Author: Thorn Run Partners

With Congress far behind on the appropriations process prior to this Friday’s deadline, Congressional leadership formally introduced another continuing resolution (CR) over the weekend that would extend both government funding deadlines into March. The stopgap funding bill would set a deadline of March 1 for Agriculture-FDA, Military Construction-VA, Transportation-HUD, and Energy-Water, with everything else — including Labor-HHS-Education — funded through March 8. Lawmakers will now race to pass this stopgap prior to the end of the week, and bipartisan cooperation will be vital toward avoiding a partial shutdown in a short period of time.

• Next Steps. The Senate is set to act first on the CR this week, and leadership will be seeking a “time agreement” to expedite the process so that Congress does not brush up too closely to the deadline. While the stopgap is likely to pass with strong bipartisan support, some politically-tricky amendment votes could be needed to ensure cooperation among all 100 senators to speed things along. Upon passage in the Senate, it is anticipated that House leadership will bring up the CR under suspension of the rules later this week.

• Health Update. In addition to extending government funding, the CR contains extensions for various expiring health care priorities. These extensions include: (1) community health centers, teaching health centers, and the National Health Service Corps; (2) special diabetes programs; (3) a delay of certain disproportionate share payment cuts; (4) Medicare’s work geographic index floor; and (5) the Sexual Risk Avoidance Education program. The stopgap does not address a range of other health care priorities that need to be addressed early this year, including various opioid and pandemic preparedness programs that are due for extensions. To that end, look for health care leaders in Congress to continue their efforts to craft a sweeping health care package that could carry these aforementioned policies, as well as other bipartisan efforts around Medicare physician pay, price transparency, and more.

Another short-term government funding bill is becoming increasingly likely as appropriators race to finalize spending bills for fiscal year (FY) 2024. Moments ago, Senate Majority Leader Chuck Schumer (D-NY) filed votes on a legislative vehicle for a continuing resolution (CR) ahead of consideration on the floor next week. This CR, which has yet to be formally released, is expected to punt funding for all 12 spending bills into March, possibly in line with the March 8 deadline to reauthorize the Federal Aviation Administration (FAA). Meanwhile, Speaker Mike Johnson (R-LA) did not explicitly rule out putting another CR on the floor despite strong opposition from conservatives on the House Freedom Caucus. Notably, 12 House Republicans blocked passage of a rule to govern debate on three bills unrelated to government funding during yesterday’s session. GOP leadership will look to try again on this rule later today, but it remains to be seen whether conservatives are satisfied with the current spending plan to vote in favor of resuming House business.

• Situational Awareness. While Senate leadership is expressing confidence that Congress can avoid a shutdown, House Speaker Mike Johnson (R-LA) is facing increased ire from his right flank on the topline spending deal he announced with Senate Majority Leader Chuck Schumer (D-NY). Another CR is also unlikely to go over well with certain members of the House Freedom Caucus, including Reps. Warren Davidson (R-OH), Ralph Norman (R-SC), and Chip Roy (R-TX) — the latter of whom left the option of filing another motion to vacate on the table in a recent interview with CNN.

• Meanwhile…The Senate will resume consideration of pending nominations, starting with Karoline Mehalchik’s nomination to be a District Judge for the Middle District of Pennsylvania. Senators may also attempt to override a presidential veto of a resolution that seeks to overturn the Consumer Financial Protection Bureau’s (CFPB) Section 1071 rule relating to “Small Business Lending Under the Equal Credit Opportunity Act (Regulation B).” However, this vote is not expected to meet the two-thirds majority needed to overturn the veto message.

Now that they have topline funding figures in hand, congressional appropriations leaders are in the process of negotiating each of the spending allocations for all 12 spending bills. Once Chairs Kay Granger (R-TX) and Patty Murray (D-WA) reach a deal on these 302(b) subcommittee allocations, appropriators can work out the final details of each bill ahead of floor action. Congress has until January 19 before the first government funding deadline for Agriculture-FDA, Energy-Water Development, Military Construction-VA, and Transportation-HUD, with everything else funded through February 2. With time running short, the latest intel from Capitol Hill suggests that Speaker Mike Johnson (R-LA) and Majority Leader Chuck Schumer (D-NY) could put another short-term funding patch on the floor to avoid a shutdown and provide more time. However, this option does come with some perils for the House speaker, as Freedom Caucus conservatives have railed against the current topline deal and remain opposed to another continuing resolution (CR).

• Supplemental Funding Update. Talks over a supplemental appropriations package for foreign aid and border security have hit another snag in the Senate according to Sen. James Lankford (R-OK), one of the leading negotiators on these issues. Sen. Lankford told reporters yesterday that he is pessimistic on the prospects of a deal coming together this week, with parole authority emerging as a fresh issue within the border and immigration talks. Negotiations are expected to continue throughout the week with the goal of producing an agreement sometime before the upcoming government funding deadlines.

• Today in Congress. Both chambers will be in session today, but floor activity will be scant. In the upper chamber, senators will hold a final up-or-down vote on John Kazen’s nomination to be a District Judge for the Southern District of Texas. Meanwhile, the House will gavel in for a procedural “quorum call” to kick off the second session of the 118th Congress before turning to suspension bills out of the Financial Services Committee tomorrow.

Congress will gavel back in this week as lawmakers race to fund the government ahead of the upcoming deadlines. Over the weekend, House Speaker Mike Johnson (R-LA) and Senate Majority Leader Chuck Schumer (D-NY) announced a deal on topline spending numbers for fiscal year (FY) 2024, setting the overall spending number for non-defense funding at $773 billion, with defense funding pegged at $886 billion — figures that are in line with those agreed to under the Fiscal Responsibility Act (FRA). Lawmakers have until January 19 to negotiate, finalize, and pass the spending bills for Agriculture-FDA, Energy-Water Development, Military Construction-VA, and Transportation-HUD. The remaining bills must be passed by February 2.

• Context & Next Steps. If leadership can make meaningful progress on a bipartisan “omnibus” spending package for FY 2024, it could be leveraged as a vehicle to carry bipartisan agreements on health care, tax, border security, foreign aid, and more. However, lawmakers must navigate a host of “poison pill” issues such as abortion, immigration, and spending cuts before this can become a reality. In addition to keeping the government funded and clearing the decks on a slate of 2024 priorities, leadership also appears motivated to avert a one percent across the board spending cut that would otherwise be triggered under the terms of last year’s debt ceiling agreement. This cut would take effect at the beginning of May through a sequestration order to be issued by April 30, 2024, thus providing Congress with less than three months to nix the FRA sequestration penalty.

Negotiating teams for House Speaker Mike Johnson (R-LA) and Senate Majority Leader Chuck Schumer (D-NY) are continuing their efforts to hash out a topline spending agreement for fiscal year (FY) 2024 as Congress has just 16 days until the first government funding deadline. According to the latest intel from the Hill, a deal on appropriations numbers — which would include no cuts to defense spending and lower non-defense spending levels than those set under the Fiscal Responsibility Act (FRA) — could come together by the end of this week if this positive momentum holds true. The topline spending allocations are a key precursor to crafting final versions of all 12 spending bills ahead of both deadlines, but more time could ultimately be needed if talks fall apart. Funding for Agriculture-FDA, Energy-Water Development, Military Construction-VA, and Transportation-HUD runs through January 19, with everything else funded until February 2.

Congress will return next week for a jam-packed legislative session filled with key deadlines, lingering disagreements, and policy opportunities. Here’s a look at what to watch for as lawmakers get ready to gavel in for the second session of the 118th Congress:

• Government Funding. Congress faces two government funding deadlines to kick off the first quarter of 2024, with the first one approaching on January 19. Despite some hopes of progress on reaching a deal for topline spending figures, lawmakers left for the holidays without an agreement amid several disagreements between House and Senate leadership. If appropriations “cardinals” cannot strike an accord over these next three weeks, expect lawmakers to try to punt all 12 funding measures later into the year.

• Spending Cuts. In addition to avoiding a shutdown, bipartisan cooperation will be needed to avert automatic spending cuts from the Fiscal Responsibility Act (FRA). Specifically, the 2023 debt ceiling package includes a penalty for the use of a continuing resolution (CR) in fiscal year (FY) 2024 that reduces defense and nondefense funding levels by 1 percent if appropriations bills are not enacted by January. This cut would take effect at the beginning of May through a sequestration order to be issued by April 30, 2024, thus providing Congress with less than three months to nix the sequestration penalty.

• Supplemental Appropriations. Senate negotiators furiously tried to clinch a deal on a supplemental funding package that would include various tranches of money for Israel, Ukraine, and Taiwan, as well as security efforts at the U.S.-Mexico border. Despite staying in session for an extra week before the holidays, the bipartisan Senate group was unable to produce legislative text of the deal due to “complex” issues related to border policy. The White House was also seeking additional appropriations for a host of domestic priorities such as disaster relief, child care funding, wildland firefighter pay, and more.

• Health Package. Prior to adjourning for the year, the House took an important vote that could tee up action on a sweeping health care package in the first quarter of this year. The Lower Costs, More Transparency Act was sent to the Senate in December 2023 with the hopes that it could be leveraged to carry additional health care priorities early this year. This includes: (1) addressing scheduled cuts to the Medicare Physician Fee Schedule (MPFS); (2) reauthorization of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Reauthorization Act; (3) reforms, oversight, and transparency requirements for pharmacy benefit managers (PBM) and Medicare Advantage (MA) plans; and (4) other bipartisan policies to address drug shortages, antimicrobial resistance, workforce needs, health IT, and more.

• FAA Reauthorization. President Biden signed a short-term extension for the Federal Aviation Administration (FAA) late last year, extending the agency’s funding to March 8, 2024. While the House passed the Transportation and Infrastructure (T&I) Committee’s bill with bipartisan support last year, the Senate Commerce Committee remains stuck in neutral due to disputes over pilot training, drone policy, and DCA perimeter slots. As such, expect T&I Committee Chair Sam Graves (R-MO) and Ranking Member Rick Larsen (D-WA) to press the Senate to take up the House-passed FAA reauthorization in lieu of another short-term extension.

• Other Odds & Ends. In addition to these aforementioned items, lawmakers must address other programs that are set to expire in early 2024, including the National Flood Insurance Program (NFIP) and the Temporary Assistance for Needy Families (TANF) program. Leaders of the House and Senate Agriculture Committees will also work to produce a long-term Farm Bill ahead of the September 30 deadline for these programs. Additionally, Congress faces an April 19 deadline to reauthorize the Foreign Intelligence Surveillance Act (FISA).

Congress has funded the government into early 2024, but lawmakers must still contend with several year-end legislative priorities when they return after the Thanksgiving holiday. Notably, a bipartisan group of senators plans to resume negotiations over a supplemental appropriations package that could potentially include buckets of funding for Israel, Ukraine, and Taiwan in exchange for additional border spending and policy changes. The negotiations have proven to be a tough slog throughout the fall, especially given the lack of appetite among House conservatives for additional foreign spending. Other items that need to be addressed prior to the end of the year include the fiscal year (FY) 2024 National Defense Authorization Act (NDAA) as well as reauthorization of the Federal Aviation Administration (FAA)

• Government Funding Update. Leadership will look to get the appropriations process back on track with the goal of clinching a broader fiscal year (FY) 2024 spending deal. According to intel from Capitol Hill, the Senate is eyeing another “minibus” package that would contain funding bills for Defense, Labor-HHS-Education, Energy-Water, and Commerce-Justice-Science. With the House’s process on ice over several intraparty disputes within the GOP majority, bipartisan cooperation will be needed among Senate leaders and Speaker Mike Johnson (R-LA) to clinch a deal for next year’s spending levels.