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02.09.21 Washington Update

Overview – Now that Congress has passed a budget, the real fun begins. And it’s called reconciliation.  That lone word has been top-of-mind not only for budget process geeks, but everyone in Washington concerned about the course of policy, spending, and taxes over the next two years. A central question, beyond whether Biden’s COVID package will pass under reconciliation—it probably will—is whether the plan to include raising the federal minimum wage to $15 survives.

Over the weekend, President Biden struck a pessimistic note, as the Congressional Budget Office issued a report concluding the minimum wage will cost 1.4 million jobs by 2025. But Senate Budget Committee Chairman Bernie Sanders (I-VT) is soldiering on, saying he has “an army of lawyers” working to ensure the wage hike passes the Byrd Rule test. But that’s the least of Sanders’ problems. Even if they get past the Parliamentarian, or if Democrats take the extreme step of disregarding her ruling, supporters need 51 votes, which, as of now, they don’t have.

And as we’ve noted many times, don’t assume that Speaker Pelosi (D-CA) has an easy path to 218. Last week, that path became more cluttered, when the New York state Board of Elections certified Representative-elect Claudia Tenney the winner of New York’s 22nd Congressional District (her opponent has vowed to appeal, even to the House of Representatives). For now, that confirms the 15th House seat Republicans flipped during the last election cycle. This brings Pelosi’s majority to a tenuous 221-to-211 margin.

And things could get worse. There are currently two vacant congressional seats in Louisiana, following the passing of Representative-elect Luke Letlow (R) and former Rep. Cedric Richmond’s (D) resignation to join the Biden Administration. Special elections in Louisiana will be held March 20; however, with so many candidates running, runoff elections in April seem plausible. (There will also be a vacant seat in Texas following today’s tragic passing of Rep. Ron Wright (R-TX).)

Rep. Marcia Fudge (D-OH) is expected to resign, pending her confirmation to be the next Secretary of Housing and Urban Development. While no special election date has been announced, it could be as early as May when her seat is filled.

This raises another central question: can Democratic leaders offer carrots to moderates, particularly Sen. Joe Manchin (D-WVA), to get their support for a minimum wage increase and other controversial priorities on reconciliation? Time will tell, but it seems doubtful. Consider Manchin. Of the things he would want most, helping his home-state coal industry would likely be paramount, something the Progressive Left could never abide.

Meanwhile, Congressional Republicans appear united, at least in the reconciliation fight. Senate GOP moderates, who last month floated a $618 billion compromise COVID stimulus plan, feel vindicated after former Obama National Economic Council Director Larry Summers recently panned Biden’s $1.9 trillion COVID package as bloated, ill-advised, and potentially inflationary. As for the House GOP, the dust-up over House Conference Chairman Liz Cheney (R-WY) and Rep. Marjorie Taylor Greene (R-GA) is now behind them. After some rough sledding, members emerged from last week’s conference meeting united, emboldened, and firmly behind Minority Leader Kevin McCarthy (R-CA).

They are ready to fight, with very few defections expected, the Democrats’ reconciliation package, which will follow President Biden’s “American Rescue Plan”. It will include additional direct payments to individuals, extended enhanced unemployment benefits, state and local aid, funding for vaccine distribution, housing and nutritional assistance, and some investments in public infrastructure such as public transit and broadband.

 

House – There are no votes scheduled for the House floor for the next two weeks. House Democratic leaders want to vote on a final reconciliation package the week of February 22 when the House returns. House lawmakers could come back early should it come together earlier than that.

Over the next several weeks, the twelve committees that received reconciliation instructions will mark up legislation for inclusion into an omnibus reconciliation bill. These markups will be arduous and seemingly endless, as House leaders want proposals sent to the House Budget Committee by this Friday (which is ambitious to say the least.) House Republicans will flood the zone with amendments, which, depending on the committee, could create vote-counting problems for Democrats. As such, this process, in committee and on the floor, may get tense and potentially dicey.

 

Senate – The impeachment trial of former President Trump begins tomorrow, focusing the Senate’s attention this week. By standing rules, the Senate will begin each day at noon, except Sundays, and will continue until the trial is over, unless senators agree to changes. The shape and scope of the trial will determine how long the trial lasts. Senators will vote to adopt a rules agreement once the trial begins and is expected to grant up to 16 hours per side for presentations. The trial agreement will also set up a process for debate and a vote on whether witnesses will be called to provide testimony, which could prolong the trial.

Democrats and Republicans alike want to make swift work of this exercise. Democrats want to focus on advancing President Biden’s recovery agenda and Republicans want to talk about something besides the tragic events of Jan. 6. President Trump’s first impeachment trial lasted three weeks. Many Republicans believe that impeaching a former president is unconstitutional and, based on public statements and prior votes, Trump’s acquittal is a near certainty.

While the trial consumes time on the Senate floor each afternoon and evening, there will also be activity in Senate committees during morning business. After the adoption of the Senate organizing resolution last week, Senate Democrats now control the committees and their agendas. Work this week will continue to focus on processing President Biden’s nominations, including his picks for Secretaries of Labor and Education and director of the White House Office of Management and Budget.