Key Takeaways

  • Congress returns this week with most of the attention on Senate where the Biden agenda is awaiting action.
  • Friday deadline looms for government funding and avoiding government shutdown.  How long will the next temporary funding (CR) bill last?
  • Debt ceiling date of December 15 requires Congressional action to avoid US Government default.
  • Biden’s domestic agenda in Build Back Better (BBB) Budget Reconciliation Bill sits in the Senate awaiting Byrd Rule decisions.

Busy Week After Thanksgiving

After a week off for Thanksgiving Congress returns with a busy agenda as they try to approve measures before Christmas.  This week the center of attention will be passing a Continuing Resolution (CR) that will fund the government past the current deadline of Friday, December 3. The good news is that both sides of the aisle want to avoid a government shutdown and Republicans seem unwilling to mount a filibuster that could delay a spending bill.  The open question that should be resolved before Friday is how long the next CR will be.  There are some Democrats who want to keep the feet of Congress close to the fire and pass a short-term CR that will only last a few weeks and expire prior to Christmas.  On the other hand some Democrats and most Republicans want to negotiate spending for the current fiscal year and believe that will take a few more months and want this upcoming CR to run until January or February.

Why is this important?  A CR, the vehicle that funds government without specific budgets being approved, uses the funding levels of the past fiscal year.  While a CR can change the spending level as a distinct part of the legislation, it generally makes no accommodations for changing spending priorities.  The House and Senate Appropriations Committees are working on spending bills for fiscal year 2022 that began on October 1; so far all are tied up in partisan haggling.

What could break the federal funding logjam?  As always deals are what gets things done in DC.  This week the Senate will be working on the National Defense Authorization Act (NDAA) which allocates money to the Department of Defense.  Despite harsh partisanship there is a substantial bipartisan majority that wants to increase and reallocate DoD spending to respond to changing strategic initiatives ranging from concern about a military buildup by China to the challenges created in the Middle East by the withdrawal from Afghanistan.  There have been talks between the House and Senate of cutting a deal where increased defense spending eventually authorized in the NDAA could be balanced with increased domestic spending from programs ranging from the recently approved infrastructure legislation to the expanded childcare credit that is a top Democratic priority.

This coming week watch for the date agreed upon for the next CR as it may tell how the Congressional leadership and White House are viewing an eventual compromise on a large spending package.

Debt Ceiling:  While the focus this week will be on agreeing on the terms of the next CR, behind the scenes talks are continuing on a strategy to increase or suspend the debt ceiling.  Before the recess McConnell and Schumer had an unusual private meeting where strategies for dealing with the debt ceiling were discussed.  McConnell said: “ we will avoid a default, we always have,” but didn’t reveal what the plan was.  The official notification on the nation’s ability to pay its bills comes from the Treasury Department.  Secretary Yellen’s most recent pronouncement was that the date was likely to be around December 15, but there is considerable skepticism as to whether or not there may in fact be a later “drop dead” date coming. 

Obviously, talk of a US Government default poses serious headline risk, and while both sides seem committed to avoiding the catastrophe, and there have been positive comments from both Schumer and McConnell, there still is no announced game plan. Last month McConnell took a lot of heat from both conservative news outlets and his Republican Senate colleagues for supporting a $450B ceiling increase; he seems to want to cut a deal to avoid a default but also needs to maintain the support of his Senate Republican caucus.  Bottom line, this will be a tough few weeks for both McConnell and Schumer as they navigate a plan to avoid a default.

Build Back Better (BBB):  While the Senate works to pass the NDAA, avoid a government shutdown with a new CR, and develop a debt ceiling strategy, it also must act on the House passed Biden agenda contained in the BBB Act.

BBB is incorporated in the Reconciliation Bill for FY 2022.  Budget Reconciliation is the special bill that changes the government budget, both revenue and spending, without the threat of a Senate filibuster.  However, the Senate has a special Reconciliation rule developed by former Senate Leader Robert Byrd, the Byrd rule, that limits Reconciliation provisions to those with a direct impact on the government budget.  It is the job of the Senate Parliamentarian to determine what provisions rise or fall under the Byrd Rule.  Earlier this year, when the Senate considered the delayed Reconciliation Bill for FY 2021, the Parliamentarian ruled that an increase in the Federal minimum wage did not qualify under the Byrd.  In the coming weeks the Parliamentarian will meet with Senate leaders to determine what provisions in the House passed bill are in or out under the Byrd Rule.

After the Byrd Rule issues are resolved Leader Schumer must still navigate the differences within the Democratic caucus in the Senate.  With the 50/50 Senate every Democratic Senators must agree on the legislation.  At some point the ideas of Bernie Sanders and Joe Manchin will need to be compromised so a final Senate version of BBB can get a vote in the Senate.

Disclosures (show)

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