Update 659 — The Putative 118th Congress:
What’s Ahead for Economic Policy Legislation
The House GOP conference has had several thousand dollars of pizza delivered this week to sustain it through failed ballot after ballot to elect a Speaker. This spectacular display of chaotic dysfunction comes two years after the insurrection on the Capitol, a more orderly indoor echo of another January 6. Now with no Speaker of the House elected, therefore no members of the House sworn in, QED there is no House.
The delivery of dysfunction does not mean we will not have a 118th Congress. We will, and the folkways of the Hill will govern again. So it is not too soon to do a run through of what the prospects are for priorities in progressive economic reform legislation in the prospective 118th.
As for 20/20 Vision DC as well– we have passed the 22,000 mark and are looking to expand staff. We seek applicants for three new positions. If you’re interested, please see the job descriptions for Financial Policy Analyst, Economic Policy Advocate, and Project and Editorial Assistant.
Good weekends all,
Dana
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As a new divided Congress opens, the legislative picture is beginning to emerge. Democrats present a unified front, both in the Senate where they are in the majority and in the House as the minority. Republicans by contrast are off to an inauspicious start, sans Speaker. Last Congress was extremely productive, passing infrastructure, science and technology, energy, and health care investments to name a few. But there are many policy priorities on the Democratic agenda that are yet to be addressed but could gain traction in the 118th Congress.
Democratic Priorities
Although Democrats may not have the numbers they would have hoped to see in the House, they must continue to work diligently on their top legislative priorities and uphold their party’s values. While there are a number of key issues that deserve congressional time and attention, housing and democracy reform are two critical areas that may see some progress if Democrats can hold their ground.
Housing
A sector that was largely ignored throughout the 117th Congress will be on top of mind for many Democratic lawmakers entering the new year: housing. The housing sector, which has experienced an incredibly hot two years, has been in dire need of attention and major reform since the financial crisis of 2008. Many are hopeful that 2023 will be the year Congress finally comes together to implement effective public policy that can finally meet the demands of today’s society. Increasing the housing stock, expanding access to affordable housing, and rehabilitating public housing safety are all critical components to consider in a broader housing package, and we remain hopeful that these objectives can come to fruition under the new Democratic leadership.
Democracy Reform
Last Congress, Democrats came incredibly close to passing comprehensive democracy reform legislation. Despite the support of all 50 senators on the bill, two senators sought to uphold the filibuster instead of strengthening our democracy. Nonetheless, democracy reform remains a top issue for Democrats and will continue to be a priority.
The realities of a divided Congress might dim its prospects, but lawmakers will continue to introduce bills and show their support for voting rights, campaign finance reform, and election administration. Now that Democrats have expanded their majority in the Senate to 51, the Senate Rules and Judiciary Committees will prioritize these issues, holding hearings that highlight the need for reform with a goal of advancing legislation. The work done under this Congress will set the groundwork for the next time there is a Democratic trifecta, making its role critical.
Child Tax Credit
Expanding the Child Tax Credit has been a major priority for Democrats since the CTC expansion in the American Rescue Plan– which drove a historic one-year drop in child poverty– expired in December of 2021. With Republicans in control of the House, Democrats will have to negotiate a compromise bill.
Restoring monthly payments is a top priority, as they previously allowed low-income families to meet more of their basic needs. Refundability is also a major issue– full refundability would benefit an estimated 19 million children whose families’ incomes are currently too low to receive the full credit. Democrats will also need to play defense against conservatives calling for stricter Social Security number requirements and against using cuts to poverty-reduction programs like the EITC as offsets for a CTC expansion.
Education Finance
President Biden’s student loan forgiveness plan is still tied up in the courts. While we won’t know definitively which way SCOTUS will rule until later this year, there are a number of proposals that Congress could take up to reduce the burden of student debt.
Congress can continue to expand Pell grants to cover more of the cost of higher education and reduce the burden on low-income students and their families. Additionally, Senators Reed and Collins’ Partnerships for Affordability and Student Success (PASS) Act has the potential to expand financial aid through federal and state partnerships. The bill could accrue bipartisan support and offer an option for addressing affordability for current and future students. While more comprehensive reforms are unlikely to pass this Congress, lawmakers must keep pushing to build support for them in the long-term.
Defense in the House
With Republicans now in control of the House, progressive lawmakers and advocates will need to be prepared to take defensive positions against a number of Republican policies and priorities. While many Republican proposals will die either in the Senate or on Biden’s desk, the GOP still wields significant power through their hearing and oversight authorities, as well as their ability to block must-pass legislation, like raising or suspending the debt limit.
Debt Limit
Because Democrats were not able to raise or suspend the debt limit last year, they will need to do so this year and attempt to avert a 2011-style standoff. Republicans have been vocal about their intentions to extract major cuts to programs like Social Security and Medicare, complicating attempts to reach a compromise. Failure to reach an agreement would have disastrous consequences, as the mere threat of default in 2011 led S&P to downgrade the country’s credit rating for the first time ever. Congress allowing the U.S. to actually default later this year would be far more damaging and Democrats will need to find a way to avoid this worst-case scenario while limiting damage to the social safety net.
Government Funding
While the Fiscal Year 2023 omnibus is finally complete, the battle over funding for key agencies and programs is not. House Republicans have already made moves to take a vote on rescinding the additional IRS funding in the Inflation Reduction Act, indicating their commitment to both choking off the understaffed agency’s funding and cutting government spending more broadly.
The FY24 budget process is also set to kick off soon, with the president’s budget expected to be released in early February. This will set off what will once again be a fierce debate over non-defense discretionary spending levels. Democrats will have to fight to maintain funding for key government agencies in a time where some agencies, like the IRS and the NLRB, will need significant increases in order to fulfill their missions.
Hearings
House Republicans’ biggest tool in the divided Congress will be hearings, as they are already expected to launch personal investigations into the Biden family and other senior administration officials in the House Oversight Committee. Democrats will have a strong champion against these attacks in Ranking Member Jamie Raskin. Other committees will work to erode the work of the past Congress. On the other hand, Democrats in the Senate will have the very same power to hold hearings and advance legislation in the Senate.
Bipartisan Buy-in
If any major legislation is to be passed this Congress it will need bipartisan support from both the Republican House and Democratic Senate. There are only a handful of policies from the last Congress that members from both sides were interested in addressing and could be taken up this Congress.
Congressional Stock Trading Ban
In the 117th Congress, congressional stock trading reform gained a lot of traction as several members on each side of the aisle introduced proposals to ban members of congress from trading stock. With the plethora of bills and technical details that affect the personal finances of each individual member, a consensus never formed. There is an opportunity to build on that work in this Congress, especially since there are members in both parties interested in reform.
This is a common sense ethics reform that would make members of congress beholden to the people they serve and not their wallets. It is a popular issue among voters as well, as 70 percent support a congressional stock trading ban. Many candidates on both sides of the aisle ran on a stock ban and others used stock trades as the basis for attack ads. While this reform remains top of mind, the 118th Congress should seize on this opportunity to pass a congressional stock trading ban.
Crypto
Another opportunity for bipartisan collaboration presents itself in the digital asset space, as lawmakers are finally beginning to catch their breath from last month’s Bankman-Fried fiasco. Following the abrupt collapse of the trading platform, the Senate Banking Committee and House Financial Services Committee each held hearings to investigate the matter and better understand what exactly led to the major bankruptcy that left millions defrauded. The implosion of FTX was one of many high-profile fallouts in the crypto world, but end of year deadlines and changing majorities overshadowed the complexities of crypto and pushed regulatory discussions to the backburner.
A number of bipartisan bills were presented in the later months of the 117th Congress, all of which proved inviable and faulty at best. While none of these bills came to fruition, they are all expected to serve as a starting point for discussion in the new congress. Heading into the new year, it is evident that Democrats and Republicans alike want to address the lack of oversight in this industry and instill comprehensive guardrails, but the question still stands: how exactly can we get there?
Delivering Dysfunction
The 118th Congress has undoubtedly gotten off to a rocky start. Several days and several ballots later than expected, a Speaker is still yet to be elected so no official business can be conducted. This cast doubts on the productivity of the 118th might be and may foreshadow the difficulties that lie ahead under the new majority. If Republicans are already struggling to organize, they will find it difficult to push forward policy priorities, allowing Democrats’ legislative goals to shine through. It will be an uphill battle for the two parties to find compromises and pass legislation.
At the same time, we would be remiss not to emphasize Democrats’ great performance in the midterms that led to this Congress. Expanding the Senate majority and losing only nine House seats is a tremendous accomplishment. Democrats have the opportunity to confirm positions, hold hearings in the Senate, and set up their policy priorities for 2024. After this first unconventional week of the 118th Congress, it is clear this will be one to watch.