The final legislative weeks of 2021 are packed with a number of must-pass bills, including one to keep the federal government functioning and another—the reconciliation bill—that is a priority of the Biden administration and many Democrats in Congress.
This client alert details pending items, highlights the many hurdles the Senate will face in the weeks ahead and outlines their paths forward. Currently, the House and Senate are scheduled to be in session through Dec. 10 before adjourning for the year. Due to consideration of the items below, work will likely continue right up to the Christmas holiday.
National Defense Authorization Act
State of Play
On Sept. 23, the House passed a $778 billion National Defense Authorization Act (NDAA) for fiscal year 2022 by a bipartisan 316-113 vote. Thirty-eight Democrats and 75 Republicans voted against the bill. The House bill will need to be reconciled with the Senate’s version before it can be signed into law.
The Senate Armed Services Committee (SASC) approved its version of the NDAA in July, and the bill is currently being considered by the full Senate.
On Nov. 18, the Senate was unable to reach an agreement to vote on a series of 20 Republican, Democratic and bipartisan amendments due to multiple objections from Republican senators. On Nov. 19, the Senate agreed to the motion to proceed to the NDAA by voice vote. SASC Chair Jack Reed (D-RI) then offered a substitute amendment that included the Senate-reported text plus a bipartisan manager’s package of amendments.
On Monday, Nov. 29, Sente Republicans blocked an effort offered by Senate Democrats to end debate and consider the NDAA with limited amendments. The effort was blocked because Republicans wanted more time to consider additional amendments. Senators now need to reach a bipartisan agreement on how to advance the bill. The timeline for consideration and path forward for the bill is unknown.
In a typical year, the House and Senate pass their respective drafts in the early fall, giving negotiators months to debate the differences in their versions and finish a compromise in early December. Due to the compressed timeline, even if the bill is passed out of the Senate the week of Nov. 30, there will be little time to formally appoint conferees. Instead, a “ping-pong” process, in which the two chambers trade amended drafts of the bill, is likely to be how that bill reaches a final resolution before the end of the year.
On Nov. 22, House Armed Services Committee (HASC) Chair Adam Smith (D-WA) said, “Conference is problematic because there’s a lot of steps that you have to go through [to start that]. That takes time … and it’s going to be hard if not impossible at this point to get into conference.” Smith said his staff is already looking at alternative scenarios, including a ping-pong process, rather than formally write a third version in the conference committee.
Armed Services Committee staff have negotiated text within the jurisdiction of the committee and have elevated issues that could not be resolved via the “Big Four”—the two chairs and two ranking members of HASC and SASC. Outside committees are expected to receive a date to weigh in on provisions within their jurisdictions shortly. Once an agreement is reached and text is finalized, the House and Senate will pass the revised text, and the bill will be signed into law by President Joe Biden. This entire process will likely be completed before Christmas.
State of Play
Democratic appropriators produced individual bills this year that included traditionally partisan provisions, resulting in a stalemate that persisted through the Thanksgiving recess.
On Sept. 21, the House passed a continuing resolution (CR) to keep the government funded through Dec. 3. The bill passed the House along party lines by a vote of 220-211. On Sept. 30, the Senate approved the CR, and it was signed into law.
As of Nov. 30, the House passed nine of the 12 bills, the Senate has not passed any and none have been signed into law.
As Dec. 3 quickly approaches, Democrats and Republicans still have significant work to do on the appropriations bills. Congress is likely to pass an additional CR in early December. While appropriators were initially considering a short-term CR to Dec. 17, House and Senate leaders are coalescing around passage of a CR that extends into late January or February. This would avoid the need to pass two CRs in one month, punting discussions on a potential omnibus into the new year and most likely after passage of the Build Back Better Act. Given the tight December timeline, and the fact that appropriators are far apart on even commencing negotiations, it is increasingly likely this debate will continue into 2022.
Reconciliation: The Build Back Better Act
Budget reconciliation is a unique budgetary process that allows the majority party to enact legislation with a simple majority (51 votes including the vice president in the Senate, and 218 votes in the House). The two most recent White House administrations before Biden successfully used reconciliation, once each, to enact the Affordable Care Act during Barack Obama’s presidency and the Tax Cuts and Jobs Act when Donald Trump was in office. The Biden administration used reconciliation once earlier this year as well to pass the American Rescue Plan Act, which was a COVID-19 relief bill.
Beyond the simple majority that is required to pass a reconciliation bill, there are two other aspects that set it apart from other bills.
1. The Byrd rule:
Under the Byrd rule, provisions included in a reconciliation bill must be related to the budget.
Section 313(b)(1) of the Congressional Budget Act sets six tests for matters to be considered extraneous under the Byrd rule. If a provision meets one or more of the below criteria, it is considered extraneous and cannot be included in the reconciliation bill:
- it does not produce a change in outlays or revenues or a change in the terms and conditions under which outlays are made or revenues are collected;
- it produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
- it is outside of the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
- it produces a change in outlays or revenues that is merely incidental to the non-budgetary components of the provision;
- it would increase the deficit for a fiscal year beyond the “budget window” covered by the reconciliation measure; and
- it recommends changes in Social Security.
Any senator may raise a point of order in regard to a specific provision while the Senate is considering a reconciliation bill. When a point of order is raised, the Senate parliamentarian will review a provision and rule if that given provision is Byrd rule compliant. The Byrd rule can be waived; however, that requires 60 votes in the Senate.
Debate for reconciliation bills is limited to 20 hours, but senators are able to offer an unlimited number of amendments that are considered live on the Senate floor in a consecutive manner. This process is referred to as “vote-a-rama.” Some of amendments are substantive, many are not. The minority party typically offers politically charged amendments, forcing the majority party to take difficult votes.
State of Play
Congressional Democrats are now using their slim majorities in both congressional chambers to enact their environmental, climate and “human infrastructure” priorities via the reconciliation bill currently being considered: the Build Back Better Act.
The House officially began the reconciliation process on Aug. 24 by passing what are known as reconciliation instructions—which requires 13 of the House’s standing committees (e.g., House Natural Resources) to write and pass legislation out of committee that follows the reconciliation instructions. After each committee that received instructions passed their portion of the reconciliation language, the House Budget Committee then combined the individual reconciliation bills into the larger Build Back Better Act.
The original bill drafted by the House was too costly for some and addressed issues a number of members did not deem pertinent to the bill. This internal disagreement between Democrats spurred significant negotiations between key factions of the party: House progressives, House moderates, Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ), and the White House. Following negotiations, a framework was reached and a new bill drafted in late October. However, the House further amended the framework before moving the bill to the floor for consideration—meaning the bill no longer meets the parameters previously agreed to by congressional Democrats and the White House.
On Nov. 19, the House of Representatives passed the Build Back Better Act by a vote of 220-213, with Rep. Jared Golden (D-ME) being the sole Democrat to vote against the package along with all Republicans. The vote came after the Congressional Budget Office (CBO) released its complete estimate for the legislation, which several moderate House Democrats said they wanted to see before voting for the bill. House leadership originally intended to approve the legislation on Nov. 18, but an eight-hour floor speech from House Minority Leader Kevin McCarthy (R-CA) delayed the vote until Nov. 19.
The bill is now expected to be considered by the Senate in late December. Majority Leader Chuck Schumer (D-NY) said he anticipated the bill would be considered before Christmas, but significant work is needed before the bill can be brought to the Senate floor. It looks increasingly likely that final resolution—one way or the other—may not come until January 2022.
Since the House-passed version does not reflect the previously negotiated agreement nor does it include provisions approved by the various Senate committees, it is likely the bill will see a number of changes. Some changes will be technical to keep provisions compliant with the Byrd rule, while others will be substantive. Provisions related to paid family leave, the SALT tax cap and other revenue raisers, immigration reform, drug pricing, climate provisions and more will all be re-examined. The biggest issue overhanging consideration may well be the cost of the legislation. Notwithstanding the analyses from the CBO and the Office of Management and Budget referenced earlier, Sen. Manchin has insisted that the entire bill be paid for and that he does not currently deem that to be the case. His posture alone may well require the elimination of several items to bring down the total cost of the legislation.
As Democrats continue to finalize text, Senate Republicans are also gearing up for vote-a-rama.
In addition to meeting the political priorities of the caucus and the White House, Senate Democrats will need to ensure all 50 senators can support the policies of final text and are prepared to vote for the bill. If a bill passes out of the Senate in the coming weeks, it will likely need to return to the House for approval before it can be signed into law by President Biden.
State of Play
Congress can raise the debt limit to a specific amount or waive the debt limit for a set amount of time. To raise or waive the debt limit under regular order, 60 votes are needed in the Senate and 218 votes are needed in the House. Reconciliation can also be used to raise the debt limit by a specific amount and requires 51 votes in the Senate, including the vice president, and 218 votes in the House. Senate Majority Leader Schumer has resisted this approach consistently through the second half of this year, while Senate Minority Leader Mitch McConnell (R-KY) has publicly insisted that it is the only viable approach remaining. Treasury Secretary Janet Yellen recently expressed an openness to the idea, but it remains unclear whether Democrats will opt for this partisan approach ahead of the Dec. 3 deadline under the current short-term extension. In recent days, there have been indications of conversations between Senate leaders on finding a path forward that may or may not include the reconciliation process.
Due to previous congressional action in 2019, a debt limit of $28.5 trillion was reimposed on Aug. 1, 2021. The Treasury Department was required to use extraordinary measures to ensure the United States did not reach the debt limit before Congress addressed the issue. Although it was unknown when the federal government would actually hit the debt limit, outside analysts (including the historically reliable Bipartisan Policy Center) indicated it would have been between Oct. 15 and Nov. 4.
In early October, to prevent the United States from defaulting on its debts, the Senate came to a bipartisan agreement to raise the debt limit to $28.9 trillion, pushing off the debt default until Dec. 3. The House passed the bill on a party-line vote, and it was signed by President Biden.
Until the passage of the bipartisan infrastructure package, many believed the Dec. 3 deadline could be pushed back several weeks. However, given the passage of the bipartisan infrastructure package and the large programs it funds, administration officials and congressional leaders are calling on the Senate to find a path to address the debt limit no later than Dec. 15.
In a Nov. 16 letter to congressional leadership, Yellen urged lawmakers to raise or suspend the debt limit as soon as possible, pointing to Dec. 15 as the deadline.
Congress has a few options to address the debt limit. First, a bipartisan agreement could be reached and a bill could be passed and signed into law. As the deadline nears, senators may become more open to negotiations. Second, as something Congress often does with controversial items, Democrats could maneuver a provision on debt into a must-pass bill such as the NDAA or another appropriations bill. This will be difficult as far as timing since many of these bills will not be signed into law ahead of Dec. 15. Finally, Democrats could use reconciliation to address the debt limit but would then have to face the political ramifications of being solely responsible for expensive legislation with no real policy changes.