Washington Wrap Up: Omnibus, Debt, Ceiling, & Railroad Deal
December 5, 2022.
Although Congress averted a freight railroad strike last week, it is making slow progress toward passage of a yearend spending bill.
Why it matters: The slow progress means Congress will need to stay in DC until December 23 to complete its work.
Yes, but: Spending talks could pick up this week after lawmakers learn the results of Tuesday’s Georgia Senate runoff. If the Democrats hold Georgia’s seat as polls suggest, Republicans may be more willing to negotiate in the post-election session.
- Senate negotiators are “tens of billions of dollars” apart on funding levels for an omnibus spending bill. The current December 16 spending deadline is likely to be extended to December 23 under a short-term Continuing Resolution (CR).
- Senate Republicans want to increase defense spending by $45 billion (the level the Armed Services Committee authorized for 2023). They also don’t want more money spent on domestic programs, and argue Democrats added non-defense spending when they passed the Inflation Reduction Act in August.
- Senate Democrats are pushing for $26 billion more in non-defense spending.
If no omnibus agreement is reached, the next most likely outcome is a Continuing Resolution (or CR) until September 30, 2023. Don’t expect a short-term CR to January 2023 even though Senate Republican leader Mitch McConnell is facing pressure from conservatives to punt to the next Congress when Republicans control the House and have more leverage. Leaders in both parties oppose such a move because it would most likely result in a government shutdown in January as newly-elected Republican House members see a government shutdown as a virtue, rather than a liability.
Rail Strike — President Joe Biden on Friday signed legislation to impose contract terms on workers under an agreement between freight railroads and their unions.
- The move, allowed by the 1926 Railway Labor Act, averted an impending strike that could have caused shortages, spiking prices, as well as stopped factory production.
- A strike also could also have disrupted daily commuter rail services for up to seven million travelers and the daily transportation of 6,300 carloads of food and farm products.
What they’re saying: “Our nation’s rail system is literally the backbone of our supply chain. A rail shutdown would have devastated our economy.” —President Biden.
Debt Limit — House Speaker Nancy Pelosi still hopes Congress will address the debt limit in a bipartisan manner, but a vote before year-end is doubtful.
- At some point in 2023, Congress will need to vote to raise the current debt limit of $31.4 trillion, but the prospects are uncertain.
- This week, a key Senate Republican said lawmakers plan to use the next debt limit increase to force cuts in projected federal spending and changes to Social Security and other entitlement programs. Republicans insist bipartisan fiscal reforms could be achieved without defaulting on the national debt.
What they’re saying: “There’s a set of solutions there that we really need to take on if we’re going to get serious about making these programs sustainable and getting this debt bomb at a manageable level before it’s too late.” — Sen. John Thune (R-SD) in comments to Bloomberg.
Potential spending reforms include:
- Phasing in a Social Security retirement age increase.
- Changing how decisions are made under state-run Medicaid.
- Creating more competition, options, and choice within Medicare.
Thune drew a comparison to Part D of Medicare, created in 2003 to add drug plans administered by private companies, saying, “It’s one of the few programs in my time in politics that actually cost less than what was projected,” Bloomberg reported.
But a White House spokesman responded that changes to entitlement programs are a “stone-cold nonstarter” and President Biden has said he would “not yield” to Republican demands related to the debt limit.
The bottom line: the long-term spending bill is a higher near-term priority, but raising the debt limit will be one of next year’s biggest political fights.