On September 26 President Biden signed into law the three-month funding bill that avoided a government shutdown on October 1. The continuing resolution (CR) extended fiscal year (FY) 2024 funding levels until December 20 and made few (none of them controversial) policy changes. So, the tough issues—e.g., FY 2025 funding levels, whether to block certain regulations (including the fiduciary rule)—were left to be resolved during the November-December lame duck session of the 118th Congress.
The lame duck session—expected to go from November 12 to December 20—will be fraught. Lawmakers from 2023-2024’s 118th Congress will be doing the voting/deciding. Newly elected (or reelected) lawmakers do not take office until the 119th Congress convenes in January. Below is a discussion of issues that matter to NAIFA members that may arise during lame duck.
Appropriations: There is deep disagreement within each of the two parties as well as between the two parties on the appropriate funding level for U.S. discretionary spending in FY 2025. So far, there is no agreement on an overall spending cap or on maximum spending levels agency-by-agency. Pre-election partisanship contributed greatly to lawmakers’ inability to find consensus last month. And while that partisanship will not go away after the November 5 elections, it will be tempered, to a degree, by knowing which party will control the House, Senate and White House. Party control will heavily influence the strategy for shaping FY 2025 funding legislation.
Regardless of which party controls which pieces of the legislative process, expect close scrutiny of each spending decision. The federal debt currently exceeds $35 trillion, while the deficit for FY 2024 is projected to hit almost $2 trillion. (The Congressional Budget Office (CBO) estimates FY 2024 revenue collected by the U.S. to equal $4.9 trillion, while the government’s obligations are projected to hit $6.8 trillion.) This debt level is growing more worrisome to all lawmakers (but especially the fiscal hawks) and so even those most willing to “invest” by way of government spending are ever more sensitive to a program’s or policy’s cost.
This government funding legislation will trigger talk of a potential government shutdown if Congress and the President cannot agree on a package of FY 2025 appropriations bills (or just one massive bill) before year-end. The effort may also include a way to deal with the debt limit that has to be re-suspended or raised to avoid default by the U.S. on at least some of its obligations. So, expect a hard-fought battle over government funding legislation once the lame duck 118th Congress returns to Washington on November 12.
Tax Legislation: The stalled-in-the-Senate House-passed HR 7024, a tax bill that combines certain business tax provisions with ones that extend and expand the child tax credit and the low-income housing credit, could get a vote in the Senate in November-December. Most of the opposition to passing it earlier this year came from key Republicans who argued that the Senate should wait, in hopes that Senate Republicans will be in a stronger bargaining position after the 2024 election results, with control of the Senate potentially flipping to Republicans.
HR 7024 combines GOP-favored rules governing bonus depreciation, research & development, some disaster aid, expansion of the child tax credit, and a cut-off of the ability to file employee retention tax credit (ERTC) claims.
Whether HR 7024 will get a vote prior to year-end depends to a very great degree on the results of the November 5 elections.
Also possible during the 118th Congress’ lame duck session – and also dependent on election results – are votes on SECURE and SECURE 2.0 technical corrections.
NFIP: Also possible during the lame duck session, as a result of Hurricanes Helene and Milton, is National Flood Insurance Program (NFIP) funding and/or program design.
Regulations Oversight: There are a number of Congressional Review Act (CRA) resolutions to block regulations awaiting lawmakers’ votes during lame duck. They include resolutions to block the fiduciary rule, the worker classification rule, and the new overtime salary threshold rule. Some (maybe all) could pass Congress in November-December, but none would survive a promised presidential veto. So, to make a resolution to block a rule veto-proof, it is likely that supporters will try to include these rule blocks in the year-end government funding bill. Whether any or all such attempts could succeed is doubtful, but the effort is likely.
Prospects: Congress must pass legislation to fund the government’s discretionary spending before December 21. The challenges are rife. Some lawmakers want multiple funding bills—they abhor the gigantic legislation that rolls all 12 regular order funding bills into one massive piece of legislation. Some want policy riders while others strongly oppose them. Funding levels are and will remain controversial. And many sponsors of unrelated pieces of legislation will be jockeying to be included in this must-pass bill. While it is possible lawmakers will find a way to balance all these issues, the likelihood is that either there will be another CR to provide funding into 2025 (thus setting up these tough decisions for the new 119th Congress), a one-bill omnibus package, or a government shut-down. And it is impossible to predict the likelihood of any of these potential outcomes until the results of the November elections are known.
NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.