With both chambers of Congress back in session next week and the summer of strikes likely to continue, we expect economic issues to be front and center this month. Congress confronts a September 30 deadline for the 2024 Fiscal Year federal budget and for two major reauthorization bills. And the big three Detroit automakers’ current contract with the United Auto Workers union expires on September 14.
The Senate, which has already returned from recess, acted with dispatch this week to confirm no less than three members of the Federal Reserve Board of Governors, filling its last vacancies. The interest rate-setting Federal Open Markets Committee (FOMC) will also meet this month. September will see debate and perhaps action aplenty. How much will be resolved this month? Details below.
Good weekends, all…
With the Senate back in session and the House returning on Tuesday, the 118th Congress enters its most intense and deadline-studded legislative period yet. Here are the major issues we’re following in September:
The UAW Strike
On September 14, the current contracts of about 150,000 auto workers will expire. The last agreement in 2019 provided only modest wage increases and little else for workers at Ford, GM, and Stellantis. The United Auto Workers (UAW) union voted overwhelmingly late last month to authorize strikes against the three Detroit automakers. If negotiations on new labor contracts are not resolved next week union members may strike come September 15.
The union, which has a strike fund of $950 million to provide about $500 a week per worker to cover those on strike for up to ten weeks, is calling for:
- wage increases of 46 percent over four years
- a four-day work week
- an end to “tiering” which pays new workers less
- cost-of-living adjustments and improved pensions and health care benefits
If auto workers go on strike, they will join thousands of workers in the entertainment industry who have been on the picket line since this summer. Writers belonging to the Writers Guild of America (WGA) have been on strike since May and actors who belong to the SAG-AFTRA union joined them in July. 323,000 workers have gone on over 200 strikes this year, the most in 23 years.
The UPS-Teamsters agreement, averting a strike in late July, gave its 340,000 workers an historical increase in pay topping at $49 an hour and stands as a model for many of the UAW demands.
A UAW strike would come at a time when the big three automakers are seeing record profits: $21 billion in the first half of this year alone. But competition from non-union plants mainly in the South continues to put pressure on the auto manufacturers.
A strike could cost the automakers $5 billion in just ten days. With negotiations continuing, General Motors has offered UAW employees a ten percent wage hike, Ford has proposed a nine percent wage increase, and Stellantis is reportedly planning to make an offer to UAW by the end of this week. New UAW President Shawn Fain has called the union’s demands “audacious,” a term that both sides can probably agree on.
Avoiding a Government Shutdown
At midnight on September 30, the last day of FY2023, funding for the federal government will expire. Congress has yet to enact any of the twelve spending bills to allocate discretionary spending for FY2024. The Senate Appropriations Committee has approved all 12 spending bills but none has reached the floor; House counterparts have approved only one, which has not seen a floor vote. If these bills are not enacted by the deadline – or a temporary spending bill is not passed – most of the federal government will shut down on October 1.
Such a shutdown would be more extensive than the partial government shutdown that began in December 2018 which affected discretionary spending covered by the seven appropriations bills that had yet to be enacted. In this case, all federal activities covered by discretionary appropriations could be impacted. A shutdown in October could look more like those seen in early 2018 and 2013 when hundreds of thousands of federal employees were furloughed. Furloughed employees are guaranteed back pay following the resolution of a shutdown due to legislation passed in January 2019.
In June, President Biden and House Speaker Kevin McCarthy (R-CA) signed off on an agreement to raise the debt ceiling while capping spending over the next two years that was intended to prevent this very situation. Members of the House Freedom Caucus have since claimed that spending caps outlined in the Fiscal Responsibility Act (FRA) provided a ceiling rather than an agreed upon target.
Congress can still avoid a shutdown. Congress can either pass all twelve appropriations bills through both chambers and get them signed by President Biden before the September 30 deadline, or pass a continuing resolution (CR) to temporarily fund the government in the absence of an appropriations bill.
The two chambers are about $153 billion apart on the federal funding levels. Next week, the Senate plans to bring a package of three of the twelve spending bills needed to avert a shutdown – a so-called “minibus” – to the floor. Passage of the remaining bills would require herculean legislative effort in September to forestall a shutdown.
The White House is pushing Congress to pass a continuing resolution, but the path forward remains uncertain. Senate Republicans, including conservatives in the GOP leadership like Senate Minority Leader Mitch McConnell (R-KY) and Senator John Cornyn (R-TX) are pushing for the inclusion of about $24 billion in aid to Ukraine and about $16 billion in disaster relief funds in the CR, while a group of House Republicans opposes the inclusion of funds to support Ukraine.
We urge the members of Congress obstructing the appropriations process to fulfill one of their most fundamental duties and fund the federal government, rather than hold spending on critical agencies and programs and the futures of tens of thousands of federal employees hostage.
2023 Farm Bill Reauthorization
On September 30, the current omnibus farm bill will expire. Congress must reauthorize the farm bill, a broad and complex bill that authorizes funding for an array of agricultural and food programs, every five years. But the 2023 farm bill reauthorization is not on track to be enacted by this month’s deadline, with neither house having acted yet. A short-term extension of the current farm bill is possible by September 30.
The 2023 farm bill is expected to provide more funding to relevant programs than its 2018 predecessor. This year’s farm bill is expected to allocate over $500 billion in funding. The current baseline for farm bill programs is estimated at $725 billion over five years and $1.46 trillion over ten.
2023 FAA Reauthorization
Also on September 30, funding for the Federal Aviation Administration (FAA) will expire. As with the farm bill, Congress must pass legislation providing federal funding for FAA programs for the next five years. This year’s reauthorization bill is currently stalled in the Senate Commerce Committee.
The 2023 Federal Aviation Administration (FAA) Reauthorization Act would authorize $103.9 billion for FAA programs for the next five years. Senate Commerce Committee Chair Maria Cantwell (D-WA) has said that an extension is likely as the Committee continues to debate changes to pilot training rules proposed by Senator John Thune (R-SD).
The RECOUP Act
In late June, the Recovering Executive Compensation from Unaccountable Practices (RECOUP) Act passed out of the Senate Banking Committee by a rare near-unanimous 21-2 vote for major legislation. The bipartisan bill led by Senate Banking Committee Chair Sherrod Brown (D-OH) and Ranking Member Tim Scott (R-SC) seeks to strengthen penalties against self-dealing by executives of failed banks.
In the cases of all three recently failed banks — Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank — bank executives loaded up on risk and engaged in share sales in the face of their firms’ imminent failures. The RECOUP Act is the first legislative response to this spring’s turmoil in the banking sector to pass through the Committee. Brown does not expect changes to the bill before it reaches the Senate floor.
The bill’s fate is now in the hands of Senate Majority Leader Chuck Schumer (D-NY) and Senate Minority Leader Mitch McConnell (R-KY). We urge the Senate to pass the legislation as soon as possible to protect consumers, depositors and the public and hold reckless bank executives accountable.
This month will see a completion of the process of installing the Biden administration’s three latest nominees to fill positions at the Federal Reserve. When complete, the Fed will have filled all its current vacancies.
This week, the Senate confirmed:
- Federal Reserve Governor Philip Jefferson as vice chair of the Federal Reserve — Jefferson was confirmed in an 88-10 vote. Jefferson was confirmed by a slightly larger margin than last year when he was confirmed to the Fed’s board in a 91-7 vote. He will serve in the position for a four-year term.
- Fed Governor Lisa Cook to another 14-year term on the Fed’s Board of Governors — Cook was confirmed in a 51-47 vote along party lines.
- World Bank Executive Director for the United States Adriana Kugler to fill the final vacant seat on the Fed’s board — Kugler was confirmed by the Senate in a 53-45 vote. Kugler will become the first Hispanic member of the Fed’s Board of Governors in the central bank’s 110-year history. Kugler will fill the seat vacated by Director of the National Economic Council Lael Brainard for an unexpired term of fourteen years which began on February 1, 2012.
The House will return on Tuesday following the August recess.
Tuesday, September 12th
- Senate Banking Committee Hearing: Oversight of the U.S. Securities and Exchange Commission
- Senate Banking Committee Subcommittee on Housing, Transportation, and Community Development Hearing: Housing Supply and Innovation
Wednesday, September 13th
- August Consumer Price Index (CPI) data
Thursday, September 14th
- House Financial Services Committee Subcommittee on Financial Institutions and Monetary Policy Hearing: Implementing Basel III: What’s the Fed’s Endgame?
- House Financial Services Committee Subcommittee on Digital Assets, Financial Technology and Inclusion Hearing: Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives
- Federal Reserve Governor Michelle Bowman is slated to speak on a panel on “The Future of Money and Consumer Protection” at the Philadelphia Fed’s Seventh Annual Fintech Conference at 4:55 ET
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