Washington Weekly: September Agenda

The Senate confirmed various Biden administration judicial nominees. The House passed three government reform bills to improve federal whistleblower protections, US Census Bureau operations and employment safeguards for federal employees.

The Senate will continue to confirm Biden administration nominees. The House will vote on a Senate-passed bill to allow borrowers with consolidated student loan debt linked to a spouse or ex-spouse the ability to separate the loans and may consider a bill to reform an 1887 election law in an effort to clarify the presidential electoral count procedure. Both the Senate and House will continue to work to craft a bill to extend funding for government agencies after the current fiscal year expires on September 30 (see below).

September Agenda.

With just 52 days left before Election Day, members of Congress would much rather be home campaigning for re-election than in Washington debating legislation. Given this prevailing sentiment, Congress has a very limited agenda this month. While there will continue to be debate about key issues in committee hearings, it is unlikely that Congress will pass any major legislation beyond a short-term government funding bill. Congress needs to pass that bill since a new fiscal year begins on October 1 (fiscal year 2023). A handful of bills on other issues, including data privacy, anti-trust, police funding, reauthorization of the Food and Drug Administration and caps on the cost of insulin (see below), could be considered by either the House or Senate, but all are longshots at this point. With little happening over the next few weeks, Congress will look to December (after the mid-term elections) to pass outstanding bills that have significant bipartisan support.

Government Funding Bill.

To avert a government shutdown, Congress must pass a funding bill for government agencies by October 1. No one in Congress is eager to be blamed for a government shutdown, so a short-term extension will be passed by October 1. This “continuing resolution” will allow agencies to function on a continuing basis at the current year’s level of spending beyond October 1. There will be partisan haggling over whether to include additional funding for Ukraine, Covid, monkeypox and fire-fighting activities in the west, as President Biden has requested. Also in play is a potential provision to streamline permitting for energy infrastructure projects that was promised to Senator Joe Manchin (D-WV) as a condition for his support of the Democrats’ Build Back Better legislation in August (renamed the Inflation Reduction Act). With the bipartisan desire to leave Washington by month’s end, we think Congress will pass a deal to fund the government until mid/late December, though we are bearish that Senator Manchin’s permitting provision will be included.

Big Bank Brouhaha.

The CEOs for some of the largest US banks will head back to Capitol Hill next week for hearings in both the House and Senate. The executives can expect a grilling from lawmakers on both sides of the aisle. Democrats will focus on the banks’ consumer finance practices (including overdraft fees and new credit products like buy now pay later) and will call on the banks to do more on climate and diversity in hiring. Some Democrats will attack the banks for being too large. The banks in turn will tout the strength of the banking system through the pandemic and highlight how banks have to compete with nonbank entities subject to far less regulatory oversight. Republicans, meanwhile, will criticize the executives for some of their positions on social issues and argue that environmental, social and governance (ESG) policies at these and other companies are curbing lending and investment for certain industries, including fossil fuels and guns. The hearings will come on the heels of reports this week about credit card companies implementing a new category code to catalogue gun purchases. The hearings will generate sizzle and press coverage and will underscore how bank CEOs (and other corporate leaders) face conflicting demands from lawmakers in both two parties over a wide range of business practices.

Insulin Prices.

A group of Democrats in both the House and Senate are pushing for more changes to address the cost of insulin in the US. The Inflation Reduction Act that passed last month contained a $35-per-month cap for insulin costs for Medicare beneficiaries. Democrats also would have liked to cap out-of-pocket expenses for insulin for individuals with private insurance, but that amendment failed in a 57-43 vote last month (60 votes were needed to pass). Over 37 million Americans (about one in ten) have diabetes, with about one in five of those relying on insulin to manage their condition. Insulin costs have more than doubled over the last decade. At least 22 states have enacted legislation capping expenses, but there has not been enough congressional support for a federally imposed cap outside of Medicare. With seven Republican Senators having voted last month for including an expansion of the insulin cap to private insurance, Democrats will take another shot at passing this bill, although that likely will happen in December rather than this month.

Stronger US-Taiwan Defense Ties.

A Senate committee passed a bipartisan bill this week to strengthen US-Taiwan defense and security ties. The bill specifically expands Taiwan’s ability to purchase arms from the US. The committee’s passage of the bill underscores the strong support that Taiwan has from Senators in both parties. The bill was expedited after the visit of House Speaker Nancy Pelosi (D-CA) to Taiwan in July. That visit provoked a strong reaction from China (over a dozen other House and Senate members from both parties also have visited the island since then) and continues to be a sore spot in the bilateral relationship. The committee’s approval further suggests that US policy will continue to strongly tilt toward Taiwan amidst escalating US-China tensions. This bill could pass the House and Senate this year (in December), and how China will react is an open question. Taiwan is a “red line” for China, but it also seems to be emerging as one for the US as well.

House Republicans on Offense.

House Republicans, led by Republican Leader Kevin McCarthy (CA), are expected to unveil a “Commitment to America” plan next week. The plan will cover a wide range of domestic and national security matters, but will focus on hot-button issues like inflation, employment, supply chains, education, technology, crime, immigration and government accountability. The goal of the plan is to show voters what House Republicans stand for and what policy issues they would prioritize if they take control of the House next year. While the plan could be of interest to voters who want to see the likely Republican agenda, it also could be harmful to Republicans to the extent that it takes voters’ attention off of policy challenges like high inflation they may currently associate with Democrats. While this agenda may garner media attention, it is unlikely to be that impactful in the upcoming elections. The announced plan’s significance instead would be more as a guide for what Republicans will do if they win a majority in the House, which we believe is likely.

Federal Judges.

During former President Trump’s time in office, we occasionally commented that one of the longest lasting impacts of his presidency is likely to be the number of federal judges he appointed. Over his four years, Trump had 231 judges confirmed. It is worth noting that President Biden is also building an impressive record of seating judges on the bench. In fact, he has had 82 judges (including Supreme Court Justice Ketanji Brown Jackson) confirmed over his first 18 months in office. This pace of appointments actually has outpaced President Trump’s record so far (he had 53 judges confirmed after 18 months in office). President Biden is quietly building a lasting legacy in this area and will expand on this record, especially if Democrats retain control of the Senate after the upcoming mid-term elections.

Debate Dodging.

With the final primary elections wrapping up this past Tuesday in all states, the general elections are now in full swing. Election day is only 52 days away and early voting begins as soon as next week in some states. Yet, one traditional part of the stretch run will be missing in many states: debates between the main candidates. Despite the longstanding tradition of having debates before the general election, there are many high-profile Senate and gubernatorial races where at least one candidate has not agreed to debate. Some states like Georgia and Pennsylvania also have scaled back the number of debates and have scheduled them well after early voting has already begun. On the one hand, the trend is a setback to civic engagement since it takes away voters’ ability to directly compare and contrast candidates. On the other, it is not surprising since candidates in the lead generally see little upside and plenty of downside to participating in debates. It remains to be seen if this is a lasting trend, but the Republican National Committee has already withdrawn support for certain presidential candidate debates in 2024, which will keep the issue of fewer debates in the news over the next couple of years.