Legislative Update

Joe Fitzgerald

Tuesday, July 27, 2021

legislative update

Procedural vote on bipartisan infrastructure package fails, plan still in play

Last Wednesday’s procedural vote on the $1.2 trillion bipartisan infrastructure package failed 51-to-49.  60 votes were needed for passage. The outcome was a foregone conclusion as Senate Republicans had indicated that they would not vote to begin debate until the package was finalized. The removal of a provision appropriating $40 billion for increased IRS enforcement, which was projected to yield $100 billion in additional tax revenue, necessitated the development of an alternative as the agreement is predicated on the understanding that its cost will not increase the deficit.

Senate Majority Leader Chuck Schumer (D-New York) proceeded with the vote arguing that the package did not need to be finalized to begin debate. The failure of Wednesday’s vote is not a major setback as Senate Majority Leader Chuck Schumer (D-New York) can call another vote once the details of the package are finalized (for parliamentary reasons, he changed his vote from “yes” to “no” – a move that will allow him to bring the measure up again).

As of this writing, negotiations continue.

Debt ceiling fight developing

Senate Republicans have indicated that they may not vote to increase the debt ceiling (the statutory limit on federal borrowing) unless Democrats agree to rein-in spending.   The current agreement to suspend the debt ceiling expires on July 31 following its suspension for two years in 2019. The prior debt ceiling was $22 trillion; however, during the suspension, an additional $6.5 trillion was borrowed bringing the total amount of debt subject to the limit to $28.5 trillion. A substantial portion of that borrowing was in response to the COVID pandemic. Should Congress not increase the debt limit by the deadline, the Treasury Department would invoke “extraordinary measures” to prevent default over the summer. However, the prospect of default looms at some point in the fall. Democratic leadership and the Biden Administration have not publicly indicated a willingness to negotiate yet.

This comes amid Democratic efforts to advance a $3.5 trillion budget resolution via the reconciliation process [i] which would fund an array of social spending and climate action measures that the Biden Administration seeks to undertake.

[i] Reconciliation is authorized under the Congressional Budget Act. Each year Congress is supposed to pass a budget resolution which sets forth a plan for taxes and spending. It does not always do so. A budget resolution requires a simple majority in both houses. The Act permits the use of reconciliation provided that House and Senate pass a budget resolution that includes “reconciliation instructions.” Those instructions include targets for raising or lowering spending or revenues for a specific fiscal year or period of fiscal years.

Budget resolutions do not detail what legislative changes a committee should undertake in order to meet the targets included in the reconciliation instructions. Once the committees complete their work in drafting the budget committees in the House and Senate combine their recommendations into a single omnibus bill for consideration by both houses. The budget resolution and the ultimate omnibus bill are subject to a simple majority vote in both Houses.

The omnibus bill is still subject to requirements set forth in the Congressional Budget Act as well as the rules of the House and Senate.