Congressional Update: 2023 To-Do’s and 2024 Priorities

As the year draws to a close, the halls of Capitol Hill are buzzing with last-minute legislative priorities. From the National Defense Authorization Act and Federal Aviation Administration reauthorization to health care and tax extender packages, Congress faces several issues that demand resolution before their planned adjournment on December 15. Additionally, Members are laying the groundwork for a government funding package that must be addressed in early 2024. Below, we outline the challenges, debates, and decisions to expect in Congress before the year’s close.

Appropriations

Congress rolled into the Thanksgiving holiday week by passing a continuing resolution (CR) that avoided a shutdown. This unique “laddered” CR divided the 12 annual appropriations bills into two tranches with different end dates. Agriculture; Energy and Water; Military Construction; Veterans Affairs; and Transportation, Housing and Urban Development, funded through January 19, 2024; and the remaining eight bills (Commerce-Justice, Defense, Financial Services and General Government, Interior and Environment, Homeland Security, Labor-Health and Human Services, Legislative Branch, and State-Foreign Operations) are funded through February 2, 2024.

While the enactment of the CR ensures government funding through the holidays, there is essential work that must be completed before Congress adjourns around December 15, 2023, if Members are serious about avoiding shutdowns in January and February. Conference agreements do not come together as quickly as short-term CRs, and for the first tranche of bills to have any chance of becoming law, Congress and the White House must collaborate on agreements regarding top-line spending levels. Subsequently, they need to determine how to divide those top lines across 12 different bills.

Democrats and the White House could reference the Fiscal Responsibility Act (FRA), the June 2023 agreement that lifted the debt ceiling and established top-line spending levels for fiscal years 2024 and 2025 for defense and non-defense discretionary spending, as a spending agreement not only in principle but also now in statute. A vocal group of House Republicans view the FRA agreements as wholly unsatisfactory and demand that newly elected Speaker Mike Johnson (R-LA) re-engage with the Senate and White House to craft a new funding deal. However, the group has not specified the areas where they would be willing to concede to achieve a lower spending level.

Why are the next two weeks important? To initiate the appropriations committees’ work on completing full-year bill negotiations, each subcommittee needs its conference allocation. Highly functional negotiators, with clear and uniform guidance from their respective leadership teams and motivated to “get to yes,” could potentially hammer out a conference report in four to five sleepless weeks. Factoring in a few days for people to spend a little time with their families over the holidays, plus the week it usually takes for the legislation to move through both the Chambers to the President’s desk for signature, the calendar looks a bit pinched for those first four bills on the ladder. Subcommittees need to receive their allocations before December 15th, or else the January 19th deadline is near impossible, and Congress will again be faced with shutting down the agencies in the first tranche of bills or doing another CR.

Speaker Johnson already said he will not consider another short-term extension and will only back a full-year CR. Appropriations veterans know that full-year CRs are messy, requiring almost as much negotiating and bargaining as regular order full-year appropriations, often with some negotiators operating with significantly less motivation and cooperation, given some Members view that year-long CRs represent an institutional failure.

With active negotiations on a possible supplemental measure to cover Israel, Ukraine, the border, and immigration percolating in the Senate, productive cooperation and collaboration on those measures could help create goodwill and yield a successful resolution of the FY 2024 appropriations process as well.

National Defense Authorization Act (NDAA)

With days to go until the House and Senate are set to adjourn for the year, the National Defense Authorization Act (NDAA) remains under negotiation as House and Senate leadership look to resolve their final differences. The House and Senate Armed Services Committee staff worked for months to resolve the majority of the underlying bill, but leadership must carefully determine what can achieve bipartisan support in both chambers and reach the President’s desk for the 63rd year in a row.

House conservatives will likely raise concerns if much of the language adopted during the House floor debate to restrict and roll back a wide range of Administration policies is stripped from the final version. Senator John Cornyn’s (R-TX) and Senator Bob Casey’s (D-PA) Senate-passed amendment on outbound investment screening, which the Senate overwhelmingly adopted during their floor debate, may also be excluded after opposition from House committee leaders.

With time running out, leadership must also identify the unrelated items that need to hitch a ride on the measure as one of the last remaining vehicles for this year. Among final issues in negotiations, this week Speaker Johnson expressed his opposition to the inclusion of a clean extension of authorities under Section 702 of the Foreign Intelligence Surveillance Act (FISA), and Senate Armed Services Committee Ranking Member Roger Wicker (R-MS) is holding the bill over Australia-United Kingdom-United States (AUKUS) security pact provisions.

Federal Aviation Administration Reauthorization

As the current short-term extension of the Federal Aviation Administration’s (FAA) authorization is set to expire at the end of the year, there is an opportunity to reach a bipartisan deal on changes to pilot training rules within reach in the Senate, which increases chances for passage of a long-term FAA reauthorization bill this Congress. While the House passed its FAA reauthorization bill (H.R.3935) over the summer with broad bipartisan support, the Senate version (S.1939) has been bogged down by a dispute over proposed changes to pilot training requirements that prevented the bill from advancing out of committee. Key senators on both sides of this impasse — including Sen. John Thune (R-SD), who offered the amendment to change pilot training rules, and Senate Aviation Subcommittee Chair Tammy Duckworth (D-IL), who strongly opposed those changes — are signaling a breakthrough that could lead to the bill being marked up followed by potential Senate floor action.

With few legislative days remaining before the end of the year, another short-term extension to March to allow time for conference negotiations is likely. Along with pilot training, there are several issues that will need to be resolved between the House and Senate bills, including adding more long-distance flights to Washington Reagan National Airport, but movement on a long-term reauthorization of the FAA finally looks likely after months of delay.

Health Care

While there will not be an end-of-year omnibus package, there is optimism that health legislation could advance as a standalone bill or as a part of a separate spending package. Some legislators aim to prioritize the following initiatives: reversals to Medicare payment cuts for doctors (scheduled to go into effect in January); reauthorization of the SUPPORT Act (to address mental health and opioid use disorder); actions to bolster community health centers; and the reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA), for which support is dwindling. Additionally, there is a desire on both sides of the aisle to pass a bipartisan package addressing pharmacy benefit manager business practices and drug shortages in early 2024.

Tax

The lack of an end-of-year spending package this December is diminishing the potential for enactment of a tax package in 2023. However, the forward progress to reach a consensus and potentially attach it to a spending deal in early 2024 continues. There is bipartisan support for a bill to provide relief for double-taxation Taiwanese companies, which could be the foundation for a broader compromise on other tax issues. Other items under consideration have been debated for over a year. These issues include addressing the expiration of R&D amortization, business interest deductibility, and reestablishing the Child Tax Credit (CTC).