September 14, 2021

Federal Update

Lawmakers face a series of simultaneous sprints this fall that could reshape the U.S. economy and reverberate into next year’s campaigns — including funding the government, addressing the debt limit and a potential $3.5 trillion reconciliation package.

The most immediate of three major priorities is that the government will partially shut down on October 1 unless Congress does something in the next three weeks to keep appropriations flowing past the end of the fiscal year on September 30.

The government also might not be able to meet its financial obligations as early as October unless Congress raises or suspends its borrowing authority known as the debt limit, as outlined in a series of increasingly dire letters from Treasury Secretary Janet L. Yellen to congressional leaders.

These priorities must be negotiated as Democrats set up a quick timeline for a two-track legislative strategy for jobs and infrastructure bills. That would entail passing a bipartisan infrastructure measure that has already passed the Senate, and coupling that with a sweeping $3.5 trillion package of social spending for health care, environment, education, job training and more through the budget reconciliation process — which is not subject to a filibuster and hence prevents Republicans from blocking it. That creates a slog through September as House and Senate lawmakers write, negotiate and advance what will amount to a giant package — which represents the heart of President Joe Biden’s domestic agenda — through the reconciliation process.

But few priorities take the sort of preeminence as Democratic leaders are assigning to the two infrastructure measures. Both Democratic leaders need to keep their caucuses on board. They can lose only three votes in the House, and zero in the Senate, even with the protection the reconciliation process provides from the filibuster for the larger $3.5 trillion package.

That means the Senate, with its narrower majority, will largely take the lead. Speaker Pelosi told reporters last month that the House would write the bill with the Senate. Speaker Pelosi said committees involved would advance their pieces of that legislation by September 15, and they got busy doing so the week before Labor Day. Given the Senate’s 50-50 split, there's an expectation that the Senate likely won't mark up their own versions of the reconciliation pieces, but rather will work with their House counterparts on the package that eventually comes out of the House.

As part of the two-track strategy, House Democrats set a September 27 deadline for a floor vote on the bipartisan infrastructure bill. Progressives have balked at voting for that if not coupled with the larger measure. Senate Majority Leader Schumer likewise has set a September 15 deadline to assemble the reconciliation package.

The broader bill will likely contain several disputed issues. Among other items, Democrats want to include: enhanced child care subsidies; a new paid family leave program; clean energy incentives; affordable housing funds; an expansion of Medicare to cover dental, hearing and vision benefits; and more. Such provisions could provide Democrats with a critical victory to motivate voters ahead of next year’s midterm races, typically a time when the president’s party loses congressional seats.

But wait, there’s more. All that arrives simultaneously with contentious issues that will require time and attention, including oversight of Biden’s withdrawal from the Afghanistan war and increased action with the House select committee that is looking into the January 6 insurrection. That comes as right-wing extremist groups are planning to attend a September 18 rally at the Capitol to demand “justice” for those charged in connection with the January 6 attack on the building.

To that, add pressure on Democrats to respond to the end of the eviction moratorium related to the coronavirus pandemic, more restrictive state voting laws and a new Texas law that ends most legal abortions in that state. A smaller group of negotiators is still trying to hammer out a deal on an overhaul to policing policies.

No area will it be easy, and in no place is it certain. Senate Republicans have warned they will not support changes to the debt limit, which needs 60 votes to pass in the 50-50 Senate, unless Democrats change course and add it to the reconciliation bill. But that is something both Pelosi and Schumer have repeatedly ruled out.

The Senate returned yesterday from their recess with a hectic agenda ahead of them before the end of the fiscal year. We will keep you updated as this evolves over the next three weeks.