Having secured passage of their budget resolution last week, House Democrats are wasting no time in assembling the ensuing reconciliation package with tentatively scheduled markups starting as early as Thursday. It’s the start of an all-out sprint for Democrat lawmakers as they work to meet a host of high-profile September deadlines.
We’ll have a lot more clarity as the committees – particularly Ways and Means – make public their portions of the reconciliation package, but last week’s events at least give us a sense of the timing and roadblocks facing its adoption. Below is our commentary on those developments.
About that “Deal”
While all 220 House Democrats ultimately voted in favor of the Senate budget resolution, that outcome was far from certain. In the days leading up to the vote, nine moderate Democrats demanded Speaker Nancy Pelosi first take up the Senate-approved infrastructure bill before turning to the $3.5 trillion budget resolution and related reconciliation bill. The Speaker had made clear she wanted to pass the reconciliation bill first.
The two sides came to a Solomonic agreement: Pelosi got a vote on the budget (but not the reconciliation bill) while moderates were promised a vote on the infrastructure bill no later than September 27.
Or were they? The rule that was passed by the House reads:
On the legislative day of September 27, 2021, the House shall consider in the House the motion referred to in subsection (a) if not offered prior to such legislative day.
“Consider” is not the same as “vote,” much less “adoption,” so there is some wiggle room for House leadership as we approach the deadline. The Speaker could modify the agreement by passing a new rule, effectively negating or modifying the language above. Doing so would necessitate a full vote in the House, however, and would require the support of the very moderates being undermined.
Or she could invoke House Rule XIX, which allows the Speaker to unilaterally reschedule a vote and “postpone further consideration” of a measure. This would avoid a vote, but absent an agreement with the moderates it would be seen as seen as extreme and would likely spark a significant backlash.
So the deal is for consideration only, not a vote or passage. That said, any steps the Speaker takes to delay adoption of the Senate infrastructure will come with a cost, and perhaps a very high one, in the form of lost votes and failed bills.
Rise of the Moderates
The media largely portrayed last week’s episode as a victory for Speaker Pelosi. Was it?
While she did in fact secure passage of the budget resolution, that short-term success comes with a catch. Namely, her dual-track strategy – passing the bipartisan infrastructure bill alongside the larger $3.5 trillion package – now depends entirely on the House successfully drafting and moving a massive, multi-trillion spending and tax package in a matter of two or three weeks.
Absent a viable reconciliation bill before the House, the Speaker will be in a similar situation in late September as she was last week, with moderates insisting the House pass the bipartisan bill and progressives insisting she wait until the reconciliation bill passes not just the House, but the Senate as well. That’s a tall order.
Not Like TCJA
Assembling a $3.5 trillion tax and spending package in a month is no easy task. But as some have observed, Republicans accomplished a similar feat with the Tax Cuts and Jobs Act less than four years ago.
Readers should be wary of these comparisons, however. Yes, the timelines are similar – following adoption of a budget resolution in late October 2017, it took Republicans about 7 weeks to get the TCJA signed into law.
But the TCJA was much narrower in size and scope and fell under the jurisdiction of just one committee. Much of the bill was also based on past legislation which had been vetted and analyzed, meaning Republicans went into the process with at least a general consensus on what the final product would look like. Even with these tailwinds, however, the GOP had to work at breakneck speed to pass their bill.
Contrast that with the current effort, which is far broader and is expected to touch on dozens of disparate policy issues, from health care to labor to the environment. And unlike with the TCJA, Democrats don’t have a reservoir of previous bills to pull from.
Finally, they are heading into the upcoming markups without a clear sense of how much they have to spend. The budget resolution called for $3.5 trillion of total new spending, but moderates in both the House and the Senate have indicated that’s too much. How much is enough? Nobody knows, and it could take weeks (months?) to find out.
October Train Wreck
In the meantime, Leadership faces a remarkable number of deadlines and “must-pass” items coming due starting in September, including:
- Enhanced Unemployment Benefits (September 6)
- Highway Bill Authorization Expires (September 30)
- Government Funding (October 1)
- Debt Ceiling (sometime after October 1)
- Enhanced Child Tax Credit Expires (December 31)
- Tax Extenders Expire (December 31)
How does all this work out? We have no idea, but there’s a good chance there will be lot of “kicking the can down the road” in late September, including with the reconciliation package.
One observer summarized the resolution of this challenge will be “whatever Senator Sinema is willing to support.” With a 50-50 Senate and the Democrats’ four-vote majority in the House, it really may be that simple, with the most determined moderate or group of moderates deciding what the package looks like. But it is hard to see how getting to that solution, particularly getting Senate and House progressives to go along with it, happens quickly. Compromises like that usually take months to sort out.
Either way, private companies need to be prepared for massive headline and real policy risks in the next few weeks. As a member of Congress observed about last week’s events, “Wow, that escalated quickly.” Whatever package is considered by the House in September will include significant tax hikes on private businesses, and could be on the House floor before we know it.