The Senate returns today and the House next week with one must-pass bill on the agenda – Continuing Resolution (CR).
The US government’s fiscal year ends on September 30 and Congress needs to pass a stopgap spending bill to avoid a government shutdown. As we have seen in the past, politics can get in the way of Congress doing what it knows it needs to do and delay the required spending proposal.
The deadline for a government spending bill is just a month before the midterm elections and both sides want to avoid being blamed for a government shutdown weeks before voters go to the polls. However, nothing is easy in Congress, especially when the Senate is tied at 50/50 and House Democrats only have a five-seat majority. In the Senate, Republicans can threaten a filibuster and require a 60 vote margin to pass the CR, and in the House the progressive wing of the Democratic Party can put demands on the table using their leverage in the closely divided House.
The Continuing Resolution as the name implies continues spending money at current levels; that can cause problems as spending priorities have changed over the past year. In fact, the Administration on Friday put forward a $47B emergency supplemental request in the hope that it can be included in the CR. The supplemental request ranges from a need for new money for recent natural disasters including massive floods and destructive fires to more funding to support Ukraine and fill holes in the fight against Covid. Traditionally, an emergency supplemental request is accepted by Congress, but this close to a midterm when control of Congress is on the line, nothing is certain.
Since the CR is a must-pass bill, many Members of Congress will try to get pet projects into the bill. One issue that has received a lot of attention is a proposal by Senator Joe Manchin to accelerate the approval process of energy projects. Biden, Schumer and Pelosi all promised Manchin a vote on his proposal before September 30, and the CR may be a logical candidate. But– will House progressives give this a green light? Stay tuned.
The CR will only fund the government past the election until December 9 or 16, either way the lame duck, post-election session will then have to fight the budget decisions again.
Powell speaks
Fed Chair Powell’s speech at Jackson Hole clearly rocked markets as his comments were widely viewed as very hawkish, which was likely his intent. With the next FOMC meeting approaching on September 20/21, his remarks this Thursday before a monetary conference being held by the Cato Institute may be his last before the meeting. Here is the link to the conference which will be web broadcast.
Midterms
Traditionally the rule of thumb in politics is that after Labor Day, voters start to seriously turn their attention to November elections. From my days in politics, we generally saw the number of undecided voters shrink as Election Day approached and candidates had more events, and unfortunately, the number of political commercials increased.
As summer has come to an end, Democrats have seen some special elections go their way. In upstate New York, a swing district that Trump won in 2016 and Biden carried narrowly in 2020 stayed in Democratic hands when many pundits gave the Republicans a good chance of winning. Last week in solidly Republican Alaska the Democratic candidate won a special election to fill the seat of the late Don Young.
In the Senate, political pros are looking at 10 seats – 5 Republican and 5 Democratic – that will likely determine control of the evenly divided chamber. Last week saw both President Biden and former President Trump make appearances in Pennsylvania, demonstrating the emphasis both parties are putting on the open Senate seat.
The two recent wins by Democrats in the special House elections have cheered Democrats, but they still have long odds at keeping control of the lower chamber. Below is an interesting chart prepared by the Brookings Institute. It shows how midterm elections have gone from the Civil War through 2014, and the pattern is hard to miss. The party that controls the White House lost seats in the House in all but four elections. While gas prices may be declining, there remains deep economic concern as reflected in nearly every poll.
Democrats look to the abortion issue and the SCOTUS decision to overturn Wade as a potential game changer this November. The ballot issue in the Kansas primary this summer saw those who support legal abortions winning with nearly 60% of the vote in a reliably Republican state. Still, the chart below shows the historical trend that Democrats are fighting.