The House and Senate are off for their Thanksgiving break, returning on Tuesday, November 28 for three weeks of work in which members will try to make some progress on the unfinished work of passing the 12 budgets needed to fund the government and avoid a government shutdown early next year.
In order to avoid a shutdown prior to Thanksgiving, Congress last week passed a tiered or laddered Continuing Resolution (CR) which gives the legislators until January 19 to pass budgets, fund the government, and avoid a shutdown. The idea of a ladder for shutdown dates was developed by the conservative Republican Freedom Caucus and adopted by the House’s new Speaker Mike Johnson. The idea is to give Congress time to pass budgets for the remainder of the current fiscal year and avoid the history of recent years where most of the government was funded by an unwieldy Omnibus Spending Bill that was difficult for Congress to review and amend.
The CR approved last week establishes the deadline of January 19th of next year for some of the budgets such as Ag, VA, Transportation, and HUD that have traditionally been less controversial. The second date of February 2nd is for the more difficult budgets such as Defense and HHS. However, House Republicans have made even the traditionally easy bills more difficult to pass by adding controversial social policy riders and large spending cuts.
While Speaker Johnson has been clear that it is his goal to avoid a shutdown, he leads a caucus that is sharply divided. The CR passed last week by the House saw 93 Republicans vote against the new Speaker as they opposed both the lack of budget cuts and failure to include social policy riders.
Last week, the House tried to pass some of the less controversial bills to get the ball rolling, but the leadership pulled the bills after the vote count indicated that they didn’t have the 218 votes needed to pass. The Transportation/HUD bill was going to fail because not only did all Democrats oppose the sharp cuts, but so did the Republicans from the New York state delegation. New York Republicans, who are key to the Republican majority, told the Speaker they couldn’t support the sharp cuts in Amtrak, which plays a critical role in transportation in the Northeast corridor.
The Speaker, like his predecessor, knows that the 4-vote majority is held together by the 18 Republicans who won in districts that voted for President Biden. As these votes are needed to pass any partisan legislation, the Republican leadership needs to bridge the divide or see a government shutdown starting on January 19 which will be blamed on the division within their ranks.
The challenge Congress has is that with the holiday break, they aren’t scheduled to return to Washington until January 9th giving them only a handful of legislative days prior to the January 19th deadline. The Speaker has vowed that there will be no more CRs.
Israel, Ukraine, Taiwan, and border
In addition to regular spending bills, the Congress needs to act on the President’s request for an Emergency Supplemental to fund wars in Israel and Ukraine, as well as strengthen forces in the Pacific and secure the Southern US border.
Talks by staff are likely to occur during the Thanksgiving break, and at least in the Senate, there appears to be a view that a compromise may be possible that acts on the border and immigration legislation that will accompany money for Israel and Ukraine. While far from a done deal, there appears to be a bipartisan majority to act on this bill, hopefully prior to the holiday break that is scheduled to start on December 18.
FOMC minutes
At 2:00 EST on Tuesday (November 21), the Fed releases the minutes from the 10/31-11/01 FOMC meeting. The three-week lead time allows all participants to add their input to the minutes. With the market consensus expecting no increase at the December meeting, it will be interesting to see what the rate hawks said at the meeting and how they want it reflected in the minutes.
