(UBS)
While Democrats and some moderate Republicans support an extension of the expiring ACA subsidies, most Republicans are opposed to this and are looking at alternative options (such as replacing the subsidies with deposits in ACA enrollees’ health savings accounts). There also has been some talk among Republicans about trying to advance a healthcare bill through the reconciliation process, but this is not very realistic given that it would be very complicated, time-consuming and would require all Republicans to be united on an approach. Senate Majority Leader John Thune (R-SD) promised Senate Democrats a vote on health care subsidies in December. Time is fleeting on coming together on a viable bipartisan option (for example, an extension paired with some reforms like an income cap on subsidies) rather than failed votes on competing partisan measures.
Appropriations Scramble.
Congress has a lot of unfinished work on the nine remaining appropriations bills before the expiration of government funding on January 30. The recent agreement to end the shutdown does include funding for the entire fiscal year for some parts of government (Agriculture, Congress, Veterans and military construction). However, the remaining government agencies have only a short-term extension and they cover the lion’s share of total discretionary federal spending. There was little tangible progress made this week. The Senate is looking to lead with two of the larger bills (Defense and Labor-Health) in the coming weeks, while the House would like to try to pass a package of smaller bills covering other agencies in December and take on these bigger bills in January. There are many obstacles, not the least of which is that the House is scheduled to be in session 24 days before current funding expires and the Senate for 30 days. Congressional leaders haven’t agreed to topline funding levels for the appropriations bills, with many Republicans and the Trump administration pushing for bigger cuts in spending levels. Meanwhile, Democrats want to include provisions to limit the Trump administration’s ability to make unilateral spending cuts. Lawmakers also try to use appropriations bills as vehicles for controversial policy changes. Getting through these amendments, particularly in the Senate, can be very time-consuming. Differences between House and Senate versions of bills will need to be ironed out. Congress has a small window to make progress on government funding bills before the threat of another government shutdown rears its head.
Defense Bill Approaches the Finish Line.
Lawmakers need to pass the annual National Defense Authorization Act (NDAA) before the end of the year. The bill sets policy for defense spending, though actual spending authority is determined though the appropriations process. Each chamber has passed its version of the NDAA (the House in September and the Senate in October). There have been ongoing negotiations to work out differences between the two proposals. One major difference is the topline level of spending. The House bill would authorize $882.6 billion, matching the amount requested by President Trump. The Senate bill would authorize $913.9 billion, adding $31.3 billion to the budget request. Other contentious issues that need to be worked through include anti-LGBTQ+ provisions in the House bill and a provision in the Senate bill to curb exports of advanced artificial intelligence (AI) chips to China. There will be efforts to attach additional provisions (such as a rollback of Syria sanctions), though most extraneous items will not make it in the final legislation. A final version of the bill could be released as soon as the first week in December. Despite some outstanding issues, this defense bill has passed 63 consecutive years in Congress and this year should be no different.
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