Congress

What Will the FY 2023 Appropriations Cycle Look Like?

by Matt Gontarchick

House and Senate appropriators are poised to introduce their Fiscal Year (FY) 2023 spending bills, kicking off weeks and months of negotiations and hearings.   The FY 2023 appropriations cycle notably follows a lengthy FY 2022 cycle that wasn’t resolved until March 2022.  As lawmakers grapple with the midterm elections, retirements, and economic concerns in the coming months, how likely will the new appropriations cycle spill over into the next calendar year?

What We Currently Know

So far, top congressional appropriators are saying they want FY 2023 appropriations to wrap up in the current calendar year.  In a March 31 hearing, House Appropriations Committee Chairwoman Rosa DeLauro (D-CT) expressed a desire to pass all appropriations bills “on time” so they can be signed into law by September 30, 2022.  But her Republican counterpart, Ranking Member Tom Cole (R-OK), had a more sobering take, saying Congress is unlikely to finish its work on FY 2023 appropriations until the end of the current calendar year.

There are only a handful of other indications as to how the FY 2023 appropriations cycle will pan out.  On April 28, Democratic and Republican leaders of the House and Senate Appropriations committees met to discuss topline spending levels for FY 2023.  While it remains to be seen what came out of the meeting, the dollar figures each side offers will indicate how contentious appropriations negotiations might shape out to be this summer.  For instance, the administration proposed a $1.6 trillion budget for FY 2023, with funding allocations roughly equally divided between defense and non-defense spending.  If Democrats start their negotiations with the president’s budget request, their push is likely to fall flat, as Republicans and some centrist Democrats have been eager for more defense spending. 

There aren’t many more details about timelines, either.  In the House, the Appropriations subcommittees are reportedly expected to markup their 12 spending bills between June 13 and June 22, with the full committee to follow its markups from June 22 through June 30.  However, all dates are currently tentative, and the committee won’t confirm official dates until a final notice is sent out.

The Senate Appropriations Committee has yet to announce its own tentative timeline, although Senate appropriations hearings always follow appropriations hearings in the House.  This means subcommittee and full committee markups in the Senate will probably be scheduled throughout July and August. 

Which Factors Will Impact FY 2023 Appropriations?

Unfortunately for lawmakers, they’re heading into a new appropriations cycle with many distractions and extenuating circumstances that don’t often come together all at once.  Here are some key factors that will determine whether lawmakers will wrap up the new appropriations cycle before 2022 ends

The Midterm Elections

A “wave” election that could likely see control of the House shift from one party to another is typically a strong indicator of a long appropriations season.  Due to both historical trends and President Joe Biden’s low approval ratings, Republicans are generally favored to regain a majority in the House in the 2022 midterm election this November.  The closest comparison to the 2022 election so far is 2010, when low approval ratings over the Obama administration’s handling of the economy helped flip 63 House seats to the GOP, causing the Democrats to lose control of the chamber.  As a result, Congress didn’t finalize FY 2011 spending bills until March 2011.  2018 saw another wave election, with then-President Donald Trump’s unpopularity supercharging Democratic turnout to help the party flip 41 seats, allowing Democrats to retake the House.  If 2010 and 2018 are any indication, a long FY 2023 appropriations season is likely to coincide with the 2022 midterm elections.

Retirements of Top Appropriators

Some of the current lawmakers who won’t be on the ballot for the 2022 midterm elections include Senate Appropriations Committee Chairman Patrick Leahy (D-VT) and Ranking Member Richard Shelby (R-AL), who will both be retiring at the end of the 117th Congress.  Their pending retirements might incentivize both to reach deals on spending bills sooner rather than later.   Additionally, Sen. Susan Collins (R-ME), who is widely favored to replace Shelby as the Appropriation Committee’s top Republican, has indicated she’d prefer finishing FY 2023 appropriations in 2022 to ensure she can start the new Congress “with a clean slate.”

Inflation

Inflation is at a 40-year high, which could spur lawmakers to reach a final agreement on FY 2023 sooner instead of relying on a series of continuing resolutions (CRs) into next year.  When inflation is at a more typical level like 2% per year, federal agencies can generally make do under a CR and find money in their budgets to ensure there are no interruptions in services or operations.  However, if inflation persists near its current level of 8.5% through September, agencies will have a difficult time operating under a CR as they struggle to accommodate rising prices with budgets frozen at FY 2022 levels. 

With a mix of incentives for and against reaching a budget deal, it’s hard to say when a final FY 2023 spending agreement will be signed into law.  However, election season is busy enough for lawmakers, and with a historic and contention midterm election season almost in full swing, there’s little likelihood Congress will reach an agreement on appropriations before Election Day on November 8. 

Uncategorized

Is There a Place for Earmarks in the FY22 Omnibus Package?

by Matt Gontarchick

Earmarks returned to the appropriations process last year for the first time since Congress banned the practice over a decade ago.  However, as lawmakers keep kicking the can down the road on Fiscal Year (FY) 2022 appropriations with continuing resolution after continuing resolution (also known as a CR), the likelihood that these earmarks will make it into an appropriations omnibus for FY 2022 is looking less likely.   

The Demise and Rise of Earmarks

Earmarks, or provisions inserted in appropriations bills directed for a specific project or recipient, exploded in practice throughout the 1990s and 2000s.  Earmarks gradually gained a bad reputation over time for their perceived role in adding to corruption or fueling “pork barrel spending,” which caused lawmakers to place a moratorium on the practice in 2011. 

In the years since the ban on earmarks took hold, the appropriations process only got worse, with government shutdowns becoming more common.  To incentivize lawmakers to work together on spending bills – and ultimately reduce dysfunction in the appropriations process – the Select Committee on the Modernization of Congress issued a recommendation that earmarks should return, albeit with some changes to make the process more transparent. 

In February 2021, House Democrats brought earmarks back to the appropriations process as Community Project Funding.  Unlike the earmarks of the past, House members are limited to 10 earmark requests and must declare that they have no financial connections to the projects they request.   Additionally, earmark requests are limited to schools, hospital, municipal authorities, and other non-profit organizations. 

And in the Senate, earmarks returned in April 2021 under the moniker of Congressionally Directed Spending.  Senators must follow the same earmarks rules as their counterparts in the House, with the exception that they can make an unlimited number of requests.

Earmarks and FY 2022 Appropriations

Members of both parties have made earmark requests since the start of the FY 2022 appropriations process, although activity is much higher among Democrats than Republicans.  In the House, over 220 Democrats requested funding for more than 2,000 projects, while 108 Republicans issued requests for over 700 projects.  In the Senate, a total of 60 Senators, 44 Democrats and 16 Republicans, have submitted earmarks to be included in an omnibus package.   

However, none of these earmarks will fund their intended projects until Congress finalizes appropriations for FY 2022.  The current CR to fund the government expires in less than two weeks, and there are still major disagreements between both parties that include policy riders over controversial issues like the Hyde Amendment, disagreements over parity between defense and non-defense spending increases, and finalizing topline spending levels.   In anticipation of continued gridlock, congressional leaders introduced on February 7 a new CR that would extend the government funding deadline from February 18 to March 11. 

However, the longer it takes lawmakers to agree on an appropriations omnibus for FY 2022, the less likely earmarks will be included.  Many Republicans are still concerned about the optics of earmarks, and many top Republicans in the House and Senate opted not to make earmark requests last summer when the FY 2022 appropriations process began in earnest.  As discussions on major sticking points continue, congressional leaders may simply decide to strike community funding or congressionally directed projects from an omnibus, especially if they make it harder to reach a final compromise. 

A Year-Long Continuing Resolution?

Additionally, concerns are growing that Congress could ultimately settle for a year-long CR – which means earmark might not have another shot at getting funded until the FY 2023 appropriations process is underway.

Of course, lawmakers could still reach a deal, and earmarks could ultimately make their grand return in a 2022 appropriations omnibus.  Members of Congress who submitted earmark requests know their projects will remain unfunded until a deal is reached regarding FY 22 funding, and therefore they could be incentivized to break the gridlock in the near-term. 

Additionally, with the Democrats hitting pause on passing some version of the Build Back Better Act  could mean Republicans aren’t  as sensitive to a compromise appropriations bill that calls for big spending increases.  But as Republicans don’t have as much skin in the game on earmarks as Democrats, there is no reason to believe Congress will hang its hat on earmarks being the saving grace on passing an omnibus package, which means the possibility of a year-long CR looms larger by the day. 

However, even if FY 2021 spending levels are sustained through September 30, 2022, the practice of including earmarks in future appropriation cycles aren’t out for the count.  There’s no reason to suspect the House and Senate won’t include Community Project Funding or Congressionally Directed Spending in the FY 2023 appropriations process, meaning advocates have plenty of time to prepare to lobby for projects in the next appropriations cycle.

Congress

The Most Bipartisan Committee in Congress You’ve Never Heard Of

by Matt Gontarchick

Gridlock, gridlock, gridlock.  Thanks to deeply embedded polarization, Democrats and Republicans in Congress hardly work together in a bipartisan manner to pass legislation.   However, there’s one committee that has a proven track record of members working together across the aisle: the House Select Committee on Modernization of Congress.

What it is: A bipartisan committee with an equal number of Democratic and Republican members, the House Select Committee on the Modernization of Congress was established in January 2019 to investigate, study, hold hearings, and develop recommendations to make Congress more effective, efficient, and transparent.  The committee’s members are appointed by Speaker Nancy Pelosi (D-CA) and House Republican Leader Kevin McCarthy (R-CA), and two committee members are each chosen from the House Rules Committee, the House Administration Committee, and the congressional freshman class.

While the committee does not have legislative jurisdiction – meaning it lacks the authority to develop or advance legislation – it does release rolling recommendations throughout the year. Nearly 100 recommendations have been issued over the past three years across several key areas, including streamlining and reorganizing the House of Representatives human resources, overhauling the onboarding process for new members, modernizing House technology, and reforming the budget and appropriations process.

Recent moves: On December 8, 2021, the select committee approved 25 new recommendations, 14 of which are designed to create a more civil and collaborative environment in Congress.  Key examples include creating bipartisan websites for committees, hosting bipartisan committee events, and promoting civility and collaboration at a proposed Congressional Leadership Academy and Congressional Staff Academy.  The new recommendations’ focus on civility is likely a reaction to the institution’s increasingly polarized environment that has only gotten worse since last year’s riot at the Capitol.

Recommendations do become policy. Even though the select committee can’t develop its own legislation, nearly 60% of the 97 recommendations been implemented by Congress to some degree.  Key examples include:

  • Creating a one-stop shop Human Resources HUB dedicated to Member, committee, and leadership staff.
  • Making permanent the Office of Diversity and Inclusion.
  • Allowing newly elected members to hire and pay one transition staff member.
  • Providing more financial stability for congressional staff enrolled in the federal student loan program.
  • Establishing a Community Project Funding process to allow non-profit entities to apply for competitive grants from a member of Congress (House only).  Community Project Funding requests are similar to earmarks in that they allow members to allocate funding to projects in their district, although the newest iteration has more rules and transparency requirements.

But unfinished business remains.  Many of the committee’s recommendations that have been adopted by Congress amount to non-partisan, low-hanging fruit intended to improve the workplace environment for congressional staff and members.  In contrast, the committee’s more sweeping, structural recommendation on budget and appropriations haven’t seen much movement, with the exception of the committee’s Community Project Funding recommendation.  These include:

  • Requiring an annual Fiscal State of the Union with a presentation of baseline budgetary facts to provide a common set of numbers on which to base decisions;
  • Requiring a biennial budget resolution with annual appropriations bills, which would provide appropriators more time to plan; and
  • Limiting use of the budget reconciliation process to only deficit reduction and require an explanation of changes in direct spending or revenue that have not been reconciled.

While the Select Committee on Modernization of Congress certainly seems to have a bipartisan track record, the polarized environment of the legislative branch limits how far the committee’s recommendations can go, especially when they pertain to larger, structural changes.  However, the committee’s work is far from done – the House voted in January 2021 to reauthorize the select committee through 2023 – meaning the bipartisan group will continue to have time to put out new recommendations to create a more efficient and productive Congress.

Congress

Previewing Congress’s Terrible, Horrible, No Good, Very Bad September

by Matt Gontarchick

Lawmakers are facing a September like no other.  With only a dozen or days scheduled to be in person in DC, Members of Congress must address a $3.5 trillion “human infrastructure” package, a $1 trillion bipartisan infrastructure bill, last month’s expiration of the debt ceiling, and appropriations for Fiscal Year (FY) 2022.  Each of these major bills carries several steps of their own, including committee hearings, markups, and behind-the-scenes negotiation.  How will lawmakers on Capitol Hill make it through such a complicated month?

Calendar At-A-Glance

Here’s how the calendar sets up.

Okay, Let’s Break it Down

Reconciliation

So, the House committees are meeting to mark-up the $3.5 trillion human infrastructure bill, also known as the reconciliation bill.  Speaker Nancy Pelosi (D-CA) has expressed a desire to pass the entire reconciliation bill by October 1, punting her version over to the Senate.

But what about the Senate?  The Senate is out till September 13. Even though their version of the reconciliation bill is due September 15, the Senate has yet to schedule any committee hearings.  Remember too that the Senate committees are a 50:50 split, meaning it’s harder to pass partisan legislation like this out of committee.  This all leads us to believe that the Senate may only release concepts or principles around what will be included in the legislation to meet the deadline.

We expect that when the House passes their bill, the Senate substitute the bill with their own changes. The Senate floor process includes debate and likely another all-night vote-a-rama session.  With any changes the Senate makes to the bill, the House will have to vote again, meaning the reconciliation bill has a way to go before it reaches President Biden’s desk.

Bipartisan Infrastructure Bill

Speaker Pelosi issued a September 27 deadline for the House to vote on the bill as the Senate approved it by a 69-30 vote on August 10.  If the bill doesn’t get passed in time, the House will have to vote to extend the Highway Trust Fund, which is estimated to become insolvent by October 1.

Debt Ceiling

Oh yeah, and Congress will need to raise or suspend the debt ceiling to avoid the US from defaulting on its loans. Usually, lawmakers generally agree in a bipartisan manner to increase the debt limit, but Republicans have publicly stated they will not support raising the debt limit and could force Democrats to raise the debt limit in a partisan way and without any Republican support.  

Appropriations

Even though the House has passed 9 out of 12 appropriations bills, the work has just begun in the Senate.  This signals the likelihood that Congress will need to pass a continuing resolution before September 30th to keep the government funded past September. 

How Will Things Play Out?

Between a packed schedule, partisan differences in key legislation, and divisions among some Democrats, September is shaping up to be an unpredictable month for Congress.  Below are some key items to watch for.

Will the House pass the bipartisan infrastructure bill by September 27?

Speaker Pelosi announced the September 27 deadline per an agreement with a group of moderate House Democrats who didn’t want to vote on the $3.5 trillion reconciliation bill without voting on the bipartisan infrastructure bill first.  Many moderate Democrats are holding firm on this agreement to pass this bill, even if the Senate is not finished with their reconciliation bill. Therefore, the divide between moderates and progressives on how to move forward with the legislation could create more problems for the Speaker. 

Will Sinema and Manchin demand a lower dollar amount for reconciliation?

However, the main question that is still on everyone’s mind is will the Democrats unanimously support $3.5 trillion in new spending as moderates in both chambers have concerns around this high price tag.

Even though Senate Democrats unanimously approved the budget resolution, two key moderate Democrats have signaled an unwillingness to approve $3.5 trillion in new spending, thus raising doubts about the bill’s future.  In a statement issued after the budget resolution’s passage, Sen. Joe Manchin (D-WV) expressed “serious concerns about the grave consequences” facing Americans if Congress decides to spend an additional $3.5 trillion.  On August 23, a spokesperson for Sen. Kyrsten Sinema (D-AZ) said the Senator would simply not back a $3.5 trillion bill. As the next couple of weeks unfold, all eyes will be on both Senators as the negotiations are ongoing around the reconciliation bill.

September Is Only the Beginning

With September as thorny as it is, Q4 is shaping up to be the biggest legislative fall in a number of years.  And just when they figure out these massive domestic policy issues, 2022 will be just around the corner, and with it a quick transition to campaign season for the midterm elections.