THE LOOK AHEAD - APRIL 2024
Balance of Power
Senate: 48 Democrats, 49 Republicans, 3 Independents Caucusing with Democrats
House: 218* Republicans, 213 Democrats, 4 Vacancies
CA-20: Former Speaker Kevin McCarthy’s (R) district. No candidate reached 50%+ of the vote in the special election so a runoff between State Rep. Vince Fong and Tulare Sheriff Mike Boudreaux will occur May 21st. Both candidates are Republicans.
OH-06: Rep. Bill Johnson’s (R) district. The special election is June 11th. This is a safe Republican seat.
NY-26: Rep. Brian Higgins (D) resigned Friday, February 2nd. The special election is April 30th. State Sen. Timothy Kennedy won the Democratic nomination. This is a safe Democratic seat.
CO-04: Rep. Ken Buck (R) resigned March 22nd. A special election will take place June 25th. This is a safe Republican seat.
*WI-08: Rep. Mike Gallagher (R) announced he would resign April 19th. Rep. Gallagher’s decision to wait until April 19th means the seat will remain vacant until the November general election. Under Wisconsin law, Rep. Gallagher would have to vacate the seat before April 2nd to trigger a special election.
Top Line Take Aways:
The Beatings Will Continue Until Morale Improves: The government has finally been funded…for the fiscal year that began six months ago. To celebrate the occasion, Rep. Marjorie Taylor Green (R-GA) filed a motion to vacate the Office of the Speaker. Why not? Worked great the last time. Notably, Rep. Greene did not go to the well to call up the resolution, something that must happen to trigger its consideration in the House. So, she’s just kind of leaving it there for now as a warning – or perhaps for the lolz – lest Speaker Johnson get any funny ideas about having a functional Congress. We’ve been told by various well-informed Members and staff…ahem “insiders” …that this time around there would be enough House Democrats to either abstain or vote to prevent the chair from being vacated.
What’s Another Six Months Anyways?: A lot has been made of Rep. Mike Gallagher (R-WI) leaving his seat early, reportedly to take a job at Palantir, given that he currently Chairs the House Select Committee on the Chinese Communist Party. Perhaps less discussed was Chairwoman Kay Granger’s (R-TX) decision to step down mid-session from her perch atop the House Committee on Appropriations. Rep. Granger was first elected in 1997. It took her 22 years to become the Ranking Member of the Committee, and another four to take the gavel last year. To leave one of the most powerful positions in Congress, and thus a chance to shape a year’s worth of federal spending and policy, after working for 26 years to get such an opportunity, is a significant decision. It’s widely expected that Rep. Tom Cole (R-OK) will succeed her, especially after potential rival for the post Rep. Robert Aderholt (R-AL) voted against the second tranche of government funding on March 22nd. Rep. Cole will bring a steady hand as a senior member well-respected on both sides of the aisle and should be an easy lift for Speaker Johnson’s first major Steering Committee selection. Chairwoman Granger will remain in her perch until a successor is chosen.
Oh Say Can You See Any Money for the Francis Scott Key Bridge?: One might think Congress could appropriate money for this rather quickly, but we’ve talked to Majority and Minority appropriators and staff and they’ve said….probably not. There’s also bipartisan recognition that insurance payouts should pay for a lot of this. Which means for now, money will probably come from existing programs. There are a couple things at play. One, other interested parties…like the Hawaii delegation to name one…are going to want money to address separate disasters. Two, while everyone will want to rebuild this bridge quickly, it just isn’t going to happen. For starters, they’ll have to clear the debris/dredge the channel so the Port of Baltimore can re-open, an enormously complex operation that will take at least a month just to make passable for some vessels. Given the Port’s importance to high priority sectors of the American economy, including U.S. National Security interests, opening the port will be the federal governments first priority. Then, there will be engineering, design, procurement, etc. All of these things will take time. The federal government generally isn’t good at spending large sums of infrastructure money quickly—sometimes that’s the government’s fault, sometimes it’s a reality of the situation. Finally, and something for you to be on the lookout for, to get this done in a reasonable amount of time, waivers for all sorts of Buy America(n), NEPA, ESA, federal contracting requirements, you name it will have to be done to speed things up. Each of these policies has a constituency.
BUT, should we get through all of the aforementioned hurdles, an emergency supplemental appropriations bill could be on the horizon. See our “Get Smart” section below for more on what that could look like.
Tick Tock, TikTok: After the House passed, with broad bipartisan support, a bill to force ByteDance to sell TikTok, Senators from both sides of the aisle seemed to throw cold water on its momentum. In addition to folks like Sen. Rand Paul (R-KY), 50 of the 65 no votes in the House came from the Democrats’ side of the aisle so there are some politics to work through in the upper chamber. HOWEVER, Senate Commerce Chair Cantwell (D-WA) and China Select Committee Chairman Gallagher (R-WI) met to chart a path forward and a bipartisan classified briefing was held for Senators. The prevailing opinion is that if there is no movement on the bill in April, the election calendar and more pressing priorities will end any hope for its becoming law.
Permitting Reform?: Is back! Maybe? It’s doubtful any grand bargain will be struck, but many of the big players in this space are leaving Congress (Sens. Manchin, Carper, potentially Rep. Garrett Graves) or are running for new positions (Sen. Barrasso), increasing incentives for members to find a deal. In addition, there’s goodwill on the House side between Natural Resources Chairman Bruce Westerman (R-AR) and Energy & Commerce member Rep. Scott Peters (D-CA). Plus, the issue has the elusive “win-win” elements that lead to deals. Policies that speed delivery of nuclear reactors also help grease the wheels for wind projects. Any deal will have to stay within a box defined primarily by things activists won’t get wound up about.
Calling Kenny Rogers: Tax world will have their eyes on Senate Majority Leader Schumer (D-NY) to see if he will call Senate Republicans bluff on the tax package and put it on the floor. The political calculus would be to dare Senate Republicans to block an expansion of the Child Tax Credit…while parents everywhere are filing tax returns. The risk here is not having unanimity on the Democratic side of the aisle, and the fact that forcing a vote on a bill that would likely fail will take valuable floor time in an election year. Something Majority Leaders of all parties generally try to avoid. And of course, you could end up giving GOP Senators the opportunity to force votes on things, like clean energy tax credits, that may play well in States like Montana and West Virginia.
May Your(kas) Time Come?: Don’t forget the House is still sitting on impeachment articles for Secretary of Homeland Security Alejandro Mayorkas. Once they literally walk them over to the Senate an impeachment trial must be held and dispensed with. The outcome here is not in doubt, just the timing and framing of the debate.
Discounting a Discharge: We feel like a broken record here but it’s looking like do or die time for a Ukraine/Israel supplemental. There are two much ballyhooed efforts in the media to force a vote on a Ukraine supplemental via the discharge petition. One by Rep. Brian Fitzpatrick (R-PA) and Rep. Jared Golden (D-ME) would unlock Ukraine funding and pair it with some immigration reform. House Democrats’ petition led by Rep. Jim McGovern (D-MA) is the Senate passed package. We are here to tell you…don’t buy it. The simple reason is politics. The DCCC and its affiliated super PAC are going to spend millions of dollars trying to unseat Rep. Brian Fitzpatrick in his suburban Philadelphia seat, in a state that also has a competitive Senate race. There’s simply no way…none…not even a little one…that House Democrats would hand Rep. Fitzpatrick such a massive win. Unless of course he were to retire. Conversely, vulnerable House Republicans can sign Rep. Fitzpatrick’s discharge petition, and ignore whatever the Democrats are doing. Plus, Speaker Johnson could always short circuit anything by putting a bill on the floor, something he’s said repeatedly he will do. Internally, the Speaker has floated separating “lethal” aid from “humanitarian” aid to Ukraine, even suggesting the aid as a “loan,” something also championed by former President Trump.
Plot Twist: Rep. Ken Buck (R-CO) signed the Democrats’ discharge petition on the way out the door. His signature remains valid until the seat is filled. The Republicans have a one vote majority when Rep. Gallagher resigns April 19th…BUT, remember there are some number of Democrats who will not vote for unconditional aid to Israel.
Committee Spotlight
The House
Agriculture: Ag Committee Republicans are ploughing ahead with plans to release draft text of their iteration of the Farm Bill, and plan to hold a markup in committee within a week of its unveiling. As we understand, the bill is nearly finalized, and the committee is waiting on scores and analysis from CBO. Republicans are hoping the bill will be bipartisan, but discussions around potential spending offsets – including potential cuts to the Inflation Reduction Act’s “climate-smart” conservation funding, the Thrifty Food Plan, and potential conditions on USDA’s Commodity Credit Corporation (CCC) - have left many Democrats opposed.
Appropriations: Normally, April is when the Committee drags in the relevant agency and program heads for the purpose of justifying their budget requests. That’s still the plan, but there will be some triage in effect. The House is only in session 10 days in April, but staff are working overtime to put the framework together. Requests are in (though we still lack guidance on Community Project Funding) - time to lobby for inclusion.
Armed Services: The Committee is telling its members to be ready for a mark-up of the FY25 National Defense Authorization Act (NDAA) in the first two weeks of May, with floor action early in June after the Memorial Day recess. Whether or not they meet this timeline remains to be seen but Armed Services somewhat tracks with Appropriations in that April is generally when the Committee reviews Administration budget requests and conducts oversight over program spending and effectiveness.
Natural Resources: March saw “Energy Week” on the House Floor. Is that the new “Infrastructure Week”? As we mentioned at the top there’s some space for permitting reform, but energy and federal lands will remain a focus for the Committee through the election.
Transportation and Infrastructure: You may be wondering why T&I marked up another version of the Coast Guard Reauthorization two weeks ago when the Committee had already passed a bill. One, enough time had passed that they wanted to add a year to make sure it’d be a two-year reauthorization. Two, they wanted a bill that could pass on the Suspension calendar because the original package violated House Republican rules on suspensions. And here we thought rules were for suckers. So the bill will end up on the floor under Suspension, ultimately riding with NDAA (probably), which happened with the last reauthorization. They will also likely hold some hearings/information sessions on the Frances Scott Key Bridge collapse, issues surrounding Boeing, and rail safety.
Ways and Means: The Committee is still looking for a path forward on DSP/de minimis a general trade package. April, of course, is when the tax man cometh so the Committee will look to highlight their languishing tax package in the Senate and do a little compare and contrast activity on GOP vs Dem tax priorities.
The Senate
Agriculture: Senate Ag Committee Chair Stabenow continues to block consideration of a new Farm Bill rather than negotiate with Republicans on potential offsets. Some of this is posturing but amid the impasse, Ranking Member John Boozman (R-AR) and Senate Republicans have been working on their own proposals and plan to release a Farm Bill framework after House Republicans unveil their bill. With ag producers' growing wariness over the state of the farm economy, including concerns with rising input costs, lower crop prices, and rising interest rates, Senate Republicans hope to increase pressure on their Democratic colleagues to come to the table and cut a deal.
Banking: Sen. Dick Durbin (D-IL) is upping the pressure to get his Credit Card Competition Act passed, including working with his lead cosponsor, Sen. Roger Marshall (R-KS), to unsuccessfully push for an amendment vote to the second appropriations minibus. Progress is slow under continued heavy opposition from the credit card and airline industries, with industry leaders refusing to show up and testify to Judiciary on the bill at a now-postponed April 9 hearing. Last week, Visa and Mastercard announced a nearly $30 billion settlement with U.S. merchants related to swipe fees, agreeing to cap credit interchange fees through 2030, adding further fuel to the debate over Durbin-Marshall. A deal between the two credit giants will likely take a lot of wind out of the sails for those advocating a hearing.
Commerce: Will they make the deadline? With a fresh, extended deadline of May 10, Commerce and House T&I staff are deep in negotiations to resolve differences between the House and Senate versions of their FAA reauthorization bills. We hear staff have a deadline of April 4 to finish their discussions before remaining issues (of which there will be many) get kicked up to the member level. Is getting a bill by May 10 doable? Definitely. BUT the problem with artificial deadlines is they’re just that, artificial. Meanwhile, the Committee continues to work on part of Majority Leader Chuck Schumer’s (D-NY) AI package, along with Kids Online Safety Act and continued discussions by Ranking Member Ted Cruz (R-TX) on a path forward on NIL. But even as the Francis Scott Key Bridge disaster lands (mostly) in Commerce’s jurisdiction, we hear to not expect a hearing in the near term...there’s just not enough capacity to go around.
Finance: As Senate Republicans look towards 2025 and a potential majority, the chances of getting a tax deal done this year continue to look slimmer and slimmer. Ranking Member Mike Crapo (R-ID), with backing from a sizable chunk of his caucus, is not backing down on his demands to renegotiate the tax deal Chairman Ron Wyden (D-OR) cut with Ways and Means Chairman Jason Smith (R-MO). A failure to get a breakthrough would add further complexity to the tax policy debate awaiting Congress in 2025 with the expiration of the Tax Cuts and Jobs Act.
Get Smart – Emergency Supplemental Appropriations
Let’s first restate that getting to an emergency supplemental in response to the Francis Scott Key Bridge disaster in Baltimore isn’t a foregone conclusion. For one, the House at this moment is in what could charitably be described as a precarious position when it comes both to its leadership and balance of power. But it’s also important to note that an emergency supplemental is a vehicle – and a vehicle attracts asks from every member to include funding for unfunded disasters in their state. Things like the Lahaina, HI wildfires, Western droughts, fisheries disasters, flooding, etc. Leadership’s challenge will be steering a package that gets enough Members onboard without it collapsing under its own weight as things get added to the Christmas tree.
Still, this is going to cost billions – way beyond what the State of Maryland can muster – and the Port of Baltimore is ultimately a national asset when it comes to international commerce. It will take time to pull cost estimates together for the response and recovery, though we understand appropriators have been given a ballpark number. So, with President Biden pledging he will get Congress to pony up the money, what would a disaster supplemental look like?
How Does It Work? – Everyone knows about how the regular appropriations process works (or should work). There are twelve bills that divide up how the federal government gets funded, and in theory Congress passes them individually. Except what actually happens is we get an omnibus bill cobbling together them all together, or multiple minibuses that each include some of the twelve like we got in FY24. But emergency supplemental appropriations exist outside the regular budget cycle. Like regular appropriations bills, they have to start in the House, or at least the Senate has to use a House-passed appropriations bill from the current fiscal year as a vehicle. They can be targeted, or be massive responses to national emergency like the 2020 CARES Act passed in response to the Covid-19 outbreak, which for David brings back vivid memories of spending 16 hours a day in his office conference room or boss’s Capitol hideaway negotiating bill text. No matter what it ends up looking like, leadership and appropriators will lead the way on negotiations with input from the committees of jurisdiction.
Who Gets Funding? – This is where it gets complicated. One challenge with the Francis Scott Key Bridge response is how many different federal agencies (and thereby congressional committees) are involved. The Coast Guard (USCG) is on point for immediate incident response and has jurisdiction over vessel movement in the harbor, the Army Corps of Engineers (USACE) will lead on dismantling the wreckage and is in charge of maintaining the shipping channel, the Federal Highway Administration (FHWA) provides emergency funding to repair Federal-Aid highways like the bridge, and the Maritime Administration (MARAD) provides infrastructure funding to ports, which could be an avenue for providing funding to the Port of Baltimore to make up for lost revenue.
Some of these agencies have emergency reserves – Sec. Buttigieg, for example, has said FHWA has about $900 million in its emergency fund, and the Infrastructure Investment and Jobs Act appropriated $100 million per year to that fund. But disaster costs will exceed that amount, and then FHWA will need to be replenished to help with other emergencies around the country. Similarly, USACE’s response will easily exceed contingencies built into its FY2024 Work Plan.
Then, as mentioned above, other members will seek additional funding through FEMA and other agencies for disasters in their own states and districts that haven’t been fully funded. This will only further complicate the package and raise the topline.
Issue Specific: Insurance and Something Called the General Average: A final element clouding the picture, though potentially saving the taxpayer a dollar or two (hurray!), is insurance. Internationally shipping is heavily insured, and insurance will probably cover the majority of the bill. Maersk chartered the ship but it’s operated by a company out of Singapore. The ship itself is covered by Brittania P&I Club and then there’s this thing called “General Average” which you have surely never heard of that means if you had cargo on the ship you too could be pulling out your check book. Add on top of all that the elements that the State of Maryland will be responsible for and you’re looking at a total for the Federal Government significantly lower than what you might think—but only if the Feds are willing to wait out the insurance lawsuits that are sure to come.