- Congress returns
- Venezuela intervention
- Jan. 30 new shutdown deadline
- Insurance benefits expire
- New Fed Chair in new year
- Next Fed meeting on Jan. 27-28
After the six-week holiday break, Congress returns this week to a political environment that has been sharply changed with the invasion of Venezuela and the capture of its President Nicolás Maduro, who is now being held in a New York City prison to face trial. President Trump at a weekend press conference declared that the U.S. would “run the country until such time as we can do a safe, proper and judicious transition.”
The situation in Venezuela will be a bigtime distraction. Before the invasion and capture of Maduro, Congress was already facing a busy schedule with another government shutdown deadline of Jan. 30 quickly approaching. By then, they need to take action to restore health benefits to the millions who had been depending on the Obamacare benefits that expired at year-end. Now, Congress will also be preoccupied with the quickly evolving events in Venezuela and likely hold oversight hearings as policy evolves. As both the House and Senate are under Republican control, the White House is unlikely to be summoned to a hostile hearing as the party in control has absolute authority to conduct hearings; but with Democrats back in D.C., there will always be nearby microphones that opponents of the president’s policy can run to.
To avoid another government shutdown on Jan. 30, Congress will need to either pass budgets for the nine areas that have yet to be funded for the current fiscal year or continue funding the government at current spending levels with a Continuing Resolution (CR).
One idea that had been floated by Senate Republican Leader John Thune prior to the holiday break is to put different agencies together in a so-called Omnibus Bill that might have several departments in the same legislation, rather than considering nine different bills. This has been done in the past, but like all spending bills, it is subject to a filibuster in the Senate and will require a bipartisan group of Senators for the strategy to succeed.
Democrats and some Republicans are likely going to push for action on expired health insurance benefits to be part of any spending legislation. It was this insistence by Democratic leaders in the House and Senate that led to the record 43-day long shutdown last year. Democrats are reportedly ready to seek a compromise, but the issue will be in the House where Speaker Mike Johnson has a group of his most conservative members, who have long opposed Obamacare and will be reluctant to support a funding bill that saves any aspect of the program. This will be a legislative tightrope act for the speaker. With his very narrow majority, he knows that some of his most endangered members need to restore some form of healthcare benefits or face a tough issue in the November elections.
Bottomline: Between the many new questions posed by the president’s actions in Venezuela, the Jan. 30 shutdown deadline, and the expired healthcare benefits, lots of news will be coming out of D.C.
Fed policy and Chair
The Federal Open Markets Committee is scheduled to meet regarding the next move for interest rates on Jan. 27-28.
Fed Chair Powell and the rest of the board face two pressures from the White House. First, the president has made no secret of his desire to see bigger rate cuts, and his appointee Stephen Miran has been the lone dissenting vote at the last two meetings, calling for a half-percentage point cut while the majority voted for a quarter-percentage point reduction.
While Powell’s term as chair doesn’t end until May, there has been increased speculation that the White House may announce the appointment in the coming weeks and urge the Senate to act quickly on the nomination. The thinking is that a shadow chair, speaking out in support of larger cuts, may put additional pressure on the FOMC to make sharper cuts and perhaps force Powell to vacate the chair before the May expiration of his term.