What to Expect from Congress in the Early Days of 2024
Congress is back with a full plate of work. Most immediately, lawmakers face the threat of a government shutdown, but they must meet a host of additional deadlines. We summarize what you need to know about congressional priorities, from appropriations to tax, Federal Aviation Administration reauthorization, and more.
Fiscal Year 2024 Appropriations
(by Joe Bushong, Dena Baron Smith, and Kelly Hitchcock)
Congress returned from the holidays to face the threat of a government shutdown yet again amidst an ongoing stalemate over border security and crucial aid for Ukraine and Israel.
With only a few short weeks remaining before two looming government funding deadlines set by the continuing resolution (CR) passed by Congress in November, House and Senate leaders this weekend announced an agreement on topline numbers, including dispositions on rescinding Internal Revenue Service (IRS) and COVID-19 funds, and emergency spending. This first step is needed before the House and Senate Committees on Appropriations can start more detailed negotiations on the 12 individual bills to keep the government open through the end of the fiscal year (September 30, 2024).
The Fiscal Responsibility Act (FRA), which was negotiated by President Joe Biden and former House Speaker Kevin McCarthy (R-CA) and passed with broad bipartisan support in June, lifted the debt ceiling and set topline spending levels with the hopes of jumpstarting the fiscal year (FY) 2024 appropriations process. However, House Republicans’ subsequent demand for lower spending levels, as well as a push by Democrats and Republicans in the Senate for additional emergency spending, have delayed bicameral progress on appropriations for months.
Ideally, House and Senate leaders would have agreed on topline spending levels before the holidays to allow enough time for negotiators to hammer out the difficult details of a 12-bill appropriations deal. As the topline agreement arrived late, appropriators will need more time to resolve the differences between the House and Senate bills and produce final bill text. Lawmakers are now under a time crunch that significantly increases the chances of the first government shutdown since 2019. The unique “laddered” CR passed in November divided the 12 annual appropriations bills into two tranches with different end dates. If the full-year appropriations bills covered by the first tranche of the CR are not passed through the House and Senate and signed by the President by January 19, a partial government shutdown will occur for the agencies funded by the Agriculture; Energy and Water; Military Construction-Veterans Affairs; and Transportation, Housing and Urban Development bills.
Without enactment of the remaining eight bills by February 2, a complete government shutdown will begin when funding expires for the agencies under Commerce-Justice-Science; Defense; Financial Services and General Government; Interior and Environment; Homeland Security; Labor-Health and Human Services; Legislative Branch; and State-Foreign Operations bills.
Unlike other recent shutdown threats, another short-term CR is a less likely solution as House Speaker Mike Johnson (R-LA) has previously stated that the House will not consider another short-term extension and that the only fallback option the House will support is a full-year CR. Democrats and some Republicans have decried the harmful impacts of a full-year CR, which would result in tens of billions of dollars in spending cuts under the FRA, with a one percent across-the-board sequester retroactive to the first of this year triggered on April 30. Appropriations veterans also know that full-year CRs are messy, requiring almost as much negotiating and bargaining as regular-order full-year appropriations. Further, defense hawks view the cuts to national security agencies to be drastic, especially since Congress successfully passed a conferenced FY 2024 National Defense Authorization Act (NDAA) not even a month ago, and social conservatives would be without any of the new riders carried in the draft FY 2024 House bills.
Complicating matters even more is the increasing likelihood that the yet-to-be-determined government funding deal could be linked with the also yet-to-be-determined deal on President Biden’s request for wartime funding for Ukraine, Israel, and other national security priorities. Many Republicans insist on linking national security funds with wholesale adoption of H.R. 2, the Secure the Border Act, which passed the House earlier this year with only Republican votes. Several Senators continue to earnestly negotiate in hopes of a bipartisan agreement on border security reform.
Congress has not approved new Ukraine aid for more than a year as Russia’s invasion of Ukraine rages on, Israel’s war with Hamas continues, and the crisis at the U.S. southern border is reaching historic levels. As U.S. Customs and Border Protection processed over 300,000 migrants in December, the highest monthly tally on record, bipartisan Senate negotiators continued their efforts to reach an agreement to deal with the immigration influx. Even if a deal is struck between Republicans and Democrats in the Senate and the White House, many congressional Republicans will insist any border security provisions added by the Senate that are short of those in H.R. 2 are unacceptable.
While a bipartisan deal on border security and national security aid could help create goodwill and yield a successful resolution of the 2024 appropriations process, it’s also possible that the two issues could end up intertwined and deadlocked in an increasingly partisan Congress. One thing is sure: the first weeks of the new year will prove incredibly busy and messy for Congress.
Tax
(by Carolyn Coda)
Lawmakers are once again working to drive consensus on a tax package that can be included in one of the upcoming appropriations bills. House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) have sounded a cautiously optimistic tone about the state of negotiations, which focus on combining expired Tax Cut and Jobs Act (TCJA) provisions that target research and development (R&D) amortization and business interest expensing, with the re-establishment of the child tax credit and housing credits. Lawmakers are pressing to pass legislation early this year to ensure that enacted provisions apply to the 2023 and 2024 tax years. Such a move would also be beneficial in narrowing the list of items on the table in 2025 when all the TCJA provisions that address individual taxpayers expire.
Federal Aviation Administration
(by Tim Martin)
After passing another short-term extension of the Federal Aviation Administration’s (FAA) authority through March 8 before leaving for the holidays, Congress is back with an additional two months to enact a long-term reauthorization of the FAA. With a bipartisan deal on pilot training requirements in the Senate, there is increasing optimism that the Senate will be able to advance its FAA reauthorization bill (S.1939) and complete conference negotiations with the House before the new deadline. The House passed its version (H.R.3935) with broad bipartisan support over the summer. The Senate’s version was slowed down for months by a dispute over proposed changes to pilot training requirements that prevented the bill from advancing out of the Senate Commerce, Science, and Transportation Committee. Last month, key senators on both sides of the impasse reached a pilot training agreement. The committee is now negotiating a few remaining issues to ensure the bill will be ready for markup early this session, with potential Senate floor action to follow. Along with pilot training, several issues will need to be resolved between the House and Senate bills, including raising the pilot retirement age and adding more long-distance flights to Washington Reagan National Airport. However, progress on a long-term reauthorization of the FAA finally looks likely after months of delay.
Foreign Intelligence Surveillance Act Reauthorization
(by Joel Richard)
Despite a flurry of activity after the August recess last year, Congress was unable to finalize reforms to Section 702 of the Foreign Intelligence Surveillance Act (FISA) and instead enacted a short-term extension of the provision through April 19, 2024.
Since October, Federal Bureau of Investigation (FBI) Director Christopher Wray has testified on Capitol Hill three times. In each appearance, he continued to push for an extension of the federal government’s authority to search communications and technology records generated by foreign nationals abroad and acquired from U.S. companies. Last month, before the Senate Judiciary Committee, Wray referenced the FBI’s use of 702 authorities to assist cyberattack victims, foil assassination and kidnapping plots, and prevent terrorism. Wray and others in the Biden-Harris Administration have made recent high-profile cyberattacks a centerpiece of their case for reauthorization.
While Senate committees have not formally reported FISA reform legislation, the House Permanent Select Committee on Intelligence and the House Committee on the Judiciary each reported their own reauthorization proposals. The Intelligence Committee-approved FISA Reform and Reauthorization Act would restrict the use of 702 data to foreign intelligence purposes, reduce the number of FBI personnel authorized to approve searches of 702 data related to U.S. persons by over 90 percent, and add various oversight tools and reporting requirements. The Protect Liberty and End Warrantless Surveillance Act proposed by the House Judiciary Committee would further restrict the surveillance tool by requiring warrants for all searches involving U.S. persons.
Now, Congress will have 100 days to hammer out a compromise. Despite rhetoric in consistent opposition to short-term extensions from conservative and progressive members who want more stringent reforms like warrant requirements, it is unlikely that Congress will let Section 702 expire due to resulting national security vulnerabilities at a time of heightened global conflict. With uncertainty around federal funding deadlines early in the year, Congress may need to again give itself more time to resolve the FISA reauthorization debate.
Health Care
(by Katie Wise and Evan Smith)
Several health care programs and policy extenders will be top of mind for lawmakers in 2024. The November CR authorized certain programs through January 19, including funding for the Special Diabetes Program, Community Health Centers, and the Teaching Health Center Graduate Medical Education (THCGME) Program. The CR also delayed cuts to Medicaid payments for Disproportionate Share Hospitals (DSH) and Medicare payments for clinical diagnostic laboratory tests, among others.
We expect the January 19 legislative package to be the target for several health care policy riders, including pharmacy benefit manager (PBM) reform, mental health, and addressing drug shortages. However, due to current political dynamics, it is unlikely that controversial policies will ride on the first deadline. Chair of the Energy and Commerce Committee, Representative Cathy McMorris Rodgers (R-WA), is expected to continue her efforts to move The Lower Costs, More Transparency Act, which passed the House 320–71. The bill requires health care insurers to disclose information about specific health care costs within the drug supply chain and extends several public health programs. While the Senate has yet to act on the measure, it certainly sets the tone for the world of the possible in the House.
Additionally, while both the Senate Health, Education, Labor and Pensions Committee and the House Energy and Commerce Committee worked throughout 2023 on measures related to drug shortages, the issue proved to be a partisan sticking point in the House. Whether or not any such provisions could hitch a ride on early legislative packages, Congress will undoubtedly remain focused on the issue, given the impact on patients.
Biden-Harris Administration
(by Eric Rosen and Kenny Roberts)
With Congress set to resume its long-running spending debate, President Biden and his Administration will kick off 2024 with a return to the themes that animated Biden’s run for the presidency in 2016. Indeed, the President’s Valley Forge speech on the third anniversary of the January 6th attack on the Capitol sought to remind voters of the stakes of the 2024 election and aimed to highlight perceived risks associated with a potential return of former President Trump to the White House.
We expect the Biden-Harris Administration to continue to highlight the real-world impact voters feel from their legislative accomplishments, ranging from authorizing Medicare to negotiate the price of prescription drugs, to hiking taxes on corporations, creating new clean energy incentives, and rebuilding roads, bridges, ports, and airports. The President and his Cabinet will spend much of 2024 touting the impact the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, the CHIPS and Science Act, and other efforts are having in communities around the country.
The President and Vice President will remind voters of the state of the country when they took office in early 2021. They will highlight their proposal and implementation of the American Rescue Plan, designed to slow the COVID-19 pandemic and foster economic recovery. They will point to strong job growth in 2021 and 2022, a record low unemployment rate, and the number of small business starts as evidence that their policies are working. And despite his strong Roman Catholic faith and somewhat tortured record on abortion, President Biden will remind voters that it was Republican-appointed Supreme Court Justices that voted to overturn Roe v. Wade, and tout the executive actions his Administration has taken to defend reproductive rights.
We anticipate the President will seek to shore up support among younger voters by focusing on the steps the Biden-Harris Administration has taken to provide relief from student debt, reviewing how marijuana is scheduled under federal law, advancing equity and racial justice, and initiating some criminal justice and police reforms. The Biden-Harris Administration will also highlight their emission reduction goals, along with their efforts to develop more clean energy sources in the U.S.
President Biden will tout his domestic accomplishments while seeking support from the same voters for his foreign policy initiatives. With some indicators that Democratic support for the President’s approach on Israel is softening, and with significant portions of the Republican Congress rebuffing his calls for more aid to Ukraine, the President will continue to remind American voters of the domestic benefits — ranging from more jobs in defense industries to fewer terrorist attacks on US soil — of his approach to U.S. global leadership, and he will contrast that vision with the former President’s foreign policy agenda.
