Down to the Wire: What to Expect as Congress Hurdles Towards Critical December Deadlines
True to form, the nation’s most infamous procrastinating governmental body finds itself bumping up on several crucial deadlines. On December 3, the short-term government funding bill is set to expire. Not long after, the government is expected to default on its debt, potentially plunging the country into a ‘catastrophic’ debt crisis. And let’s not forget the annual end-of-year cliffs that, among other things, will slash payments to grandma’s doctors.
Feeling the warmth of those holiday fires yet? Don’t worry if you aren’t because Congress is tossing a few more logs on: a massive $1.75 billion social spending deal – a critical element of President Biden’s agenda and a key component of many members’ campaign promises heading into the 2022 midterm elections; the National Defense Authorization Act (NDAA) (which must pass before year end or break an over half-century streak); and maybe, just maybe, some form of USICA to help combat the growing influence of China.
Government funding. Debt limit. 12/31 cliffs. BBB. NDAA. USICA…and 3 weeks of scheduled legislative activity? Sounds like Congress is saying, “Hold my beer.”
How Do We Pull This Off? What to Know As Congress Returns.
GOVERNMENT FUNDING – Send in the Kicker
Democratic leadership is almost exclusively focused on passing President Joe Biden’s $1.75 Build Back Better bill. With BBB eating so much clock (and possibly Senate floor) time, it is highly likely Congress will again punt the 12 appropriations bills and enact yet another stopgap spending patch. The two most likely options: (1) a patch thru the end of December; (2) a bridge to February or March 2022. It is possible, maybe even probable, that Congress chooses both options.
U.S. DEBT CEILING – Blink Twice or Reconcile
The 28.9 trillion dollar question: when does Congress really need to act on raising the debt ceiling? Secretary Yellen has stated that extraordinary measures will be needed to avoid defaulting before December 3, but it is less clear how long those efforts can stave off default – a situation aided on one hand by strong revenues and complicated on the other by a mandated transfer of general funds as a result of the bipartisan infrastructure deal. We see two primary options: Republicans again come to the aid of Leader Schumer, something they have vowed not to do a second time, or Democrats can use reconciliation, something they have been warming to since the last game of Congressional chicken. This requires (a) either the ability to attach it to the existing BBB reconciliation bill or (b) run a separate reconciliation vehicle just for the debt limit – both options would eat critical time on the calendar. Put us down as slightly leaning towards a year end mashup of appropriations, anomalies, supplementals, year-enders and debt limit ride together. After all, when you have a problem too big to solve, the DC answer is to make it bigger.
12/31 CLIFFS – Schedule Grandma’s Appointment Now
Here’s what we know: no one – and we mean no one – wants to talk about the end of year, yet. As noted above, Democrats remain focused on BBB, which has left the GOP sitting on the legislative sidelines. Until either BBB is passed or becomes clear it cannot be sent to the president well ahead of December 31, we expect this stalemate (can we even call it that if neither side is really engaging?) to continue. The possibility of Congress going over this cliff is real, and if the situation does not change many may be forced to seek retroactive fixes early in the new year.
NDAA – Even Joe DiMaggio Missed after 56
It seems very likely that the Senate will begin consideration of the NDAA the week of November 15. In anticipation of consideration of the National Defense Authorization bill (NDAA), which has been enacted into law over the last 60 years, Senators have filed hundreds of amendments in advance of debate. The bill presents an opportunity for Members to add their priorities whether defense related or not.
USICA – But May Not Find What You Are Looking For
The Schumer-Young China Competition bill continues to languish in the House where it is seen by leadership as more of a “we’ll get to it when we get to it” Senate priority. Suggestions to split out the emergency appropriations for OpenRAN/CHIPS semiconductor funding have gotten a cool reception Senate-side where proponents (not least the Majority Leader) want to see the bill get to the president’s desk intact. In Leader Schumer’s “Dear Colleague” outlining the year-end forecast he calls for USICA to be included in the NDAA. Whether it hitches a ride on a moving vehicle at year’s end or goes it alone, we still like USICA’s chances for getting over the line.
BUILD BACK BETTER – Construction Delays Continue
The House has a shot at passing the President’s core agenda item this week, and we might even give Speaker Pelosi better than even odds at doing so. Yes, moderates want a CBO score, but they won’t get it – at least not a complete one. However, CBO is likely to produce a lot of numbers in the coming days that will be buffeted by the White House and a host of outside analysts. That was enough to claim BIF was paid for, and we suspect – especially given the political necessity to deliver –it will be enough for the House.
The Senate, however, will be a much longer process where we expect design issues to still be debated further delaying final construction of the bill. While December 31 (or more likely 24) is an important psychological and emotional deadline, it is one that can be crossed. In fact, odds are increasing that we will be here in January still debating the path forward on BBB.