The Reconciliation Bill is Moving (For Now)

Following (justified) doubts by rank-and-file Republicans in both chambers about the viability of getting their budget reconciliation package to the President’s desk by Memorial Day, GOP leadership announced this week that the deadline for enactment has been pushed to July 4th. But at this point, it’s looking like congressional republicans will do everything they can to meet that deadline.

House committees began holding markups this week to advance their individual sections of the GOP megabill. Today, the House Committee on Transportation and Infrastructure is considering its committee print for inclusion in the larger package. As far as new spending goes, T&I’s piece appropriates almost 23 billion dollars for the Coast Guard, as well as $15 billion for the modernization of the FAA’s Air Traffic Control. The print also imposes an annual registration fee on electric vehicle owners as a means of paying into the Highway Trust Fund (HTF). Finally, it would rescind $4.6 billion in obligated funding and end Inflation Reduction Act programs on alternative aviation fuels, use of low-carbon materials, and emerging technologies in federal buildings, Neighborhood Access and Equity Grants, and more.

Next week’s markups will bring extremely contentious debates on more controversial proposals, like reforms to SNAP and Medicaid that are very likely to reduce the overall disbursement of benefits and could have significant consequences for state and local budgets.

In addition to the long-term spending cuts to non-defense/immigration budgets, a series of pay-fors have been floated to offset extension (and expansion) of the tax cuts provided by the 2017 Tax Cuts and Jobs Act – which at the time was touted as the first Trump Administration’s defining legislative achievement and was notably also passed through budget reconciliation. These revenue-generating proposals include things like increased timber sales from trees harvested on federal lands, selloffs of public lands, and stripping tax-exempt status for municipal bonds.

While this may look like just another punted congressional deadline, the circumstances suggest otherwise. Several factors are driving conservative coalescence around advancing the reconciliation bill.

First and foremost, it’s President Trump’s top legislative priority for this year. To counter declining approval numbers, market instability, and trade war concerns, the White House wants a major win as soon as possible.

Second, the forthcoming “X-date” estimate on when the U.S. will breach the national debt limit is expected to land sometime in August or early September. Given that there are no other legislative vehicles suitable to carry a debt limit extension, and congressional Democrats have fewer and fewer incentives to negotiate, Republicans are forced to include a debt limit fix in the reconciliation bill. This means the bill will essentially have to be passed before the August recess unless Democrats come to the table to help pass a standalone bill to address the debt.

Third, the intentional selection of the new deadline will itself drive movement. The current administration has a penchant for using symbolism to drive its messaging and agenda - think “Liberation Day” for the tariff announcement. While this may seem trivial, don’t underestimate leveraging the patriotism associated with July 4th to drive action by congressional Republicans.

While Congress seems to set, miss, and adjust deadlines every year, there’s reason to believe congressional Republicans may land the plane to deliver a win for the President before the summer.