Washington Update: In Washington this Fall, Plenty of Whimpers and a Possible Bang
In The Hollow Men, poet T.S. Eliot famously said the world would end “not with a bang but with a whimper.”
One could be forgiven for believing that the normally combustible environment in Washington around the end of each fiscal year (September 30) might end the same way this year. After all, just before the congressional August recess, lawmakers sent a budget deal to President Donald Trump’s desk that suspended the debt ceiling and set spending levels for the next two fiscal years, avoiding both government default on U.S. debt obligations and about $135 billion in automatic spending cuts that would have been triggered by the 2013 Budget Control Act if no deal had been reached.
But, while there was plenty of drama – would there be last-minute, deal-busting tweets? – and the media largely hailed the deal as a major, bipartisan breakthrough, don’t be fooled.
Despite media coverage suggesting otherwise, August’s whimper does not mean the federal government shutdown threat in September has passed. On the contrary: both the House and Senate still need to pass the final versions of every one of the 12 annual government spending bills required to keep the lights turned on come October 1 at the various federal agencies across the country.
Bang.
Here is how the inside-the-Beltway publication Roll Call set the stage for September: “The fiscal 2020 spending bills contain dozens of sticky issues … all amid a background of increasing partisanship ahead of the 2020 elections.”
Lawmakers, at least, will not be starting from step one when they return after Labor Day. They have been working on various pieces of these appropriations bills since day one of the current Congress.
House Speaker Nancy Pelosi (D-Calif.) and members of her chamber actually have approved 10 of the 12 annual appropriations bills, but each of those passed the Democratic-run House on a party-line vote. Once the GOP-led Senate passes their versions of the legislation – which are expected to have much lower spending targets – House appropriators will have to meet with their Senate counterparts to hash out the differences between the two bills. Only then will the bills be able to be sent back to their respective chambers for a full vote.
To achieve a majority vote by both the House and the Republican-held Senate, Roll Call explained House appropriators will need to do several things.
First, they will need to rework several of their spending bills “to reduce nondefense accounts by $15 billion to reflect” the budget deal that was signed by the president earlier this summer. They also will need to add about $5 billion for defense spending.
While the old saying in Washington goes, “A billion here, a billion there…after a while, it starts to add up,” the spending levels themselves, though the heart of the appropriations process, will not be the highest hurdle this fall. Roll Call also noted the House likely will “have to strike through many of the left-leaning policy riders that made the bills so appealing to liberal Democrats.”
Policy riders are provisions added to spending legislation that instruct federal agencies or congressional committees to do certain things. These instructions could be as simple as calling for a study into an issue or they could be as strong as to prevent an executive branch department from moving forward on a new (and controversial) regulation.
The House-passed FY 2020 appropriations bills, in fact, include a provision in the House’s financial services spending bill supported by Financial Services Committee Chair Maxine Waters (D-Calif.) that would keep the Securities and Exchange Commission from finalizing any new rules written by the Trump administration.
But didn’t news reports regarding the August budget deal suggest that leaders from both chambers agreed to keep these riders from shutting down the annual spending process?
They did, but, as usual, that’s not the full story.
As part of the deal, lawmakers did agree they would not to include controversial provisions in future spending bills. (Specifically, the agreement says, “There will be no poison pills, additional new riders . . . or other changes in policy or conventions.”) But this is, after all, Washington. And, as The Washington Post explains, lawmakers will “disagree on what constitutes a poison pill, and the debate could be revived once specific spending bills are introduced.”
A group of more than 250 organizations called the Clean Budget Coalition, which wants to eliminate riders from the annual appropriations process, also has not declared victory.
The coalition is led by a good government group called Public Citizen. Its Vice President of Legislative Affairs, Lisa Gilbert, recently explained in The Hill that riders like the SEC-related one supported by Rep. Waters are not the only problematic ones. Lawmakers also must contend with provisions called “legacy riders,” which get carried over from one budget cycle to the next and are “ideological poison pills that members of Congress were forced to swallow so they could pass previous spending bills.”
When they passed their versions of the fiscal year 2020 spending bills, House leaders eliminated several legacy riders – including GOP-supported provisions that had blocked new regulations aimed at reducing greenhouse gas emissions and that have kept U.S. foreign assistance from going to groups that perform or promote abortions.
Some Republicans, including the commander in chief, who want those provisions added back to the final spending bills, will argue that Democrats’ removal of pre-existing policy riders constitutes a “poison pill.” And it’s a safe bet that the Democratic House, with its large, prominent progressive wing, will demand its leaders hold firm against such pressure.
Of course, there are plenty of other policy areas where partisanship will erupt in the Capitol this fall.
As it was during the 35-day shutdown earlier this year, because it is intimately tied to immigration issues, the annual spending bill for the Department of Homeland Security (DHS) also will prove to be a landmine for the two parties.
Senate Homeland Security Appropriations Chair Shelley Moore Capito (R-W.Va.) told Roll Call getting the DHS bill passed will be “difficult” because “The wall money is obviously a point of contention, [Immigration and Customs Enforcement] beds are a point of contention and the situation in general, because it’s deteriorated so much that it puts a lot of pressure on my bill.”
One option that members of Congress are likely to consider is combining 11 of the 12 spending bills – called an “omnibus appropriations bill” – and sending it to the president’s desk for approval. (The DHS appropriations bill would be separated from the pack in this scenario.) If the president signs the legislation, then only DHS would be subject to a shutdown.
That, of course, is a big “if.” We know from experience as recently as earlier this year that President Trump is willing to hold up all other work in hopes of getting funding for his border wall.
And if this “if” was not enough, lawmakers also must deal with a few other “must pass” pieces of legislation by September 30. These include bills to reauthorize the National Flood Insurance Program, the Export-Import Bank and the Temporary Assistance for Needy Families program. Legislative squabbles about reforming, expanding or reducing each of these programs also could erode the cooperation needed to get the fiscal year 2020 spending bills to the finish line.
Bottom line: expect some whimpering in Washington this fall, but it all eventually could lead to a big bang.
Steve Boms is the founder and President of Allon Advocacy, LLC, a Washington, D.C.-based public policy consulting firm. Steve has spent his career focused on complex financial services public policy issues, having worked in the United States Congress on the committee with jurisdiction over banking. He has led advocacy efforts and public policy teams globally for equity options exchanges, large U.S.-based financial institutions, and leading fintech firms. In addition to working directly with Allon's clients, he is a frequent conference panelist and his perspective is solicited by reporters on the technology, financial services, and regulatory beats.
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The content and opinions expressed herein are provided by a third party, Allon Advocacy, LLC. This commentary is provided for informational purposes only and does not necessarily reflect the views of Envestnet. The information, analysis and opinions expressed herein reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. It is not intended to constitute legal, tax, securities or investment advice.