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The Lame Duck and the Usual Suspects

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A lame duck session of Congress takes place after an election but before the new members of Congress take office (January 3). Congress’s inability to complete its work on appropriations bills before an election has routinely made finishing that work the primary focus for lame duck sessions. They also offer the opportunity to get other legislation enacted and that generates lots of suspects particularly for retiring members of Congress. For Congressional leaders, the wish lists for lame duck action from members is far longer than the list of bills likely to become law.

The one item Congress must address is government funding. The continuing resolution signed into law on September 30 funds government agencies through December 16.

ELECTIONS HAVE CONSEQUENCES

In addition to government funding, the results of the election and other events influence what happens in a lame duck session. With the House and Senate not scheduled to return to Washington until November 14, that leaves four weeks of session with a one week break for Thanksgiving, to negotiate, finalize and pass legislation by both Houses before CR funding expires. Government funding and other priority legislation will not be the only item occupying leaders and members’ time and attention. Leaders and members also will be preoccupied by leadership elections and committee assignments for the 118th Congress. If the election gives Republicans a majority in the Senate or if that remains in doubt due to run-off elections, Senate Majority Leader Schumer (D-NY) will want to clear nominations, particularly judges, before he loses his majority and the ability to shape the courts with confirmation of additional Biden appointees.

To secure the votes needed to avoid a partial government shutdown and to avoid having to move multiple bills through the Senate, Congressional leaders often combine appropriations bills and other legislation into a catch-all Omnibus bill.

THE SUSPECTS: LEGISLATION ON THE LAME DUCK AGENDA

Short-term continuing resolution or an omnibus appropriations bill. Congress has not completed any of the 12 appropriations bills. The two Florida Republican Senators have already stated the need for additional funding to deal with the aftermath of Hurricane Ian. Florida House Republicans sent a letter to the appropriations committee chair and ranking member asking that hurricane relief should be the “exclusive focus” of a supplemental appropriation. Democrats are likely to push for additional funding requested by the Biden Administration for COVID and monkey pox response, but thus far both have run into Republican opposition. The September CR included additional emergency supplemental funding so another short-term CR could become a vehicle for additional disaster funding. Negotiating the defense/non- defense split is currently the biggest challenge preventing bipartisan agreement on an omnibus appropriations bill. Failure to lock down a deal by December 16 may necessitate a short- term CR to give Congress time to finalize and pass it.

Medicare & PAY-GO Sequester. Medicare faces a 4% sequester (about $37 billion) at the beginning of 2023 under the Statutory Pay-as-you-go Act of 2010 (S-PAYGO), unless a law is enacted before the end of December that turns the sequester off. Democrats enacted S-PAYGO as part of legislation to increase the debt limit. While Congress has routinely exempted legislation from causing an S-PAYGO sequester, Republicans balked at doing so for the $1.9 trillion increase in the deficit from the American Rescue Plan Act (ARPA). Senate Republicans, however, ultimately agreed to postpone that sequester, as part of a bill creating an expedited legislative process to increase the debt limit. That action increased the size of the looming 2023 PAYGO sequester. It is unlikely that Congress allows this sequester to occur. Another postponement is the most likely outcome.

National Defense Authorization Act (NDAA). On October 11, the Senate version of the NDAA was offered as a bipartisan amendment to the House-passed bill (HR 7900), but the Senate has a slew of amendments to dispose of before it can clear this bill. The annual NDAA has been completed every year for the past six decades. We don’t expect that streak to end. The House and Senate armed services committees may opt to wait until after an agreement on appropriations totals for defense and non- defense emerges, but they don’t have to do so.

Tax extenders and other tax legislation. The Inflation Reduction Act (IRA) extended a number of expiring provisions, mostly related to energy and other Democratic priorities. One major priority for Democrats missing from the IRA is an extension of the American Rescue Plan Act’s (ARPA) temporary expansion of a child tax credit that expired at the end of the 2021. Republicans will push for extension of business-related provisions that provide for immediate expensing of research and development (R&D) costs, bonus depreciation, and deduction of interest expense. There is speculation that a scaled-back child credit could be paired with a package of business tax extensions but that could come with a big price tag (a full ten-year extension of the child credit would cost $1.6 trillion). A more likely candidate is bipartisan House-passed legislation that would expand incentives for retirement savings.

OTHER POTENTIAL LEGISLATION

Energy Permitting Reform. Efforts to include this Manchin legislation in the initial CR failed. Senator Manchin (D-WV) will attempt to get it enacted in a lame duck. Competing Senate Republican legislation and more importantly, rank and file Democratic opposition to the legislation in both houses, provide potential roadblocks.

Electoral Vote Count Reform. In response to the events of January 6, 2021, the House passed legislation earlier this year on a largely party-line vote to reform the Electoral Count Act of 1887. A bipartisan Senate bill, embraced by Senate leaders Schumer (D-NY) and McConnell (R-KY), is a stronger candidate for lame duck action.

Same Sex Marriage Legislation. The House passed its version of this legislation by 267-157 vote, with 57 Republicans voting for it. While there is a bipartisan bill in the Senate, it ran into resistance due to religious freedom concerns and its consideration has been delayed until the lame duck.

Other. There is a slew of other potential legislation. Some speculate the lame duck will increase the debt limit. That seems unlikely since Congress rarely deals with the debt limit until it has to and the current debt limit is not expected to be breached until late next year.

With the exception of either an omnibus appropriations bill or a CR and a few other bills, most of this legislation will not make it into law. After the Thanksgiving break, there will be three weeks to finalize legislative text and pass it. Congress will ensure that the government does not shut down, but beyond that there is only so much bandwidth in a lame duck session, when retiring members are looking forward to returning home, those who have been re-elected are looking to next year, and everyone will be clamoring to get home for the holiday season.

FORECAST

>95% Congress avoids a mid-December partial government shutdown