118th Congress Priorities
With just under a week until the midterm elections, early voter turnout is breaking records – nearly 25 million voters have already cast their ballots. The stakes are high, polls are still shifting, and many races remain neck and neck. Voters continue to be most concerned about the state of the economy, namely inflation and gas prices, as well as key partisan issues, such as crime, immigration, abortion, and the future of democracy. Political pundits are increasingly shifting their projections towards a divided government, and potentially a flip of both chambers. This outcome would align with the conventional wisdom about midterm elections.
With must-pass legislation topping the agenda and a post-midterms political environment likely to be characterized by intense partisan negotiations and intra-party disputes, this lame duck is shaping up to be a busy one. Beyond top legislative priorities – government funding and the National Defense Authorization Act (NDAA) – Democrats’ desire to move judicial nominations, mutual interest in advancing bipartisan measures, and a lengthy list of issues where action is possible will shape the work period between now and the end of the year.
Still, many priorities will remain out of reach until either the new Congress, or depending on the outcome of the midterm elections, for the foreseeable future. Hypothetically, just under a fifth of the 118th Congress could be newcomers, setting up an equally chaotic return in January. The outcome of the elections could determine whether work continues next year on antitrust, privacy, retirement security, or behavioral health legislation that might stall in the current Congress. Debates surrounding expiring measures, notably the debt limit and the Farm Bill, will likely escalate, while negotiations on fiscal year 2024 (FY24) appropriations and authorizations will begin to come into the foray as well. Republicans have signaled interest in oversight and investigations while Democrats may shift more heavily to executive activities.
With a chance of control in Congress, or else very tight margins likely, we are certain to see a flurry of administrative action and regulatory activity next year, especially as provisions in the American Rescue Plan (ARP), Infrastructure Investment and Jobs (IIJA) Act, the Inflation Reduction (IRA) Act, and the CHIPS and Science Act are set to roll out starting in 2023.
Predictions are subject to change, but one thing is clear: once the midterm election results are called and the margins in Congress are known, Washington will begin to orient to a new deadline: the 2024 Presidential Election.
Priorities for the Lame Duck
While the scope of what Congress might accomplish in the lame duck is contingent on the outcome of the midterm elections, the timeline for advancing any legislative priorities will be extremely tight. The House and Senate are set to return on November 14. The continuing resolution (CR) expires on December 16, meaning there are only 17 legislative days in the House and 20 in the Senate to advance legislation to fund the government. Even if a spending bill is agreed to by mid-December, there are no more scheduled legislative days in the House after then and only three legislative days in the Senate until the end of 2022. Before the year – and potentially their majorities in the House and Senate – comes to an end, Democrats will aim to squeeze in last-minute priorities, notably codifying same-sex marriage and passing the Electoral Count Reform Act, while Republicans might be expected to delay other measures so they can hit the ground running with their “Commitment to America” in the next Congress. Further, 77 Members are set to retire, not including roughly 25 vulnerable incumbents, and many will want to fit in legacy bills, particularly those who are retiring or lose their re-election.
FY23 Omnibus Appropriations Bill
FY23 began on October 1. However, as has become the norm in recent years, Congress has yet to pass the 12 appropriations bills needed to keep the government functioning. Appropriators in both chambers continue to work on a deal to avoid government shutdown on December 16.
There are several scenarios for the FY23 appropriations endgame. The most likely scenario would see a 12-bill package passed via an omnibus before the end of the 117th Congress. It is possible that negotiators do not quite meet the December 16 deadline and that there would be another short-term CR keeping Congress in town working through Christmas if the extra time was needed to finish the omnibus.
A second scenario would see another short-term CR, perhaps through February or March 2023, at which point Congress would pass its FY23 appropriations measures. In our view, there is not an upside for either party to hold appropriations over to the 118th Congress, where Democrats might no longer hold gavels and Republicans might be struggling to unite a new and potentially unruly caucus.
Assuming an omnibus comes together in December, it could serve as a vehicle for other priorities, including a Hurricane Ian disaster supplemental and additional Ukraine aid. Democrats may push for the inclusion of pandemic relief funding, but Republicans are likely to continue to push back. Following the breakdown of energy permitting negotiations in September, it is possible Sen. Joe Manchin (D-WV) could attempt to revive the topic again, but this is another election-contingent priority. The final package will likely be full of extenders, most notably those related to healthcare and taxes. For instance, reviving the child tax credit (CTC) remains a key interest for Democrats, while Trump-era tax credit extensions, like the business interest deduction and research development, are a priority for Republicans. The spending bill could also serve as the vehicle for many reauthorizations that were included in the CR, such as National Transportation Safety Board (NTSB), Federal Communications Commission (FCC) spectrum authority, and many Medicare-related programs.
FY23 NDAA
Enacted into law for the past 61 consecutive years, the NDAA is expected to be the first item on the agenda when the Senate returns from the midterm elections. The House passed its NDAA over the summer. In early October, Senate Armed Services (SASC) Chair Jack Reed (D-RI) opened debate on the Senate version, proposing a modified substitute amendment that incorporated 75 of the nearly 1000 NDAA amendments that were filed, including authorizations for the State Department, Maritime Administration, Coast Guard, intelligence agencies, Water Resources Development Act (WRDA), as well as other stand-alone measures, like the American Security Drone Act. It is possible there could be a second manager’s package of NDAA amendments, although there would likely be a high bar to clear for additional amendments to make the cut.
At this point, it is not yet clear if the full Senate will stay on the NDAA until completion or if the bill will be pulled from the floor so that the Senate might instead pursue an informal conference with the House. Armed Services Committee staff appears to be preparing for both scenarios as we approach the lame duck. Given that SASC Ranking Member Jim Inhofe (R-OK) is retiring, and because many Members view the NDAA as an opportunity to demonstrate their commitment to servicemembers, we expect a conference report to pass before the 117th Congress adjourns.
Marriage Equality
In June, the House passed its version of the Respect for Marriage Act, with 47 Republicans voting in favor of the measure. The bill would codify both same-sex and interracial marriage. The bill would also require that states recognize all marriages if they were considered valid when performed in the state and address the concern surrounding Supreme Court Justice Clarence Thomas’ concurring opinion in Roe v. Wade, in which he suggested that marriage equality and same-sex marriage should be reconsidered by the Supreme Court (SCOTUS).
The Senate decided to push a vote on marriage equality until after the midterms to ensure the votes exist for passage. The bill will need at least 10 Republican votes to overcome the filibuster, but indications from earlier in the fall suggest several Republicans are already on board. Currently, the Senate is editing the bill to clarify that the legislation does not allow polygamy or restrict religious freedom. Changes to the bill text would require a House vote on the updated language, but passage is expected in the lame duck.
Electoral Count Act
The Presidential Election Reform Act passed the House with just nine GOP votes in mid-September. At the end of that month, the Senate Rules Committee favorably reported its version, the Electoral Count Act, out of committee following the endorsement of Senate Minority Leader Mitch McConnell (R-KY). The Senate bill, produced by a bipartisan group formed at the beginning of the year, already has 11 GOP co-sponsors – one more than is needed to break a filibuster. Among its provisions, the bill would clarify that the vice president has only a ministerial role in counting electoral votes, close the loophole that allows state legislatures to declare a “failed” election, and ensure an expedited judicial process to resolve disputes about the validity of electoral votes. Like the marriage equality vote, the measure was punted until after the election.
Judicial and Other Nominations
Senate Majority Leader Chuck Schumer (D-NY) has stated that confirming judges to the federal bench is a key priority for Democrats. For more than 20 months, Democrats have kept pace with former President Donald Trump’s confirmation numbers despite holding a narrow majority in the Senate. With 85 vacancies to fill, not including 31 announced federal vacancies that will occur before the end of President Biden’s term, Senate Majority Whip and Judiciary Committee Chair Dick Durbin (D-IL) has signaled that these confirmations are a high priority for him in the lame duck. If Democrats lose control of the chamber in the midterm elections, Leader Schumer could also use floor time during the lame duck for consideration of other nominees who would otherwise be unlikely to be renominated or confirmed by a GOP-controlled Senate. An example might be Gigi Sohn, whose nomination for FCC commissioner has now been awaiting a vote for more than a year.
Debt Limit
Majority Leader Chuck Schumer (D-NY) has committed to raising the debt ceiling above its existing level, which sits at $31.4 trillion. Given that Democrats might be a minority for the next two years and Democratic Senators up in 2024 would want to get past the debt ceiling negotiation before being considered “in cycle,” there is added urgency to get this done during the lame duck session. President Biden has urged lawmakers to raise the debt ceiling. However, he has also stated that he will refuse to cut programs like Medicare under any circumstances. Some Democrats are hoping to secure votes from Republicans who supported raising the debt ceiling last year. Leader Schumer will need at least 10 Republican votes. While some Republicans have expressed support for raising the debt ceiling, they might be unwilling to play ball during the lame duck depending on topline omnibus figures and PAYGO relief.
It is unlikely that any debt ceiling provision will be included as part of the omnibus, but there are a few options for addressing the debt limit in the lame duck. Doing it via a budget resolution would require two vote-a-ramas (budget resolution and then reconciliation), and in the timeframe of the lame duck, this would require too much floor time. Leader Schumer could attempt to use the same strategy he employed the last two times the debt limit was raised in October and December 2021 by asking unanimous consent for the debt ceiling to be raised by a simple majority vote. At that time, Leader McConnell went along so the vote in the Senate was 50-48 in October and 50-49 in December. However, Leader McConnell would likely object to this tactic this time around. Republicans will want to leverage raising the debt ceiling in order to make cuts in non-defense discretionary spending.
Other Issues to Ride on Larger Vehicles During the Lame Duck
Ukraine Assistance
Since Russia invaded Ukraine in February, the U.S. has approved more than $53 billion in security, economic, and humanitarian assistance for Ukraine. An additional $12.3 billion was appropriated in the CR passed in September. Members on both sides of the aisle have expressed support for continued assistance in recent weeks, but there are now growing questions about the U.S. commitment to Ukraine going forward. For example, a recent controversial letter from the House Progressive Caucus called for diplomatic solutions, magnifying concerns. House Progressive Caucus leaders have since retracted their letter, and Democrats continue to promise that additional Ukraine assistance will make it into the omnibus.
If Republicans win control of the House, the prospects for another large military aid package become hazier. GOP Members have already voted against billions in aid, including 57 Republicans who voted against the $40 billion package in May. In recent weeks, House Minority Leader Kevin McCarthy (R-CA) has implied that a Republican-controlled Congress would focus on the economy and border security, which would mean reducing Ukraine aid. That being said, intraparty clashes between GOP Members, who want to boost defense spending, versus more economically conservative Members, who want to cut federal spending, could stall aid efforts.
Saudi Arabia Sanctions
All eyes have been on the U.S. since Saudi Arabia sided with Russia to cut oil production during the Organization of Petroleum Exporting Countries (OPEC+) meeting in early October. President Joe Biden has openly threatened consequences for Saudi Arabia, and Members of both parties have criticized the move as a turning point in the relationship between the two countries. Senate Foreign Relations (SFRC) Chair Sen. Bob Menendez (D-NJ) continues to call for the U.S. to freeze all cooperation with Saudi Arabia beyond what is necessary to defend U.S. personnel and interests. Meanwhile, Sen. Richard Blumenthal (D-CT) and Rep. Ro Khanna (D-CA) introduced legislation a week following the OPEC+ meeting that would halt arm sales to Saudi Arabia for a year, and Sen. Blumenthal has indicated such language could be added to the NDAA.
In addition, the bipartisan No Oil Producing and Exporting Cartels (NOPEC) Act, introduced by Sens. Chuck Grassley (R-IA), Mike Lee (R-UT), Amy Klobuchar (D-MN), and Patrick Leahy (D-VT) in early May, was added as an amendment to the NDAA. NOPEC would classify OPEC as a cartel and subject its members to antitrust legislation. The measure passed the Senate Judiciary Committee on a bipartisan vote, with seven GOP Members voting in favor. Similar bills have been considered in the past, including a House-passed bill in 2007, but failed in large part due to potential retaliation from OPEC.
PAYGO Relief
There is also mounting pressure to avoid the Statutory Pay-As-You-Go (PAYGO) Act from taking effect. Congress has routinely prevented this trigger by including provisions that exempt legislation from the mechanism. To prevent sequestration in early 2022, Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act, shifting the balances to FY22. However, cuts from the ARP are set to take effect in January because the law requires the Office of Management and Budget (OMB) to issue a sequestration order within 15 days of the end of the Congressional session. If Republicans win control, there is a high likelihood of prompt action, which could see a revival of the Protecting the American Taxpayer and Medicare Act, introduced by Sen. John Kennedy (R-LA) in December 2021.
Healthcare Extenders
Medicare issues are slated to come to a head in the lame-duck. The Public Health Emergency (PHE) Extender, which has been in place since the beginning of the pandemic, has allowed crucial healthcare services, like Medicare telehealth coverage and waivers, to remain accessible. Although President Biden has stated publicly that the pandemic has ended, public health officials still deem the PHE Extender to be necessary. This latest PHE Extender will expire January 11, 2023. However, some in Congress, including Sen. Brian Schatz (D-HI), are pushing for telehealth legislation like the CONNECT for Health Act to ensure accessibility. Also looking ahead to next year, the 2023 Medicare Physician Fee Schedule Proposed Rule would include payment cuts for many providers, while also reducing funds for laboratory services by 15 percent. Congress would need to revise the rule before it is implemented in order to avoid these two adverse outcomes.
Retirement Security
The SECURE 2.0 Act, which bolsters retirement savings by closing coverage gaps and expanding employer incentives, made headway this year when it was passed by the House Education and Labor and Senate Health, Education, Labor, and Pensions (HELP) and Finance Committees. Earlier versions of this bill had stalled prior to the onset of COVID-19. Conversations about supporting recovery from the pandemic now include a desire to address how Americans' savings were negatively impacted.
Behavioral Health
The pandemic has also put a spotlight on behavioral and mental health. Several committees of jurisdiction, namely the Senate Finance, Senate HELP, and House Energy and Commerce Committees, have proposed reauthorizations of major behavioral health programs, as well as major reforms. For example, the House Energy and Commerce Committee's Restoring Hope for Mental Health and Well-Being Act passed the House by a vote of 402-20. HELP has its own package of mental health reauthorizations. Meanwhile, after months of work, Senate Finance unveiled a package this fall that includes major Medicare and Medicaid updates for mental health. Behavioral and mental health are likely to remain priorities in the coming year.
Pandemic Relief
While Democrats aim to include COVID-19 relief in legislation moving during the lame duck, next year's spending depends on the results of the midterm and who wields the gavel in each chamber. In its FY23 budget request, the Biden Administration proposed almost $27 billion to fight the coronavirus pandemic and the monkeypox outbreak. The funds, which were opposed by Republicans in both chambers on the grounds that current pandemic relief funds have yet to be spent, would be used to continue to provide free tests to the public, accelerate vaccine research, and support the global response. This is a top Democratic priority, and Appropriations Chairs Leahy and Rosa DeLauro (D-CT) have expressed support for these programs.
Pandemic Preparedness
Although there are many efforts to address the ongoing pandemic, some in Congress have looked to preparing for the next pandemic. A bipartisan effort by the Senate HELP Committee this Congress resulted in the PREVENT Pandemics Act. The legislation includes public health coordination, supply chain, and equity provisions. It is championed by current HELP leadership, Chair Patty Murray (D-WA) and Ranking Member Richard Burr (R-NC). Sen. Murray is currently in a tighter race for reelection than many anticipated. Assuming she wins reelection, she is likely to give up the top Democratic slot on HELP to lead Democrats on the Appropriations Committee. Additionally, with Sen. Burr retiring, new champions would be needed to carry this legislation across the finish line if no action occurs by the end of 2022.
Drug Pricing
Having already emerged as a policy priority earlier this year, drug pricing is unlikely to go away anytime soon. A portion of the bipartisan INSULIN Act sponsored by Sens. Jeanne Shaheen (D-NH) and Susan Collins (R-ME) – aimed at addressing insulin prices – was included in the IRA, and staff have been modifying the legislation in the hopes of getting the remainder of the bill across the finish line. However, the pharmaceutical industry is expected to push back hard on any further drug pricing efforts, including the 340B Drug Pricing Program.
Tax Extenders
Several dozen tax breaks are authorized for only a limited number of years, and when these temporary provisions are scheduled to expire, they become known as “tax extenders” because lawmakers typically consider extending most or all of them. Last fiscal year, Congress allowed 40 provisions to expire without replacing them, including the Child Tax Credit (CTC) and the Employee Retention Tax Credit. This year, another set of provisions is set to expire, notably the Highway Trust Fund excise tax, allowance of full deduction for business meals, and the railroad track maintenance credit (expiration of the 50 percent rate). Other possible extensions include the Low-Income Housing Tax Credit Allocation by 9 percent for the next four years; and the New Markets Tax Credit, which promotes investment in low-income communities. The fate of extenders depends on which party wins in the midterms, but including extenders in one of the must-pass packages would fit a recent pattern for lawmakers. If Republicans are successful in flipping the House and/or Senate, they may want to enter the majority next year having cleared tax extenders from the previous session.
Federal Communications Commission (FCC) Spectrum Auction Authority Extension
FCC Spectrum Auction Authority, which gives authority to conduct auctions of radio spectrum, was another measure extended to December 16 under the CR. Consensus seems to be that another extension of FCC spectrum auction authority will ride on the omnibus, although the length of the extension is still being debated. At this point, it is unclear if the extension will be relatively clean or name specific spectrum bands for auction. If specific bands are included, the legislation is likely to direct spectrum auction revenue towards other telecom priorities, such as Next Generation 911 (NG911) technology and filling the shortfall in the FCC’s Secure and Trusted Networks “rip and replace” Reimbursement Program.
Privacy
Despite a moment of bipartisanship on privacy in the House this summer the prospects for a comprehensive federal privacy bill or even narrower privacy legislation to move in the lame duck appears to be dimming. In July, the House Energy and Commerce Committee reported the American Data Privacy and Protection Act (ADPPA) out of committee on a 52-2 vote. House Speaker Nancy Pelosi (D-CA) and other Members of the California delegation have raised concerns with the bill, primarily related to preemption of state laws and regulations. Additionally, while the House bill has the backing of Senate Commerce Committee Ranking Member Roger Wicker (R-MS), Commerce Committee Chair Maria Cantwell (D-WA) is not on board.
Smaller privacy bills, such as Sen. Ed Markey’s (D-MA) Children and Teens’ Online Privacy Protection Act (CTOPPA), which would govern how websites and online services protect the privacy of children under the age of 17, and Sens. Blumenthal and Marsha Blackburn’s (R-TN) Kids Online Safety Act (KOSA), which includes a duty of loyalty clause that requires technology companies to prevent harm to minors while mandating more transparency in their algorithms for users and researchers, have been cited as candidates to ride on the omnibus. Both bills have been favorably reported out of the Senate Commerce Committee. While there are rumors about the introduction of a House companion to KOSA during the lame duck, many staffers question if these bills could move on an end-of-the-year vehicle without first receiving serious consideration by the House.
Antitrust
Although Senate Judiciary Antitrust Subcommittee Chair Klobuchar is expected to push for floor consideration of the American Innovation and Choice Online Act (AICOA), it is likely that this bill, along with other larger antitrust proposals such as the Open App Markets Act (OAMA) and the Journalism Competition and Preservation Act (JCPA), have enough support in the Senate to overcome a filibuster. Given that GOP leadership has signaled that antitrust will not be a priority if they hold control of the House and/or Senate next year, these bills could be stalled for the foreseeable future without action during the lame duck.
In early October, the House passed an antitrust package that included the Merger Filing Fee Modernization Act (MFFA), which would increase filing fees on large merger and acquisition transactions; the Foreign Merger Subsidy Disclosure Act (FMSDA), which would require merging companies operating in the U.S. to disclose information about any subsidies or financial support from foreign entities; and the State Antitrust Enforcement Venue Act, which would permit state attorney generals to keep cases in the jurisdiction they choose. These smaller antitrust bills might be candidates to ride on the omnibus. In fact, both the State Antitrust Enforcement Venue Act and the MFFA have already passed the Senate as part of other legislation. While there are some California Democrats who have expressed concern with language in the MFFA that they worry would give state attorneys general (AGs) the ability to hear cases individually rather than consolidating similar cases to be heard before a federal court, these concerns are unlikely to impact the chances of these narrow antitrust bills riding on the omnibus.
Environmental Permitting Reform
Given the influx of infrastructure-related spending, environmental permitting reform is an item of major bipartisan interest. Dueling bills, offered by Sens. Manchin and Shelley Moore Capito (R-WV), failed to garner enough support to ride on the CR passed in September. Progressives, particularly on the House side, continue to oppose provisions in Sen. Manchin’s version, arguing that certain language would make it easier to skirt environmental reviews and greenlight fossil fuel projects. There could be a path forward during the lame duck session, as Sen. Capito has expressed support for Sen. Manchin’s legislation. Further, the bills have overlapping priorities, including putting a two-year cap on environmental reviews for major projects under the National Environmental Policy Act (NEPA), approving the Mountain Valley Pipeline, and directing the Administration to name 25 high-priority energy projects. Majority Leader Schumer has promised that responsible permitting will make it into the end of the year omnibus. However, given the competing list of priorities, it is entirely possible permitting reform will be left on the cutting room floor. If Republicans give the legislation another shot in the next Congress, it is unclear how much, if any, of Sen. Manchin’s proposal would be incorporated, particularly considering that many Republicans remain angry about Sen. Manchin’s role in helping Democrats get the IRA across the finish line.
Executive Actions to Watch Next Year
Provisions in ARP, IIJA, IRA, and CHIPS & Science Act Set to Roll Out Beginning in 2023
The $1.9 trillion ARP was signed into law in March 2021 to speed up economic recovery and support Americans in the fallout from the pandemic. While much of the funding has already been used by states, funding for some ARP programs remains available through 2024 and 2025. Republicans are expected to continue to criticize the plan as fueling inflation and worsening the labor shortage, and if they hold gavels, have signaled that they plan to investigate how ARP funds have been spent. We may even see the GOP try to claw back remaining funds to pay for other GOP priorities.
At $1.2 trillion, the IIJA was signed into law in November 2021. Overall, this funding was intended to catalyze private sector investments in transportation, energy, carbon capture, water, and broadband sectors.
Transportation: the IIJA includes several five-year competitive grant programs. Some programs, like the Federal-State Partnership for Intercity Passenger Rail Grants, are still early in the notice of funding opportunity (NOFO) process, but many NOFOs have been closed and several have already or are expected to award funds this year or early next, including for the INFRA (Nationally Significant Multimodal Freight and Highway Projects), Megaprojects and Rural Surface Transportation Grant programs.
EVs and Battery Materials: For the EV sector, the IIJA funds new and existing energy transition and EV-related programs. Some are in the early stages, including the New Competitive Grant Programs for Charging and Fueling Infrastructure which is set to release its NOFO later this year. Others have received applications and some programs, including a Department of Energy (DOE) program to boost domestic battery production, have already announced awards.
Energy, Water, & Broadband: The IIJA created several programs, many of which have begun allowing for interest letter submissions, like the Water Infrastructure Finance and Innovation Act (WIFIA). Others, including the Regional Direct Air Capture Hubs program, are set to issue funding opportunity announcements (FOA) between now and early 2023, DOE is expected to issue another notice of intent (NOI)/request for information (RFI) in the first quarter of 2023 for the Transmission Facilitation Program, which will incorporate loans and public-private partnerships as financing tools. The National Telecommunications and Information Administration (NTIA) is set to roll out grants for middle mile over the next six months, tribal broadband over the next year, and state grants under the Broadband Equity, Access, and Deployment (BEAD) program within the next two years.
DOE Loan Programs: The IIJA and IRA substantially increase DOE’s Loan Programs Office’s (LPO) funding capacity, positioning this office to be very active in the coming years. Much of the work this year has been focused on stakeholder outreach, interagency coordination, and development of online resources for applicants. The Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) NOFOs are expected before the end of the year.
The third major law, August’s $700 billion IRA provides new spending to reduce carbon emissions, lower healthcare costs, fund the Internal Revenue Service (IRS), and improve taxpayer compliance. Implementation is underway as the White House has released several executive orders (EOs) and appointed former Bill Clinton chief of staff John Podesta as the new Senior Advisor for Clean Energy Innovation and Implementation. The White House also launched a new IRA website to provide further guidance. Beginning next year, several clean manufacturing tax credits will take effect, including credits for rooftop solar, certain efficiency improvements, and buying and installing heat pumps. Income-qualified households will also be able to receive a tax credit of up to $7,500 for EVs. In addition, starting in 2023, certain companies meeting a revenue threshold will owe a corporate minimum tax, a stock buyback tax takes effect, and certain Medicare prescription drug benefit changes will take effect beginning in 2023. Again, if Republicans take control of either chamber, they will likely seek ways to block deployment of all major Democratic rollout plans, notably the Administration’s plan for the IRS.
The fourth major package, the CHIPS and Science Act, was also passed in August, and is designed to boost U.S. competitiveness, innovation, and national security by catalyzing investments in domestic semiconductor manufacturing, jump-starting commercialization of leading-edge technologies, and building an inclusive workforce. Over the next five years, the Commerce Department will oversee $52 billion in investments in the semiconductor industry. There are currently two open RFIs on CHIPS financial incentives and Manufacturing USA Semiconductor Institutes. As has been noted in recent CHIPS for America webinars, the Administration is still thinking through many elements of implementation, including guardrails to restrict investments in leading edge semiconductor manufacturing and prohibitions on stock buybacks for recipients of federal assistance. By February 2023, we should see a solicitation for project pre-proposals for grants, loans, and loan guarantees funded by the legislation. The CHIPS and Science Act was enacted with bipartisan support and oversight of these historic investments is expected regardless of which party controls Congress next year.
Cryptocurrency Regulation
The Administration has continued to beat the drum on cryptocurrency as European policymakers continue to make moves to regulate digital currency. President Biden’s March Executive Order called on federal agencies to examine the risks and benefits of cryptocurrencies. It also recognized that the development of a central bank digital currency (CBDC) is at an early stage but encouraged the Federal Reserve to continue inquiries. In September, the White House released its “Comprehensive Framework” for crypto regulation and development, which calls for domestic cryptocurrency policies that can have a global impact on overseas criminal enterprises. It is too soon to say whether calls for action will be effective. At the same time, it is a clear step forward for U.S. cryptocurrency regulation and demonstrates how willing the government is to enter the digital currency space itself with a potential CBDC.
There is an interest in both supporting digital currency development and restricting illegal uses, which has paved a tough path for legislative proposals. While the Administration has put pressure on Congress, action is unlikely in the lame duck session. Despite several proposals, including the Digital Commodities Consumer Protection Act, Stablecoin Transparency Act, Stablecoin TRUST Act, and Responsible Financial Innovation Act, Congress has yet to consider any crypto-specific legislation, leaving regulation up to states.
Expiring Legislation to be Tackled by the 118th Congress
Regardless of which party controls Congress, there are several must-pass bills and other expiring items where the 118th Congress will see action. These include the following:
FY24 Appropriations
While Congress has yet to wrap up appropriations for FY23, FY24 is just around the corner. President Biden is expected to release his budget request sometime in the spring, and it is likely that conversations around inflation will be at the center of the debate for next year’s government spending package. The trajectory of FY24 budget negotiations likely hinges on this November’s election results. In June, the Republican Study Committee (RSC) released a budget plan including a framework that would cut spending by $16.6 trillion over 10 years, reduce Americans’ taxes by $3.9 trillion, and increase investments in military by 5 percent. As Republicans seek to take back one if not both chambers, Members are gearing up to cut spending, raise the eligibility age for Social Security and Medicare, extend Trump-era tax-cuts, and tackle other top appropriations items, such as border security, crime, and IRS overreach. Some polls have shown that Americans want dialed-backed appropriations bills that reflects pre-pandemic spending levels. A Democratic President will make delivering on these commitments difficult for conservatives, but at the same time, Republicans may be more willing to risk a default on the nation’s debt to make good on these commitments.
FY24 NDAA
While the FY23 NDAA has yet to be enacted, the FY24 NDAA season will begin early next year with offices taking their first NDAA meetings in as soon as February or March. If Republicans win control of either chamber, more hawkish Members are likely to make a push for increased defense spending. However, if we see a red wave next week, next year’s GOP caucus is also likely to include fiscal conservatives, who could temper Republicans’ efforts to significant boost the defense topline. As NDAA hearings are scheduled for next year, it is expected that the new National Defense Strategy (NDS), which was publicly released in October and identifies China as a long-term strategic competitor and Russia as an acute threat, will shape next year’s bill and future years’ defense planning. In today’s economic and security environment, we would expect next year’s NDAA process to continue debates over the Department of Defense’s (DoD) acquisition strategy and desire to divest legacy systems.
Farm Bill
The 2023 Farm Bill will be among the major expiring authorizations in the 118th Congress. The reauthorization bill is likely to include billions of dollars for programs related to federal nutrition and food access programs, crop subsidies and crop insurance, agricultural research, rural broadband, and more. The Child Nutrition Reauthorization, which has been funded since its expiration in FY15 by annual appropriations, could be included in the final bill as well. House Committee on Education and Labor Chair Bobby Scott (D-VA) introduced the Healthy Meals, Healthy Kids Act, a revival of the 2010 version, back in July. At the end of September, the White House held the Conference of Hunger, Nutrition, and Health following the release of a national strategy on the topic. President Biden is set to unveil a series of executive actions to tackle hunger, nutrition, and health disparities, including directives for the Food and Drug Administration (FDA) to roll out voluntary nutrition guidance, so it is likely to be a top priority of the Administration. Congress has begun soliciting input from various stakeholders to establish priorities, and interest groups have already started to advocate for provisions they would like to see included in the bill. The Farm Bill is also more prone to having regional coalitions, rather than partisan coalitions.
The Senate and House Agriculture Committees each must draft, amend, and vote on their own versions of the Farm Bill. The differences must then be reconciled before a final vote to send the legislation to the president’s desk. Republican and Democratic leaders on the Agriculture Committees have already outlined some of their farm bill priorities. For example, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) has noted her interest in expanding opportunities for midsized and local producers, combating climate change, and expanding conservation programs. House Agriculture Committee Chairman David Scott (D-GA) has said he would focus on programs for underserved farmers and ranchers and expand for conservation and energy programs. On the other hand, Republicans have indicated an interest in focusing on expanding domestic oil and gas production. Additionally, lawmakers have also discussed expanding crop insurance and addressing the challenges from drought, severe weather and climate change. We are also expecting interesting discussions around hemp.
FAA Reauthorization
Another major expiring law in 2023 is the Federal Aviation Administration (FAA) authorization. The last reauthorization was enacted in 2018 for $96.7 billion. In addition to "traditional" aspects, next year's effort will likely look at how the FAA engages with other agencies, from the National Aeronautics and Space Administration (NASA) on commercial spaceflight, to the National Institute of Standards and Technology (NIST) on drones, to the FCC on potential 5G interference with altimeters, to the limited amount of air space. With the Biden Administration broadly promoting environmental and consumer protection efforts, sustainable aviation fuel (SAF) and pro-consumer provisions could also find their way into the FAA reauthorization bill. However, given changing leadership at the committees of jurisdiction, how priorities will shake out remains unclear.
Priorities for a GOP-Controlled Congress
With one week until the election, FiveThirtyEight has given Republicans a 49 in 100 chance of winning the Senate and an 81 in 100 chance of winning the House. A divided government is not likely to pass any legislation that is too far from the center of the political spectrum, given that President Biden will still have veto power. A GOP-led House and/or Senate will likely “nibble at the edges” of the Democratic-led agenda of the past two years.
Commitment to America
If Republicans take the House, current House Minority Leader Kevin McCarthy (R-CA) is the heir apparent to succeed current Speaker of the House Nancy Pelosi (D-CA). Since the 2020 election, Minority Leader McCarthy along with other members of the House GOP conference have spent time crafting their “Commitment to America” policy platform centered on four overarching goals: a strong economy, a safe nation, a future built on freedom, and a government that’s accountable. In implementing the blueprint, McCarthy has stated that the first piece of legislation House Republicans would introduce would repeal the “87,000 new IRS agents” funded by the IRA. Other priorities include lowering the cost of living, making the U.S. energy independent, and increasing American supply chain capacity while decreasing reliance on China.
Oversight and Investigations
A Republican controlled Congress is likely to increase oversight and investigations into President Biden and the current Administration. Resolutions of inquiry, the legislative tool which allows the House to obtain information from the executive branch, were first restricted in May 2020 in order to limit the number of votes that Members had to take. However, those limitations were removed in July, opening the door for Republicans to sponsor more than 50 resolutions this year seeking information on hot topics ranging from offshore oil and gas drilling to inflation, the Federal Bureau of Investigation (FBI) raid of former President Trump’s Mar-a-Lago property, and President Biden’s response to known or suspected terrorists trying to illegally cross the U.S.-Mexico border. House Rules Committee Ranking Member Tom Cole (R-OK) has confirmed that if Republicans take the House, there will be more oversight of the Biden Administration, accusing Democrats of limiting resolutions to shield Biden from oversight.
Top Agenda Items for a Democrat-Controlled Congress
Even if Democrats maintain their control of one of the chambers they are unlikely to be dealing with better margins than what we have seen in the 117th Congress. There is likely to be a divided government, meaning that Democrats will likely pivot to initiatives within the executive branch.
Abortion
Since Roe v. Wade was overturned in June, Democrats have spent millions of dollars on ads re-emphasizing their commitment to protect a woman’s rights to choose and identifying legislating on abortion rights as a key priority of for a Democratic-controlled Congress. In 2021, the House passed the Women’s Health Protection Act along party lines. This vote was seen as largely symbolic because the bill has not had the votes to overcome a filibuster in the Senate. President Biden has vowed that if Democrats keep their majority, he will send a bill to Congress codifying abortion protections in January, the 50-year anniversary of the Roe decision. With the increased likely scenario that Republicans control at least one chamber, GOP Members have indicated there will be little to no support for pro-choice-related legislation. Federal agencies are also key players: Health and Human Services (HHS) Secretary Xavier Becerra and Centers for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure have made commitments for their agencies to strengthen access to abortion services, and recently, the Pentagon announced it would pay for servicemembers to travel to obtain abortions. The latter has sparked a reaction in the GOP caucus, whose Members are attempting to insert an amendment into the NDAA that would block any DoD initiative to expand access to abortion following the Dobbs v. Jackson Women’s Health Organization ruling.
Confirmation of Biden Nominees
Nominations are one of the key priorities at stake as the battle for control of the Senate continues. As noted above, Leader Schumer is likely to utilize floor time during the lame duck to confirm as many judicial nominees as possible, along with other nominees who have remained pending. If Democrats maintain their Senate majority on November 8, this lessens the pressure on Leader Schumer to jam through nominees before the 117th Congress adjourns, as Democrats would be able to continue to confirm nominees on a majority vote next year. Democrats would also be likely to use an ongoing Senate majority to continue their efforts to turn some district and circuit courts to the left, as well as SCOTUS, if there is an opportunity. If Democrats lose control of the Senate, the White House could be forced to put forward more moderate nominees to fill vacant positions and Republicans would likely block or stall these nominees from moving forward.