As the first quarter of 2024 wraps up, Congress hasn’t quite lived up to the low bar we established earlier in the year, and they have continued to grapple with a critical task: funding the US government for the remainder of the current fiscal year. After passing four stopgap measures since the fiscal year began on October 1, Congress passed a $1.2 trillion package of spending bills on March 23, putting an end to government shutdown threats.
This year’s window for legislating major policy initiatives is closing much sooner than most previous presidential cycles. Washington is left with a tight deadline on a number of measures, and, as members of Congress are set to leave town through early April, there’s little room left for error or delay in the decision-making and deal-cutting processes. We don’t expect to see much activity (other than reactionary) after Memorial Day. Until then, here’s what we’re watching:
When This Year’s Budget Talks Becomes Next Year’s
While the 2024 budget and appropriations cycle is in its final throes on Capitol Hill, Biden has introduced his proposal for the fiscal year 2025 budget. Some highlights of his plans seek to:
- Reduce the federal deficit by $3 trillion over a decade, achieved through tax increases on wealthy Americans and businesses (raising the corporate rate from 21% to 28%)
- Reduce child poverty via tax cuts for low- and middle-income families while also lowering the costs of childcare and bolstering the child tax credit
- Make healthcare and prescription drugs costs more affordable and increase the number of drugs subject to negotiation in Medicare
- Address the housing-affordability crisis with tax credits for first-time and middle-class homebuyers
It is, however, important to note that this budget proposal is more of a wish list and a blueprint for what the future could hold should Biden land a second presidential term in November. Just as the 2024 budget has faced considerable opposition, this proposal would also face significant hurdles in becoming law.
Foreign Objectives
Amidst the backdrop of legislative deadlines, the impending recess, and the elections, another challenge muddies the picture: a $95 billion security supplemental package aimed at shoring up the nation’s posture in multiple foreign conflicts. The bill includes funds for both Ukraine and Taiwan; humanitarian aid for the Israel-Hamas war; and funds for US military combat operations in the Red Sea. Despite finding success in the Senate in February, Speaker of the House Mike Johnson (R-LA) has, thus far, refused to bring the funding bill to the floor for a vote. Johnson is now intimating plans for a vote in early April, after Congress returns from recess.
While the bill remains at in impasse in the House, the Biden administration has been able to provide Ukraine an additional $300 million more in ammunition and other weapons made available through preisdential drawdown authority. This provision is used to provide military assistance in crisis situations and pulls from existing US stockpiles. This stopgap measure is intended to ease some of Ukraine’s setbacks and shortfalls while Congress continues debating a new aid package.
Tax Triumph or Trouble?
In January, the House passed a $78 billion bipartisan tax package aimed at restoring some pandemic-era business tax breaks. The bill would expand the child tax credit; restore tax breaks related to research costs, capital expenses, and interest; as well as additional tax breaks for the development of low-income housing, relief for disaster victims, and more. To finance these measures, the package would terminate the Employee Retention Tax Credit, a pandemic-era program that has been riddled with fraud.
While the bill drew bipartisan support in the House, its path forward in the Senate remains uncertain. Key Republican Senators object to expanding the child tax credit without work requirements and are looking to address technical fixes to retirement-savings laws.
