The debates in Washington over a national response to the pandemic and assistance to individuals and businesses impacted by it have at last given way to more routine debates about government funding, infrastructure, health care, labor policy and other programs. The remainder of 2021 looks like it will be focused on three major themes—infrastructure, appropriations and budget reconciliation, which allows Congress to change existing tax and spending laws to match new tax and spending levels set in a budget resolution. Most importantly, it may not be filibustered. There is, however, an additional sub-plot coming to a head soon—the national debt limit.
Debt Limit
The national debt limit was suspended for two years back in 2019 and expired on July 31. Although Treasury Secretary Janet Yellen has options to prevent the U.S. from defaulting on its obligations, she has warned those measures may not buy as much time as they have in the past. During hearings in June, Secretary Yellen implored Congress to act by either lifting the ceiling or suspending it for a time certain. This is something Congress used to do routinely without much rancor, but over the last 20 years it has become a political cudgel used by both parties on both sides of the issue depending on whether they are in the majority or minority. The national debt currently stands at more than $28 trillion and according to the Congressional Research Service, this total of all debt represents 128% of our gross domestic product (GDP), which is well above the previous peak of 118% of GDP following World War II. Debt held by the public is hovering at roughly 100% of GDP and the Congressional Budget Office (CBO) forecast released on July 1, 2021 estimates it will increase to 106.4% of GDP by the end of 2031. Again, the debt limit must be lifted or suspended by July 31 or the U.S. will default on its obligations for the first time, which could result in higher debt costs in the future if our credit rating is downgraded. At this time, it is unclear when or how Democratic leadership plans on raising or suspending the debt limit in time.
Infrastructure
After passage of the American Rescue Plan this spring, much of the attention in Washington has been centered on whether an agreement could be reached on a robust infrastructure package. President Biden proposed a package that included an expansive definition of infrastructure to include significant amounts of so-called human infrastructure in the form of child care, elderly care, paid leave and other measures. For their part, Republicans proposed significantly less spending and took a more traditional approach to the definition of infrastructure by limiting it to roads, bridges, waterways, transit, rails and airports. A bipartisan group of senators recently met with President Biden and announced an agreement that would make $579 billion in additional infrastructure investments over baseline spending that was already in the pipeline. The most contentious part of the negotiations, and to some degree continues, is how to pay for these additional investments and the lack of measures to address climate change. While tax increases were a part of President Biden’s original proposal, the bipartisan package is offset through tougher tax enforcement, reallocation of unused pandemic funding, reduction of fraud in unemployment benefits and public-private partnerships. Democratic leaders in the House and Senate are looking to pass an infrastructure package prior to the August recess and at least 10 GOP senators appear to be willing to vote in favor, which is necessary to avoid a filibuster in the Senate. If the agreement does not hold, Democrats may decide to move forward with a more partisan path under budget reconciliation, which only requires 50 votes to succeed.
American Families Plan
On the subject of reconciliation, running along side the bipartisan infrastructure deal is a budget reconciliation package that is expected to contain the broad outline of President Biden’s $1.8 trillion American Families Plan as well as additional priorities of more progressive members of the Democratic Caucus. Senate Budget Committee Chairman Bernie Sanders (I – Vt.) is leading the effort and has proposed a reconciliation package totaling $6 trillion, well above President Biden’s infrastructure and American Families Plan combined. While the details of Sanders’ reconciliation package have not been released, it is expected to include an expansion of Medicare, universal child care, paid leave, elements of the union-backed Protecting the Right to Organize Act (PRO Act) and investments in climate programs. Changes to the Affordable Care Act appear to also be on the table with the largest change being the addition of a public option in state exchanges. A package this large is likely to have difficulty garnering 50 votes in the Senate as moderates like Senator Joe Manchin (D – W.Va.) and Senator Kyrsten Sinema (D – Ariz.) have balked at such a high number. What is clear is that a reconciliation package in the neighborhood of $2 trillion to $6 trillion will be considered this year. If it ends up being on the lower end, Democrats could run into issues with the progressive wing for not being bold enough. All this is a balancing act Democratic leaders will have to manage through the process and that will likely take some time. While there has been chatter about an aggressive timeline for passage before August, it’s my view that this is unrealistic and the soonest we could see passage would be the end of September.
Other Issues
With any new administration there is a period early in the term when we know the regulatory posture is going to shift, particularly when there is a transition from one party to another. It simply takes some time for the new administration to get their people into the agencies and up to speed. We’re starting to emerge from that early startup phase and the contours of a new approach are beginning to show. Perhaps the starkest changes are going to be in the labor and environmental space. We’ve already seen a shift at the Department of Labor with the recent release of a new emergency temporary standard (ETS) for COVID-19 issued by the Occupational Health and Safety Administration (OSHA). While this ETS covers only workers in a health care setting, it is being applied as guidance for other workplaces. The Department of Labor’s Wage and Hour Division has also departed from the previous administration with respect to the joint employer standard and enforcement posture.
The Environmental Protection Agency (EPA) recently announced they will be revisiting the Navigable Waters Protection Rule that was finalized by the Trump Administration last year. While there have been conflicting signals on the process they intend to pursue, the end result is sure to be the same. A vacating of the 2020 rule and a new proposed rule to determine jurisdiction between the federal government and states. This is likely to be a long process that will take us well into 2022 before we see many specifics about how the EPA will change the 2020 rule.
I’ve had the honor of serving on the Hill and as an advocate for various industries in Washington for more than 25 years. There is a lyric from The Doors’ classic hit, Roadhouse Blues, that has served me well over those years. “The future’s uncertain and the end is always near.” For me, it is a reminder that we can’t predict the future with any precision, but we’ll find out soon enough. Be well and enjoy the summer. NCA will keep an eye out for what the future holds.
Joe Trauger is NCA’s vice president of government relations. He can be reached at [email protected] or 202-822-9822.