Spending, Tax Fights Loom for Congress After a Bustling 2021

  • Battle ahead over budget, domestic priorities before midterms
  • Lawmakers advance infrastructure, judges, defense policy bill

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Democrats, with bare majorities in Congress on the line in the November midterm elections, are trying to advance President Joe Biden’s social safety net promises this year while Republicans decry what they see as escalating costs. Taxes, climate initiatives, and how best to help U.S. companies compete against China will figure prominently as both parties seek advantage in the session beginning Jan. 3.

The packed 2022 agenda, ripe with questions about how much lawmakers can get done this year, threatens to mask the accomplishments of 2021. They include a major infrastructure bill, a $1.9 trillion Covid relief package, and a new federal holiday honoring the freedom of all slaves in America. As midterms draw closer, Democrats will likely point to those laws in a bid to retain control of Congress.

Still to Come

Social spending, climate change, tax bill: Senate Democrats will continue negotiations on their version of a tax and spending bill (H.R. 5376) with key elements of the Biden economic agenda. The House version included $550 billion for climate change, a yearlong extension of the child tax credit, curbs on drug pricing, a federal paid leave program, and support for preschool programs nationwide. Sen. Joe Manchin (D-W.Va.) said Dec. 19 he couldn’t support that version but has continued discussions with the White House. Senate Majority Leader Charles Schumer (D-N.Y.) said he wants a vote on a package in January.

Full-year government funding: Appropriators have until Feb. 18 to maintain funding for the federal government, with a goal of paying for operations for the rest of the fiscal year that ends Sept. 30. They don’t have agreement on how much to spend in total, though there’s a consensus on defense funding under the fiscal 2022 National Defense Authorization Act (Public Law 117-81) signed by Biden Dec. 27. There’s also no agreement on what policy riders to keep or omit, such as restrictions on using federal funds for abortion.

China competition & computer chips: The Senate passed a sweeping, bipartisan measure (S. 1260) in June that would provide $52 billion for the semiconductor industry and reauthorize federal science and research programs. The effort then stalled as the House debated its own approach to bolstering U.S. competitiveness. House and Senate leaders said they would negotiate a compromise bill that both chambers could pass after an attempt to attach it to the defense policy bill failed.

Voting packages: The House has passed three different voting and ethics measures: a sweeping elections package (H.R. 1), one responding to changes to the Voting Rights Act (H.R. 4), and one on executive branch ethics and foreign election interference (H.R. 5314). Democrats’ attempts to advance packages in the 50-50 Senate have been stymied by party-line votes, with Republicans opposing what they say would be a federal takeover of state matters. Schumer said he’ll seek to change Senate rules to advance a measure, though he may lack the simple majority needed to modify debate procedures.

Opioids: Lawmakers pushed back the expiration of a ban on powerful fentanyl-analogue drugs to Feb. 18 amid a debate over long-term policy. White House officials have asked Congress to permanently deem fentanyl-related substances among the most-controlled drugs, coupled with an exemption for some arrested for trafficking these newly banned substances from mandatory minimum sentences. Some lawmakers want the ban to be made permanent without criminal justice changes. House Energy and Commerce Chair Frank Pallone (D-N.J.) said his committee will draft legislation based on the administration’s recommendations, but it will take into consideration concerns from committee members.

Medicare cuts: Congress delayed scheduled Medicare cuts but will have to deal with them again soon. Sequestration — automatic cuts to federal spending under the Budget Control Act meant to help with the deficit — will kick in for Medicare on March 31 under Public Law 117-71. That law also rolled over cuts under statutory pay-as-you-go requirements by one year.

Ocean shipping: Legislation to address crowded ports and the shortage of shipping containers for U.S. exports could see more action this year. The House passed the first major overhaul of U.S. ocean shipping rules in two decades (H.R. 4996) on Dec. 8. Senators from both parties want to act on similar legislation.

Biomedical research: There’s bipartisan support for legislation to advance biomedical research next year, including establishing Biden’s Advanced Research Projects Agency for Health center, or ARPA-H. House Energy and Commerce Health Subcommittee Chair Anna Eshoo (D-Calif.) introduced legislation (H.R. 5585) that would put ARPA-H within the Health and Human Services Department generally, while a bill dubbed Cures 2.0 (H.R. 6000) from Reps. Diana DeGette (D-Colo.) and Fred Upton (R-Mich.) would put it within the National Institutes of Health.

What They Did

Passed the bipartisan infrastructure plan: Lawmakers agreed to a sweeping $1 trillion measure (Public Law 117-58) that included a five-year renewal of surface transportation programs and funding for broadband, water infrastructure, and more. The law’s roughly $550 billion in new spending, as opposed to extended programs, was partially offset.

Enacted a $1.9 trillion Covid package: Democrats used the budget reconciliation process to pass another round of Covid-19 aid (Public Law 117-2) early in 2021. The package included direct payments to individuals, aid to state and local governments, expanded health insurance subsidies, and pandemic unemployment extensions. It also provided billions of dollars for testing and vaccines, schools, mass transit, restaurants, and more.

Continued defense streak: As it has for more than six decades, Congress completed work on a National Defense Authorization Act. This year’s $768 billion edition authorizes $25 billion more than the White House requested and removes military commanders from decisions related to the prosecution of covered crimes including rape, sexual assault, murder, manslaughter, and kidnapping.

Photographer: Patrick Semansky/AP Photo/Bloomberg
Completion of the defense policy bill was a major focus for Senate Armed Services Committee Chairman Jack Reed (D-R.I.)

Overturned three Trump-era rules: Lawmakers canceled three regulations through joint resolutions under the Congressional Review Act: the Equal Employment Opportunity Commission’s conciliation procedures (Public Law 117-22), the Environmental Protection Agency’s emission standards (Public Law 117-23), and the Office of the Comptroller of Currency’s “true lender” rule (Public Law 117-24).

Created a new federal holiday: Juneteenth, the commemoration of when slaves in Texas were told of their freedom, becomes a federal holiday under Public Law 117-17. The holiday will be celebrated on June 19, or on the Friday before that date when it’s a Saturday or on the Monday after when it’s a Sunday.

Confirmed 40 federal judges: The Senate confirmed 40 judges at the circuit and district court levels in 2021, the most in a first year since President Ronald Reagan took office in 1981.

Raised the debt limit twice: Congress approved two separate increases to the ceiling on the nation’s borrowing, allowing the government to continue financing its obligations.

Loren Duggan, Sarah Babbage, and Danielle Parnass in Washington contributed to this story.

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Robin Meszoly at rmeszoly@bgov.com

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