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September 27, 2023

What to expect in Washington (September 27)

The Senate September 26 cleared 77-19 a procedural motion related to the Securing Growth and Robust Leadership in American Aviation Act (H.R. 3935), the legislative vehicle for a continuing resolution (CR) that extends government funding through November 17, provides about $6 billion each for Ukraine and disaster funding, and extends the Federal Aviation Administration reauthorization and aviation taxes through the end of the year. It could take into the weekend for the Senate to clear the CR as Senator Rand Paul (R-KY) he won't consent to expedite consideration of a Senate CR with Ukraine funding.

The New York Times reported: "Senate negotiators had considered trying to move forward with a stopgap bill that would simply maintain funding at current levels, considering that might be the least complicated path for Mr. McCarthy. But senators of both parties pressed for some assistance to Ukraine, arguing that to ignore the Biden administration's request for more aid would be an affront to the U.S. ally" just after an appeal from that country's president. But members like Senator J.D. Vance (R-OH) attributed the $6 billion for Ukraine as the reason the government might shut down.

At the same time, the House began regular-order consideration of appropriations bills on Department of Defense, State, Agriculture, and Homeland Security, which Republican leaders hope will generate enough goodwill among conservatives to back a CR before the weekend deadline. The vote on the rule for the four-bill package was 216-212, with Rep. Marjorie Taylor Greene (R-GA), who opposes funding for Ukraine, the only Republican 'no' vote. Speaker McCarthy said last night he wants the House CR, which the chamber could turn to if the four appropriations bills are passed, to include the House Republican border security package (H.R. 2). Some members refuse to support a short-term patch, and Speaker McCarthy can only lose 4 Republicans in a party-line vote. Questions remain over whether the House can pass a bill and, if so, how differences with the Senate over Ukraine, border, spending, and other issues can be bridged.

The Washington Post put the number of "never-CR" members at roughly 10 and said of the Speaker's plans, "McCarthy said he would ideally want to put a House-led short-term bill that includes border security and launching a commission on the debt on the floor Friday … He telegraphed that he remains opposed to the Senate proposal but could take that bill once it is sent to the House, tack on Republicans' border security proposal, and send it back to the Senate hours before the shutdown would begin."

And despite glimmers of progress, Speaker McCarthy still faces a Catch-22 dilemma of either adhering to conservative demands and potentially shutting down the government or aligning with Democrats and having his Speakership threatened. One potential end-around is a discharge petition, which Rep. Mike Lawler (R-NY), one of the 18 House Republicans in a Biden-won district, said he would advance if "there is not going to be a CR coming out of the House Republican caucus." A discharge petition, also eyed by Rep. Marc Molinaro (R-NY), allows a measure with the signatures of a majority of House members to be brought to the floor, without action by leaders, after seven legislative days and within two days of a sponsor announcing a vote. Conservative commentators have suggested the "nine days" requirement could be subverted by Speaker McCarthy through recessing, not adjourning, and therefore not moving to the next legislative day.

Bloomberg reported September 26, "Moderate Republicans are working with Democrats on a rarely used procedure to shorten a near-certain US government shutdown and protect themselves from the anticipated political backlash from a federal funding lapse." The story said the tactic was successfully deployed twice in the last century, to force a vote on a reauthorization of the Export-Import Bank over conservative objections in 2015 and in 2002 on campaign finance legislation opposed by House Republican leaders. It has been mulled in other contexts, including Democrats in 2002 seeking to put Republicans on record over Social Security privatization proposals.

The September 26 Washington Post reported that an eventual Senate CR "is probably dead on arrival in the House, unless Democrats and moderate Republicans tack it onto a vehicle that wouldn't need leadership's explicit approval for a floor vote. But even that course of action could cause McCarthy significant headaches, underscoring the complexity of the debate over policy and procedure that has upended the House Republican Conference for several weeks."

Rep. Matt Gaetz (R-FL) has suggested a shutdown lasting six to eight days, and short enough that most people wouldn't miss a paycheck, may be worth it to change Washington spending habits. He said over the weekend that if the House can successfully move the four-bill appropriations package, "We will have 73% of the discretionary budget funded. And if the Department of Labor and Education have to shut down for a few days as we get their appropriations in line, that's certainly not something that is optimal. But I think it's better than continuing on the current path we are … " Last night, Gaetz essentially promised to bring a vote on McCarthy's speakership to the floor and test if Democrats are willing to help him stay in the post.

Shutdown effects — Meanwhile, the Administration announced it would seek to hold Republicans accountable in the event of a shutdown. During a September 25 White House press briefing, Agriculture Secretary Tom Vilsack said of the WIC nutrition assistance program for low-income women, infants, and young children, "With a shutdown, what we would see across the United States is a denial of those benefits and opportunities. In some cases, it would be literally within a matter of days after the shutdown."

The Congressional Research Service said, "Historically, [Office of Management and Budget (OMB)] has directed agency senior officials to review their shutdown plans one week prior to the expiration of appropriations bills, regardless of whether a shutdown appeared imminent." Further, the CRS report stated, "What happens to a given executive branch employee may depend on several factors. If employees are not covered by a funded bill, then they may be put on shutdown furloughs or 'excepted' from furlough and told to come to work."

White House Press Secretary Karine Jean-Pierre said September 26 over the issue of who is deemed essential, "We're having those internal discussions … OMB was starting to have those conversations with agencies. Certainly, we're having these internal conversations as well. But look, this doesn't have to happen. The shutdown does not have to happen."

As Politico Morning Tax reported, IRS hasn't released a plan for how it would proceed during a shutdown — whether the agency would remain fully operational or be limited — and basically all the information thus far has come from the National Treasury Employees Union, which recently suggested furloughs are possible.

On the issue of Congress, the New York Times reported that under the Constitution, "compensation for members of Congress is differentiated from that of most federal workers. 'The senators and representatives shall receive a compensation for their services, to be ascertained by law, and paid out of the Treasury of the United States,' that section reads. In addition, the language of the 27th Amendment, which prohibits any law 'varying the compensation for the services of the senators and representatives' until the next election, is often interpreted as a constitutional requirement that lawmakers be paid on time."

Tax — The Senate Finance Committee has noticed a hearing for Thursday, September 28 (at 10 a.m.) to consider nominations including Marjorie Rollinson to be Chief Counsel for the Internal Revenue Service and an Assistant General Counsel in the Department of the Treasury. The Bloomberg Daily Tax Report (DTR) reported September 26, "The global tax deal, Inflation Reduction Act guidance, and a pivotal Supreme Court case are topics the nominee for the Internal Revenue Service chief counsel could face at the Senate Finance Committee on Thursday."

Health — The House Committee on Ways and Means will hold a committee markup of H.R. 5688, the "Bipartisan HSA Improvement Act of 2023" and H.R. 5687, the "HSA Modernization Act of 2023," on Thursday, September 28. The staff of the Joint Committee on Taxation has prepared descriptions and the estimated budgetary effects of the proposed legislation.

  • Description Of H.R. 5688, The "Bipartisan HSA Improvement Act Of 2023"
  • Estimated Revenue Effects of H.R. 5688, The "Bipartisan HSA Improvement Act Of 2023," Scheduled For Markup By The Committee On Ways And Means On September 28, 2023
  • Description Of H.R. 5687, The "HSA Modernization Act Of 2023"
  • Estimated Revenue Effects of H.R. 5687, The "HSA Modernization Act Of 2023," Scheduled For Markup By The Committee On Ways And Means On September 28, 2023

The Senate Budget Committee has scheduled a hearing, "Medicare Forever: Protecting Seniors by Making the Wealthy Pay Their Fair Share," for today, September 27 (at 10 a.m.).


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For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
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