November 16, 2023Client Alert

House Passes Bill to Avoid Shutdown

This week, both the House and Senate quickly passed into law a 32-page plan to maintain current federal funding into early 2024, ensuring leaders will avoid a November 17 government-wide shutdown. Despite recent partisan bitterness, new House Speaker Mike Johnson's (R-LA) plan easily cleared both chambers with both Democratic and Republican support. However, Congress has merely (and once again) delayed many difficult decisions on government-wide funding as well as defense, agriculture, and tax policy into December and early 2024. Striking more deals will only become more difficult as partisanship returns while the U.S. enters a presidential election year.

What’s in the extension: The bill, from Speaker Johnson, includes a unique “two-step” plan where four of the 12 annual appropriations bills would be extended until January 19. These are: Agriculture-FDA, Energy-Water, Military Construction-Veterans Affairs, and Transportation-HUD. The bill also includes “health extenders” (Medicaid, Medicare, community health centers, pandemic emergency response authorities) lasting through January 19. 

Remaining funding bills will be extended until February 2, which include:

  • Defense
  • Homeland Security
  • Interior-Environment
  • Commerce-Justice-Science (CJS)
  • Labor-HHS-Education
  • Financial Services – General Government
  • State-Foreign Operations
  • Legislative Branch

The bill also extends several social safety net programs through February 2, including the Temporary Assistance for Needy Families (TANF) program, the National Flood Insurance Program, and provisions speeding federal funds to the Federal Communication Commission’s Universal Service Fund. The bill also extends to February 2 the Department of Homeland Security’s National Cybersecurity Protection System and the Countering Weapons of Mass Destruction Office.

Additionally, the bill would extend nearly 20 federal agricultural and nutrition programs governed by the 2018 “Farm Bill” through September 30, 2024. The four leaders of the House and Senate Agriculture Committees released a short statement on this plan on November 12: “As negotiations on funding the government progress, we were able to come together to avoid a lapse in funding for critical agricultural programs and provide certainty to producers. This extension is in no way a substitute for passing a 5-year Farm Bill and we remain committed to working together to get it done next year.”

Bipartisan consensus around the bill emerged quickly. First, many House Republicans backed the new Speaker Johnson's plan, despite pushback from the conservative House Freedom Caucus, who argued the plan included “no spending reductions, no border security.” To get around conservative opponents on the House Rules Committee deciding which bills to to the House floor, Speaker Johnson and allies opted to pass the bill under suspension of the House's rules. A suspension vote requires at least 2/3 of the House's support to pass. After weighing their options, Democrats in the House announced their support on Tuesday: the House overwhelmingly approved the plan in a 336-95 vote.

In the Senate tonight, a similar story unfolded: both Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) both backed the bill early, leading the chamber to pass the extension bill in an 87-11 vote.

What it means: In the short term, businesses relying on federal contracts and funding will avoid yet another shutdown crisis at least through the year-end holiday season. However, this week's smooth passage of bipartisan legislation is likely an aberration for this Congress: after a grueling work period where members of Congress grappled with an earlier shutdown threat, a weeks-long House leadership fight, a shocking new conflict in Israel, and a wave of senior members announcing plans to depart, many members of Congress simply resigned themselves to pass this extension and return to debate (likely with renewed rancor) after Thanksgiving.

What’s next: Most immediately, Congress plans in the first week of December to consider an updated version of the must-pass annual National Defense Authorization Act (NDAA). Both chambers this summer passed competing drafts of the bill, which governs everything from servicemembers' pay and healthcare to purchases of warships and nuclear weapon policy, that reflect dramatically different views on controversial social issues. Staffers have spent months behind closed doors crafting a compromise version aiming to earn enough bipartisan support to pass. The NDAA could be a vehicle for many more year-end priorities, including reauthorization of surveillance authorities under the Foreign Intelligence Surveillance Act (FISA) due to expire at year end, or even long-delayed funding to support allies in Israel or Ukraine, as well as defense fortifications in the South China Sea. However, piling on too many extra priorities could push support away from the NDAA; to ensure the bill passes as foreign conflicts escalate, leaders may still drop these extras.

Once Congress deals with the NDAA, it may shift to a grab bag of other year-end priorities, such as tax. Both parties are working on plans to revive expired research and development tax credits supporting businesses, addressing the state and local tax (SALT) deduction, and potentially reviving the Child Tax Credit (CTC) for low income families. Similarly, Democrats are demanding a vote of the Biden Administration’s funding request for domestic priorities including new funding for the FCC’s Affordable Connectivity Program, domestic disaster aid, and childcare funding. Republicans say they could negotiate on these points if Democrats add on changes to immigration or asylum policy. These talks will continue through the end of the year, but the future for these priorities remain fuzzy.

Finally, this week's extension gives Congress more time not just to work on the above year-end priorities, but also finalize funding bills for the rest of fiscal year (FY) 2024. These FY 2024 bills are now weeks late after the fiscal year started on October 1. Expect both chambers to resume work on their own draft funding bills the rest of the year, with the ultimate goal to negotiate bipartisan final proposals for up-or-down votes by early 2024. If they can't negotiate, then yet another shutdown looms.

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