This Week in Washington and What Happens Next
Coordinating with our DC lobbying team, we took a shot at summarizing all that has happened this week and what comes next. How will infrastructure and budget reconciliation, debt ceilings, and government shutdown effect our industry? At least in the near-term it means Congress’ focus will be elsewhere.
What happened this week?
After months of testy negotiations, the Senate reached a major milestone, passing a $1T bipartisan infrastructure package by a 69-30 vote. Nineteen Republican Senators joined all 50 Democrats to advance the bill, which includes $550B in new spending towards “hard” infrastructure (i.e., roads, bridges, electric vehicle charging stations, broadband). Key elements of the package include $110B for physical infrastructure, $73B to modernize the nation’s electrical grid, $65B for broadband, and $105B for Amtrak, buses, subways, and trains. Not included are investments in “human infrastructure” or any tax increases. Republican objectors raised concerns around inflation and increasing the national debt, arguing the package should be more fully paid for. On the contrary, some progressive lawmakers claimed the package does not go far enough to address certain Democratic priorities like climate change and health care. Despite this, Senate lawmakers surpassed the 60-vote threshold and advanced the package out of the chamber, teeing up a vote in the House of Representatives – where its fate remains uncertain.
Following pressure from House progressives, Speaker Pelosi (D-NY) has vowed she will not hold a vote on the bipartisan measure unless it is paired with a second tax and spending bill that addresses additional Democratic priorities. Partisan politics will continue to create challenges in passing infrastructure reform by the assumed September 30th deadline (the expiration date for the highway and surface transportation funding bill and FY2021 government funding).
Immediately following the passage of infrastructure…
Following the passage of the bipartisan infrastructure bill, the Senate quickly shifted focus towards a second, partisan spending package focused on Democratic priorities not included in the bipartisan plan, often referred to as “soft” infrastructure. On Wednesday morning, Senate Democrats adopted a $3.5T budget measure on a party-line basis after a painstakingly long 14-hour “vote-a-rama” on dozens of amendments.
Passage of the resolution provides the framework for the second spending package and kicks off the budget reconciliation process, a fast-track process for Congress to enact spending legislation by a simple majority. At the direction of Senate Majority Leader Schumer (D-NY), Democratic Senators and their committee staff will start drafting legislative text for the massive reconciliation bill and will submit their first drafts by mid-to-late September. While no Republican support is needed to pass the bill through reconciliation, Democrats must keep their entire caucus in line, which may prove to be a daunting task. Sen. Kyrsten Sinema (D-AZ), a key architect of the bipartisan infrastructure package, has been critical of the package’s $3.5T price tag, and Sen. Joe Manchin (D-WV) has expressed similar concerns. The bill would address issues like climate change, universal education, expanding child support, and expanding federal health care programs like Medicare. The measures would be largely funded through higher taxes on wealthy individuals and corporations. Notably, the bill does not address the looming debt limit and allows for $1.75T of new federal borrowing.
The House is scheduled to return on August 23rd to consider the budget framework, and Speaker Pelosi will have to navigate inter-party politics in her Chamber regarding whether to consider the bipartisan bill on a standalone basis or pair it with the larger partisan package. The process will continue to play out into the fall, with the final passage likely to be pushed to October or November.
To shutdown or not to shutdown?
In addition to the two infrastructure-related measures, Congress must also consider several spending bills and raise the debt ceiling, making for a dense legislative calendar in the fall. The fiscal year for the federal government ends on September 30th, and failure to pass a stopgap funding bill by that date will result in a government shutdown. To avoid a shutdown, Congress will likely pass a continuing resolution (a short-term funding bill) to fund the federal government until December. Regarding the debt ceiling, 46 Republican senators recently wrote a letter expressing their opposition to helping Democrats to increase the borrowing limit, a move that could complicate Democrats’ ability to pass the $3.5T budget. Failure to raise the debt ceiling could risk the United States defaulting on its debt or trigger a government shutdown. Treasury Secretary Yellen has urged lawmakers to raise or suspend the debt ceiling to prevent “irreparable harm to the U.S. economy and the livelihoods of all Americans.” Senate Minority Leader McConnell (R-KY) had previously called on Democrats to raise the debt limit using the budget reconciliation process, although the budget resolution left out raising the debt ceiling entirely – further complicating the process. Raising the debt ceiling has been a bipartisan action in the past, but Republicans have expressed their opposition this time around to protest what they perceive as excessive Democrat government spending.
What about us?
NCBA will continue to monitor legislation affecting the creditors bar, like the Securing Consumers Against Misrepresented Debt Act of 2021, or the SCAM Debt Act. (H.R. 1671). The bill, sponsored by Rep. Bonamici (D-MI), would amend the Fair Debt Collection Practices Act to safeguard access to information for consumers and to stop abusive debt litigation, which NCBA believes would create confusion and harm consumers by conflicting with existing state laws and court procedures. The SCAM Debt Act passed out of the House in May as part of the Comprehensive Debt Collection Improvement Act. NCBA would like to ensure this legislation does not gain traction in the Senate or get attached to another must-pass legislative vehicle.
House Financial Services Committee (HSFC) and Senate Banking Committee (SBC) agendas are not out yet. At least to begin with, HSFC and SBC will be focused on drafting reconciliation legislation, due September 15. We will keep you posted as we hear more.
NCBA also expects Rohit Chopra to be confirmed to the CFPB in September after a much longer than anticipated nomination process.