO, among other issues. At the end of the day, the conference report will need to have enough bipartisan appeal to pass both chambers. Given its size, the NDAA could become a vehicle for other legislative items, including non-defense priorities, that require action before the year’s end.
FAA Reauthorization
While the House passed its version of the FAA reauthorization by a vote of 351-69 before leaving town, partisan clashes in the Senate are preventing progress in that chamber. According to Senate Commerce, Science, and Transportation Committee Chair Maria Cantwell (D-WA), the committee’s consideration of the bill will likely be pushed past the September 30 expiration date. On the other hand, Ranking Member Ted Cruz (R-TX) believes the committee can get a markup done in September.
Several disputes have complicated the negotiations. One of the most significant issues is an amendment by Sen. John Thune (R-SD) that would allow for alternative training options for pilots to meet the 1,500-hour requirement. Leader Schumer, Chair Cantwell, and Aviation Subcommittee Chair Tammy Duckworth (D-IL) all want the rule to stay in place as is. Leader Schumer is determined to maintain the training requirements put in place after the 2009 Colgan Air crash in his state. The Thune amendment could pass in the committee with votes from all committee Republicans, plus Sen. Kyrsten Sinema (I-AZ). Sen. Sinema is trying to cut a deal, but it is difficult to envision a tenable compromise.
Once the Senate passes its bill, there are expected to be differences to be ironed out between the two versions. For example, the Senate bill includes four additional round-trip, long-distance flights at Ronald Reagan Washington National Airport, a priority for Members on the West Coast and for some airlines like Delta to get more slots. The House bill excluded that provision due to claims that the federally owned airport is already too crowded. The Senate is also considering raising the pilot retirement age from 65 to 67, while the House-passed version includes this provision as a way to address the pilot shortage.
Given that spending fights are expected to crowd out progress on other legislative priorities, plus the jam in the Senate due to Sen. Thune’s refusal to back down on his amendment, a short-term extension of the FAA authorization is likely until there is a breakthrough in the Senate Commerce Committee.
2024 Farm Bill
Like other legislative priorities, the Farm Bill’s timeline has been pushed back because of spending disagreements. Even without the broader dynamic on government funding, the reauthorization of agricultural and nutrition programs continues to be hampered by major disagreements.
The bill is expected to exceed $1 trillion for the first time in history, which concerns many fiscally conservative Members in the House. These Members are threatening to make significant cuts to the Farm Bill, especially on programs like the Special Supplemental Nutrition Programs for Women, Infants, and Children (WIC) and the Supplemental Nutrition Assistance Program (SNAP). They claim that new work requirements and cuts must be implemented, or they won’t support the bill. Meanwhile, Democrats are standing their ground on maintaining funds for nutritional programs, primarily because cuts were already made through June’s debt ceiling deal. Some Republicans in agricultural districts, like Chair of the House Agriculture Committee GT Thompson (R-PA), are worried about delaying the reauthorization and are trying to thread the needle on a bipartisan approach to appease enough Members.
While there is disagreement in the House on the Farm Bill, the Senate is even farther behind. There is potential that the House Agriculture Chair will circulate a bill after the August recess and hold a markup in mid-September. Regardless of any forward movement in the House, the Senate is not expected to make much progress on the Farm Bill until November.
Updates on Other Congressional Priorities
Other priorities on Congress’s radar fit into one of three categories: likely to ride on an end-of-year package, strong support but stagnation due to partisan disagreement, and issues that have been around for a while but will likely see no movement.
High-Priority Items Likely to Ride on an End-of-Year Package
Section 702 of the Foreign Intelligence Surveillance Act (FISA)
Section 702 authorities permit the government to conduct electronic, warrantless surveillance on foreigners living outside the U.S.
President Biden is pushing to get Section 702 renewed without adding any new significant restrictions, while privacy hawks insist on requiring the FBI to have a warrant to search through personal data.
Conservatives view reauthorization of Section 702 as an opportunity to revise Title I of FISA, which they claim has been used to unlawfully spy on former President Donald Trump.
Emergency Supplemental Funding
Amidst an increase in natural disasters, from wildfires on Maui to peak hurricane season in the Atlantic, there is potential for Congress to push emergency supplemental funding across the finish line.
President Biden’s emergency funding request totals to $16 billion – $4 billion of which was requested following Hurricane Idalia’s impact in Florida – for the Federal Emergency Management Agency (FEMA) and disaster relief.
Pandemic and All-Hazards Preparedness Act
The government’s previous failures during the initial years of the COVID-19 pandemic and a late summer uptick in COVID cases are likely to get the PAHPA Reauthorization included on an end-of-year package. A smaller end-of-year healthcare package is expected at the end of this year, with a broader end-of-year package at the end of 2024.
In late July, the GOP-led House Energy & Commerce Committee passed two reauthorization bills along party lines. The majority removed several titles that had been historically included, upsetting Democrats on the committee.
Relief for Medicaid Disproportionate Share Hospitals (DSH) cuts
DSH cuts totaling $8 billion are scheduled for October 1, 2023. Healthcare organizations and hospitals insist on supplemental funding to continue providing care to vulnerable populations.
The Supporting Safety Net Hospitals Act (H.R.2665) would delay DSH cuts for two years, but there has been no movement on the bill since April. However, it is likely DSH cut relief will be included in an end-of-year package.
Nominations
The Senate Commerce, Science, and Transportation Committee approved the nomination of Anna Gomez and the re-nominations of Brendan Carr and Geoffrey Starks to serve as commissioners at the Federal Communications Commission (FCC) in July.
Also in July, President Biden nominated Andrew Ferguson and Melissa Holyoak to fill vacant Republican commissioner slots at the Federal Trade Commission (FTC).
The Senate Judiciary Committee is facing roadblocks on judgeship nominees, although advancing nominees remains a priority. The committee has over a dozen nominees on the executive calendar and is expecting to report out several more this month.
Meanwhile, pressure is mounting on the Biden Administration to announce and advocate for additional nominees, including the FAA administrator, a role that has not had been filled on a permanent basis in over a year.
Medium Priority Items for Congress
Taiwan Tax Legislation
Following enactment of legislation approving the June 1 U.S.-Taiwan trade agreement in early August, resolving double taxation issues and strengthening overall cooperation and economic ties between the U.S. and Taiwan remain priorities.
Sens. Ron Wyden (D-OR) and Mike Crapo (R-ID) have announced that the Senate Finance Committee will markup a Taiwan tax bill in September. The House Ways and Means Committee could also consider Taiwan tax legislation this fall.
The Senate Foreign Relations Committee has passed competing legislation that would allow the Biden Administration to negotiate a tax treaty with Taiwan and outlines a process for Congressional approval.
Artificial Intelligence (AI)
Chair Cantwell has commented that AI cannot be done without privacy regulation. We have picked up that the House shares this view.
There are partisan differences on how to respond to innovation and broad policy nexus interest on Capitol Hill, potentially impacting the pace of legislation.
Leader Schumer is aiming for a bipartisan AI bill and is likely encouraging committees to develop solutions under their jurisdiction.
Privacy
There has not been much movement on privacy legislation, even though it remains a bipartisan priority this Congress.
In late July, the Senate Commerce, Science, and Transportation Committee approved Sen. Ed Markey’s (D-MA) Children and Teens’ Online Privacy Protection Act (COPPA 2.0) and Sen. Richard Blumenthal (D-CT) and Marsha Blackburn’s (R-TN) Kids Online Safety Act (KOSA).
Privacy is likely to remain a hot topic, especially in the context of other conversations on AI and Section 702 reauthorization.
Affordable Connectivity Program (ACP) Funding
ACP funding expires on September 30.
The program facilitates Internet access for over 20 million rural and low-income households by providing $30 monthly subsidies for broadband access and Internet connected devices.
Democrats and Republicans, as well as providers and public interest groups, are aligned on the need to extend the ACP, so it remains possible that ACP funding could be included as part of an upcoming spending bill.
Spectrum Reauthorization
In March, Congress let the FCC's spectrum auction authority lapse.
A major sticking point continues to be concerns about spectrum sharing in the lower 3 GHz band, although the release of a National Telecommunications and Information Administration (NTIA)/Department of Defense (DoD) report could jumpstart talks this fall. The upcoming World Radio Conference, as well as the potential for spectrum auction revenue to be used to pay for other priorities, such as “rip and replace” and ACP subsidies, could apply pressure to get the reauthorization done.
Permitting Reform
Senate Energy and Natural Resources Committee Chair Joe Manchin (D-WV) and Ranking Member John Barrasso (R-WY) are collaborating on permitting reform.
Other members of the committee, including Sens. Martin Heinrich (D-NM) and John Hickenlooper (D-CO) are also engaged.
Senate Environment and Public Works (EPW) Committee Ranking Member Shelley Moore Capito has been pushing for permitting reform for years, re-introducing her Revitalizing the Economy by Simplifying Timelines and Assuring Regulatory Transparency (RESTART) Act this Congress.
Reps. Sean Casten (D-IL) and Mike Levin (D-CA) and the Sustainable Energy & Environment Coalition (SEEC) have led Democratic efforts on permitting reform, with a focus on accelerating clean energy projects and transmission. Draft legislation had been circulated earlier this year, and the Members hope to introduce legislation in the coming weeks.
While Reps. Scott Peters (D-CA) and Bruce Westerman (R-AR) are leading bipartisan efforts on permitting reform, it is unlikely that their legislation will advance in light of Speaker McCarthy’s refusal to consider bipartisan legislation.
June’s debt ceiling law included multiple reforms on permitting, such as outlining the scope of the National Environmental Policy Act (NEPA), adding new NEPA provisions, incorporating categorical exclusions, and more.
Secure and Fair Enforcement (SAFE) Banking Act of 2023
While Leader Schumer and Senators have identified the SAFE Banking Act as a priority, there has been no recent movement on the legislation.
While there is support for the bill on both sides of the aisle, some Democrats, like Sen. Jack Reed (D–RI), object to specific language in the bill, making its passage this year unlikely.
President Biden is also opposed to the legislation.
End-of-Year Tax Package
There are a number of members – particularly House Republicans – who have expressed interest in an end-of-year tax package. While it’s unlikely to be comprehensive, something that could see action is research and development (R&D) amortization, which has already been marked up by the Ways and Means Committee.
Perhaps the most obvious trade off that Republicans could offer Democrats for R&D amortization is the child tax credit. However, there are several potential barriers to any agreement, including ongoing disagreement about the state and local tax (SALT) deduction and proposals to repeal tax credits from the Inflation Reduction Act. The latter in particular is a non-starter for Democrats.
Lower Priority Items and Partisan Efforts
Democratic Efforts
Democrats are currently working on multiple partisan agenda items that are unlikely to pass but intend to send a political message.
Democratic priorities include creating pathways to legal status for immigrants, protecting abortion rights and funding, restoring parts of the Voting Rights Act, stricter gun control laws, and Supreme Court ethics. Democrats on the Senate Judiciary Committee will be focusing on advancing immigration and gun control.
House and Senate Democrats re-introduced the Freedom to Vote Act in late July.
GOP Efforts
Partisan GOP priorities could see some progress in the Republican-controlled House but are likely dead-on-arrival in the Democrat-controlled Senate.
House Republicans are determined to proceed with a Biden impeachment, which Speaker McCarthy has recently appeared to support.
The House Judiciary Committee has spent months investigating Hunter Biden and President Biden and is unlikely to relent anytime soon, especially with a presidential election approaching.
McCarthy’s right flank in the House has called for legislation to enact stricter border security measures.
House Republicans introduced the American Confidence in Elections (ACE) Act to counter the Democrat-backed Freedom to Vote Act.