07.13.2021 Washington Update

Infrastructure – The bipartisan group of 22 Senators–Sen. Jackie Rosen (D-NV) being the newest member–has been drafting legislative text, based on their infrastructure framework, which they hope to share with Senate colleagues this week.  Senators Kyrsten Sinema (D-AZ) and Rob Portman (R-OH) have been spearheading this effort, with the White House and a few Senate committee staffers assisting on some details.  Republicans especially are skeptical of the proposed pay-fors (as they should be); Senate Minority Leader Mitch McConnell (R-KY) has said his conference wants to see a Congressional Budget Office analysis “to see whether the proposal is credibly paid for.”

But skepticism prevails among some Democrats, too.  On their side, there is griping over paying for infrastructure with unused unemployment insurance funds and untapped COVID-19 relief funding previously designated for state and local governments.

For Republicans, the proposal causing the greatest angst is filling the so-called “tax gap” by spending billions to increase IRS enforcement agents to audit more U.S. taxpayers.  Conservative groups are already lining up against it. These groups could make the proposal a ‘key vote’ for their Congressional scorecards, which will matter for many Republicans, especially in the House.  (We note also that the tax gap pay-for likely violates budget scoring conventions—you can’t spend money to save money—and therefore might not be officially scored by CBO.)

Even though 11 Republican senators are working on drafting the legislation, we remain skeptical that there will be 10 Republicans—the number needed, as many argue, to reach the 60-vote threshold—firmly committed to voting for the final bipartisan agreement, which would ultimately sink the legislation.  Any linkage to a future reconciliation package is a non-starter for Republicans.  Not surprisingly, they don’t trust Majority Leader Charles Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA), both of whom have been openly dilating on the Senate’s “dual track” and that the final bipartisan agreement would only be considered in the House at the same time as reconciliation.

As all of this occurs, Democrats on the Senate Budget Committee are continuing to work on their fiscal year 2022 budget resolution, and they hope to have details for public consumption in the coming days.  They are busily crafting the top-line spending cap for reconciliation, with some reports now suggesting $3.5 trillion, rather than the $6 trillion preferred by Budget Committee Chairman Bernie Sanders (I-VT).

The budget resolution will set up the consideration of a reconciliation bill in September or October that will focus on welfare spending, tax increases, healthcare reform, and climate change.  Majority Leader Schumer has said that the Senate will vote on the budget resolution before the start of August recess.  House Democrats are content to let the Senate Budget Committee take the first step on a budget.


Debt Limit, Appropriations & CR – The current two-year suspension of the debt limit will expire on August 1.  Democratic leaders will want to raise or suspend the debt limit until after next year’s election but how they choose to do so is still to be determined.

Democrats could choose to raise the debt ceiling using the budget reconciliation package, meaning it would only need a simple majority to pass in the Senate.  Reconciliation has been used four times to raise the debt limit, most recently in 1997, but a debt limit suspension has never been done through reconciliation before.  A concern with that plan is that lawmakers don’t know the so-called “X date” when the Treasury Department’s extraordinary measures will end.  Given this unknown date, there is a fear that the X date could occur before the reconciliation package is ready to move in the House and Senate.  Determining that fateful date is more difficult because of the pandemic’s lingering economic effects.

Another option for Democrats is to set up a stand-alone bill addressing the debt ceiling.  This could be done by having the House attach a suspension of the debt limit to the upcoming budget resolution this month, but the Senate would still require a suspension bill to pass under the normal 60 vote threshold.  Republicans are unlikely to support a clean debt limit bill without securing other policy commitments and concessions.  Senate Republicans this spring adopted a nonbinding conference rule requiring any debt limit increase to be offset with spending cuts or structural reforms in federal spending.  The fallback position for Democratic leaders will be to do a short-term suspension of the debt limit until the end of the year and attach it to a likely continuing resolution to keep the government funded.

There is virtually no time for House and Senate appropriators to reach a funding agreement before October 1.  Given these time constraints, and the politics behind spending and other related hot-button issues (e.g., restrictions on federal funding of abortion) a continuing resolution until November 19 or December 10 is possible.

The House has a “Committee Work Week” this week, with the following Appropriations subcommittee markups: Labor/HHS/Education, Energy and Water, Commerce/Justice/Science, Transportation/HUD, and Homeland/Defense. Despite progress at the subcommittee level, the House is in session for just two weeks in July, giving House Democrats a very small window to advance bills on the House floor before the August recess.  Senate appropriators could start subcommittee markups the last week of July or early August.


China / U.S. Innovation and Competition Act – The House is drafting China legislation as a counteroffer to the Senate-passed China bill from earlier this summer.  Key differences remain, and thus prospects for a bicameral, bipartisan deal, at least anytime soon, remain elusive.

The House has been working on passing smaller bills approved by the Science and Technology, Energy and Commerce, Foreign Affairs, and Ways and Means committees.  The goal would be for the products to be negotiated with the Senate and gain bicameral agreement for possible consideration at the end of the year.

The House Foreign Affairs Committee will continue its markup tomorrow of H.R. 3524, “Ensuring American Global Leadership and Engagement Act,” which House Republicans oppose because of issues related to climate change and the overall cost of the bill.

Both parties see  China as an adversary, growing increasingly hostile and irredentist over time, but they differ in some important respects about how to deal with that.  On top of this,  House Ways and Means Committee Chairman Richard Neal (D-MA) strongly opposes the agreement reached between Senate Finance Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) on reauthorizing the Generalized System of Preferences and the Miscellaneous Tariff Bill.


Senate Floor This Week – Majority Leader Schumer filed cloture on the following nominations that will be considered this week:

  • Uzra Zeya to be an undersecretary at the State Department;
  • Julie Su to be Deputy Secretary of the Labor Department;
  • Jocelyn Samuels to be a Member of the Equal Employment Opportunity Commission;
  • Seema Nanda to be Solicitor for the Department of Labor;
  • Nellie Liang to be Under Secretary of the Treasury;
  • Donald Remy to be Deputy Secretary of Veterans Affairs; and
  • Tiffany Cunningham to be U.S. Circuit Judge for the Federal Circuit.