With the first four of twelve appropriations bills expiring this coming Friday, January 19, Congress will rush this week to send to President Biden’s desk an extension of the “laddered” CR to extend funding to March 1 and March 8. This additional CR-the third of FY 2024-would give Congressional appropriators additional time to draft and process twelve appropriations bills at the levels agreed to between Majority Leader Schumer and Speaker Johnson last week. Under the CR, new fiscal deadlines will be:
March 1: Agriculture-FDA, Energy & Water, Military Construction-VA, Transportation-HUD
March 8: Commerce-Justice-Science, Defense, Financial Services, Homeland Security, Interior-Environment, Labor-HHS, Legislative Branch, State-Foreign Operations
The Schumer/Johnson agreement maintains topline discretionary spending levels in the Fiscal Responsibility Act (FRA), while identifying additional savings in the form of new COVID rescissions and accelerated reductions to the IRS.
On Tuesday at 5:30 PM, the Senate will vote on cloture on the motion to proceed to H.R. 2872, the vehicle that will carry the March 1/March 8 CR. The text of the CR released Sunday night by Senate Appropriators is a mostly clean bill that extends a handful of noncontroversial health extenders to March 8 (see text here).
Senate leadership will attempt to secure unanimous consent to collapse the time needed to process the CR and send it to the House; absent an agreement, processing the bill could take beyond Friday at midnight and trigger a partial government shutdown. It is possible that there could be some amendment votes if necessary to expedite the process, though such amendments almost always fail.
Once the House receives the CR from the Senate, we expect House leadership to pass the bill on suspension, which requires a 2/3 bipartisan vote and does not allow for amendments.
Practically speaking, given the razor-thin House majority-now 218-213 in light of Rep. Hal Rogers’ medical absence-Speaker Johnson has few other avenues available to avoid a shutdown, as House conservatives would almost certainly have the votes to tank another procedural rule vote, as they did last week to express disapproval over the Johnson-Schumer agreement.
Although Speaker Johnson plans to abide by the 72-hour rule for availability of text, conservatives will decry the lack of regular order for yet another CR, as well as the lack of meaningful border security provisions. Unlike previous spending agreements, Speaker Johnson has not made any public commitment to the House Freedom Caucus (HFC) to address those concerns, and we expect their discontent to continue to fester this week, perhaps manifesting itself in additional blockades or protests on the floor beyond the CR.
Senate negotiators continue to work on a bipartisan border security package that could unlock supplemental funding for Ukraine, Israel, and Taiwan. Additional details could be released this week, but the timeline has slipped several times already.
Responding to a graphic on Fox News that purported to reveal details of the yet-to-be unveiled Senate agreement-including an increase of 50,000 green cards per year, work permits for adult children of H-1B holders, and automatic work permits for any migrants released from custody-Speaker Johnson stated on X: “Absolutely not.” This position was echoed by House Majority Leader Steve Scalise on last night’s GOP Conference Call, with both leaders maintaining that H.R. 2. is the House’s negotiating position and that any border agreement would be measured against the House-passed bill.
Further illustrating the challenge facing Speaker Johnson, Rep. Marjorie Taylor Greene stated she would file a “motion to vacate” against the Speaker if he were to agree to a weakened border security bill in exchange for Ukraine funding: “If he moves forward with a separate deal, trading our border security, weakening H.R. 2 in exchange for $60 billion to Ukraine, I told him yesterday in his office that I would vacate the chair.”
While a border/supplemental agreement was always going to be a tough lift in the more conservative House, the reported inclusion of provisions that expand immigration coupled with the open threat of a motion to vacate make it unlikely that Speaker Johnson would put such a bill on the floor, even if it were to reach 60 votes in the Senate. Lead GOP negotiator, Senator James Lankford, disputed the online reports and insisted negotiations remained on track, but members of Congress and the Administration looking to secure additional aid for Ukraine and Israel will likely begin exploring other options over the coming days and weeks.
While there continues to be chatter of a near-agreement between Finance Committee Chairman Wyden and Ways & Means Chairman Smith on a tax extenders bill around $75 billion, there are major challenges to such a package moving through both chambers and into law in the near-term, whether as a stand-alone item or as attached to a “must-pass” vehicle.
Although text could be released this week, the current tentative agreement is a “2-corners” agreement, at least for now. It does not yet have the full support of House and Senate leadership nor Senator Crapo or Rep. Neal, all of whom are needed for a tax bill to move on any must-pass vehicle.
In addition, Speaker Johnson is facing sustained pressure from the NY GOP delegation over state and local tax (SALT) deduction concerns, as well as complaints from conservatives over budget deficits. After having to rely on the suspension process to keep the government open this week, we are skeptical the Speaker would be eager to use the same suspension process anytime soon for a tax package that is not viewed internally as “must-pass.”
Smith and Wyden, for their part, are going to continue to push as best they can to alter these dynamics, but the path forward remains complicated. Even though tax filing season will begin in late January, the next obvious inflection point for a tax bill will be the March 1/March 8 deadlines, and we expect a continued push for adoption as the 2024 tax season gets underway.