07.20.2021 Washington Update

Infrastructure/Budget Resolution – The fate of more than $4 trillion in new federal spending will be tested on Wednesday, when the Senate takes a procedural vote on the bipartisan infrastructure agreement and talks continue on the Fiscal Year 2022 budget resolution.

Senate Majority Leader Chuck Schumer (D-NY) will likely file cloture on H.R. 3684, the INVEST in America Act, which was the House-passed infrastructure bill.  That bill serves as the vehicle to carry the eventual text—still being negotiated—of the bipartisan infrastructure framework (BIF). Wednesday’s vote requires 60 senators to pass, including 10 Republicans.  So far, even Republicans in the bipartisan “Group of 22” are indicating they may oppose procedural motions until their talks, and legislative text, have been finalized.  It seems inconceivable that final bill text, with an accompanying score by the Congressional Budget Office, will be ready in time for Wednesday’s vote.

Nonetheless, Leader Schumer is undeterred.  He clearly senses momentum building, and support growing, within the Senate Democratic Caucus for a partisan reconciliation bill.  Slowing down at this stage is not an option, as he indicated on the Senate floor last week: “It’s important to keep the two-track process moving.  All parties involved in the bipartisan infrastructure bill talks must now finalize their agreement so that the Senate can begin considering that legislation next week.”

At the risk of sounding like a broken record, the vexing issue of offsets continues to bedevil BIF negotiators.  Sen. Mark Warner (D-VA) best summarized the issue this way: “When one side takes off taxes, and the other side takes off user fees, that doesn’t give you a lot of” options to raise revenue.

Both sides are engaging in the equivalent of looking under couch cushions for available—and real—offsets.  With Democrats now intending to close the tax gap through reconciliation, a sizable budget hole will now need to be filled in the infrastructure agreement.  Moreover, Schumer’s two tracks are starting to cannibalize each other—“BIF” scavengers desperately seeking pay-fors are treading into reconciliation territory, the boundaries of which are being rigorously policed by Senate Finance Chairman Ron Wyden (D-OR).  In short, it’s more important to Wyden and Schumer that reconciliation, rather than BIF, is paid for.

Leader Schumer has also set a Wednesday deadline to reach consensus amongst Senate Democratic members on the partisan $3.5 trillion budget resolution.  Finance Committee Chairman Wyden has said, “we’re gonna pay for $3.5 trillion” through revenue-raising and cost-saving plans.  He also stated that, “we’re running them by all my colleagues,” so it will be interesting to see which revenue measures are red lines for certain Democratic senators.

Also, keep your eye on House Democrats.  House Speaker Pelosi (D-CA) said the House can be expected to change and “realign some of those priorities” in the Senate budget resolution, which is not surprising given her extremely tight majority and narrow margin of error.

 

Inflation – Inflation is clearly not going away as a major political issue. Last week, we learned that consumer prices surged 5.4% in June from a year ago, the biggest increase in 13 years. House Republicans have been sounding the alarm on inflation for months, and now Senate Republicans are following suit.

As Democratic members advance their reconciliation package this fall, expect inflation to be the number one counterpunch from the GOP.  Take, for example, Senate Minority Leader McConnell (R-KY), who, when asked about Democratic plans to spend $3.5 trillion through reconciliation, said that “with inflation raging at the highest level in 40 years, [its] wildly out of proportion with the need right now.”

To further emphasize the issue, House Minority Leader McCarthy (R-CA) sent a letter to GOP members last night regarding rising inflation and shared personal stories from constituents around the country negatively impacted by it.

Republicans will continue to tout the success of “Operation Warp Speed,” and the delivery of COVID-19 vaccines that helped reopen the country quickly.  All of that success, they argue, is falling victim to an economic crisis fueled by Democratic policies.

 

House Floor/Appropriations – The House this week will consider a bill to increase access to U.S. visas for Afghan allies who supported the U.S. military. In addition, the House will vote on H.R. 2467, the “PFAS Action Act of 2021,” which would require the EPA to designate per- and polyfluoroalkyl substances as hazardous substances, as well as legislation that would give the Federal Trade Commission authority to seek refunds for defrauded customers.

Pay attention to the House Rules Committee, as it considers amendments for the upcoming appropriations “mini-bus” legislation that includes Fiscal Year 2022 funding for Labor-HHS-Education, Agriculture-FDA, Energy-Water, Interior-Environment, Military Construction-VA, Transportation-HUD and Financial Services-General Government appropriation subcommittees.

House Democratic leadership may add bills to the package, but questions remain whether they have the votes to pass them.  All amendments are due Wednesday at 5:00 pm.

 

Senate Floor This Week and NDAA – In addition to the potential bipartisan infrastructure agreement, Leader Schumer also filed cloture on the nominations of Kenneth Polite to be an Assistant Attorney General and Jennifer Abruzzo to be General Counsel of the National Labor Relations Board.

The Senate Armed Services Committee began subcommittee markups of the Fiscal Year 2022 National Defense Authorization Act tonight with a full committee markup being conducted this Wednesday and if necessary, Thursday.