Washington Weekly: A Pause Between Mega-Bills

U.S. Office of Public Policy, 19 March 2021

This Week:

The Senate approved the nominations of Congresswoman Deb Haaland to serve as Interior Secretary, Isabel Guzman to serve as Administrator of the Small Business Administration, Katherine Tai to serve as US Trade Representative and Xavier Becerra to lead the Department of Health and Human Services.  The House approved two immigration bills that will provide a pathway to citizenship for “dreamers” (people living in the US without proper documentation since coming to the country with their parents as minors) and foreign farmworkers.  It also approved a reauthorization of the Violence Against Women Act.    

Next Week:

TheSenate will vote on various Biden administration nominees.  The Housewill hold hearings in committee but is scheduled to be out of session in terms of floor activity.

The Leads

A Pause Between Mega-Bills

After muscling through the $1.9 trillion COVID relief bill last week, President Biden and congressional Democrats are taking a few weeks to tout the benefits of the bill through public events across the country.  While the bill currently polls well, voters are still assessing the bill’s provisions and their impact.  The bill will be a major issue in the 2022 mid-term elections, and both Democrats and Republicans are trying to shape voters’ views through their respective praise and criticism of it.  The next big issue will be infrastructure, which could be coupled with comprehensive tax increases and reforms.  Since Democrats likely will try to pass this package through the budget reconciliation process (which only requires a simple majority in the Senate), the House and Senate first will have to pass an identical budget for fiscal year 2022.  In the meantime, the Senate will continue to vote on Biden administration nominations.  The House will continue to pass bills on a wide range of issues, but these generally will be partisan exercises that are unlikely to garner the 60 votes needed to advance in the Senate.  We expect to see drafts of infrastructure proposals from leading Democrats and the Biden administration in April, and on proposed tax increases/reforms as early as May.       


Busy on Immigration Policy

The House passed two targeted bills on immigration this week, but neither would address the current situation along the southwest border.  The House bills provide a legal pathway for US citizenship for “dreamers” and certain seasonal agriculture workers.  These two provisions were taken out of a more comprehensive immigration reform bill that House Democrats are still refining.  Meanwhile, the Biden administration continues to search for the right policy response to address the growing influx of undocumented immigrants, including thousands of children unaccompanied by their parents or adults, through the southwest border.  While the two bills passed by the House this week have some bipartisan support, the current context of the problems at the border will complicate their consideration in the Senate.  Senate Republicans will want to bolster enforcement at the border and place limits on asylum in order to address those problems.  These provisions may not be acceptable to Senate Democrats.  Enacting any meaningful immigration reform legislation has been a challenge for decades, and the current situation at the border underscores why.  

Other Issues

Filibuster Support Weakening?  

It’s no secret that Senate Democrats are considering changing or eliminating the legislative filibuster, which effectively sets a threshold of 60 votes to pass most legislation in the Senate (instead of a majority of 51).  Some Senate Democrats and President Biden this week rallied around a change to Senate rules that would require Senators to sustain a filibuster only through continuous speech on the Senate floor (under current practice, any Senator can raise an objection, which can only be overcome by a supermajority of 60 votes).  A so-called “talking” filibuster would force Senators (or a group of Senators) to sustain a delay in a vote by speaking on the Senate floor continuously, much like we saw from the fictitious Senator Jefferson Smith in the 1939 film Mr. Smith Goes to Washington.  This proposal presents procedural problems of its own, but it is important because it shows a broad and expanding desire by Senate Democrats to make some form of changes to the filibuster rules.  The few Democratic holdouts to filibuster reforms, including President Biden, seem to be coming around to some form of changes (if not elimination).  We are not ready now to predict this change will occur, but a substantial change or elimination of the filibuster would have dramatic and long-term consequences on the power dynamics in Washington by allowing the party in control of the Senate to pass legislation much more easily.

Cannabis Banking

 Although 36 states have legalized cannabis in some form, businesses in this growing industry continue to face impediments and risks, including an inability to access banking and other financial services due to conflict between state and federal laws.  To address this problem, several lawmakers this week re-introduced bipartisan legislation, called the Secure and Fair Enforcement (SAFE) Banking Act, to provide a safe harbor to banks and other financial institutions to serve covered cannabis businesses.  The SAFE Banking Act passed the House (by a 321 to 103 margin) in the last Congress and is likely to pass the House again later this year.  This bill and other cannabis-related bills will get more serious consideration in a Senate that is now narrowly controlled by Democrats.  Senate Banking Committee Chairman Sherrod Brown (D-OH) has indicated an interest in advancing cannabis banking legislation, although he and other Senate Democrats would like to pair the bill with broader reforms (e.g. on criminal sentencing), which could complicate its path forward in the upper chamber.  Meanwhile, new Attorney General Merrick Garland is expected to take steps to relax enforcement of federal cannabis laws in states that have legalized cannabis use.  More fundamentally, the House late last year passed (by a 228 to 164 margin) a bill to decriminalize cannabis at the federal level, but that bill will continue to have an uphill climb in a Senate where a supermajority of 60 votes is needed to pass most legislation.

Student Loans  

Senate Democrats added a provision to the recently-passed COVID relief bill to preclude student loan forgiveness from being taxed.  The tax benefit is in effect for five years starting this year and applies to all types of student loan discharges, including loan forgiveness provided through income-driven repayment programs.  While some Democrats cheered this provision as a pathway for the Biden administration to forgive up to $50,000 of student loan debt, it went largely unnoticed since the Biden administration has previously said it would sign a bill to forgive $10,000 of student loan debt but would not act unilaterally through executive action.  Whether or not this pressure from congressional Democrats to change Biden’s position will work or not is unclear, but we have our doubts.  Since this provision extends into 2025, it could be revised in the coming years depending on changes in the make-up of Congress (and the White House).

Senate and China.  

During this lull period, as outlined above, the Senate may consider bipartisan legislation to allocate federal funds to bolster US semiconductor production, particularly computer chips.  The bill would allocate approximately $40 billion to help existing US semiconductor producers and new enterprises bolster their domestic production and relocate overseas facilities back to the US.  The bill is designed to counter the Chinese government’s significant investment in its domestic chip-making production.  This concept has bipartisan support, but its ability to pass in the Senate could be complicated if Senators use the bill as a vehicle for provisions on other hot-button issues (Taiwan, Hong Kong and COVID, among others).  As the Biden administration begins to stake out positions on the various US-China issues, it may not want to be micro-managed by such Senate mandates.  The semiconductor bill will be the subject of attention over the next few weeks in the Senate, and a vote could occur next month if the two parties can agree to keep it limited to that issue.     

Politics

California Recall.  

Leaders of the effort to recall California Governor Gavin Newsom (D) recently announced that they have enough signatures to proceed with the recall effort likely this fall.  California is one of 19 states to allow voters to remove state officials before the end of their term.  While recall elections are frequently threatened against governors, it is rare that they end up making it on the ballot, and even more rare that they are successfully recalled.  The last recall petition to successfully gather enough signatures to qualify for a vote was in 2012 when Wisconsin Governor Scott Walker (R) was forced into a recall election.  He won that vote with 53% and went on to not only finish the remainder of that term, but also win another term in 2014.  The last successful gubernatorial recall election occurred in California in 2003 when Governor Gray Davis (D) was successfully recalled, becoming only the second governor in US history to be removed by a recall election (paving the way for Arnold Schwarzenegger’s victory).  With two presidential impeachments in the past year and the California governor’s recall a possibility, it’s a reminder to us that the nation doesn’t always have to wait until designated election days to challenge their leaders and seek their ousters if they don’t like the job they are doing.