Lawmakers returned to Washington after a six-week August recess with just two weeks in which to provide funding for the entirety of the discretionary spending available to the federal government. Other must-pass legislation, also due by October 1, further complicates September. And the politics are extremely difficult for all of this must-do legislation. A number of issues of concern to NAIFA could be caught up in what looks like will be a brutal month (or four).

Among the issues of concern to NAIFA are SECURE 2.0 technical corrections (potentially including codification of the catch-up contribution issues), and some tax issues (e.g., whether there may be adverse offsets for other tax rule changes).

The new fiscal year (FY) 2024 starts on October 1. Thus, all government funding must be authorized by midnight, September 30. So far, the House has passed only one of the 12 required appropriations bills (Military Construction/Veterans Affairs). The Senate has not passed any of the 12 bills. The relevant House committees must still approve most of the outstanding 11 appropriations bills, although subcommittee action has taken place, before any bill can go to the House floor for a vote. The Senate Appropriations Committee has approved all 12 appropriations bills (on a bipartisan basis), and so those bills are ready for Senate floor action.

However, there is a wide and deep gulf between the House appropriations bills and the Senate’s. Generally, the Senate has written its funding legislation up to the spending caps set in the Fiscal Responsibility Act (FRA). However, a group of hard-right House Republicans has successfully insisted on much lower ($120 billion lower for FY 2024) spending in its appropriations bills. Plus, there are policy riders (hotly controversial ones—like funding for abortion, transgender care, Ukraine, Department of Justice prosecution of former President Trump, etc.) that have so far prevented agreement between the House and Senate.

Adding to the complication is the need for “emergency supplemental” funding—some $40 billion in funding that would come from outside the FRA caps (or the lower spending levels preferred by the House) for disaster relief (the Maui wildfires, the damage from Hurricane Idalia, etc.), Defense, Ukraine aid, and border security.

Then, throw in the need to reauthorize farm bill programs—also by September 30; and the Federal Aviation Authority (FAA) legislation, another bill that faces a September 30 deadline.

Currently, most of the political difficulty is centered in the House. There, more than two dozen conservative House members are insisting on spending levels way below what the Senate (including GOP Senators) will accept. Failure to reach agreement means much of the federal government will shut down. And many of the conservative House members who are insisting on lower funding say a government shutdown, while not their preferred outcome, is not something that would keep them from opposing the higher spending levels approved in the Senate.

The House could pass its appropriations bills even in the face of the 30 or so Republicans who oppose the FRA spending levels, but it would require Democratic votes to achieve that. And Democrats are very likely to insist on including at least some of their priorities before they will vote for a GOP appropriations bill. And a large number of House Republicans oppose working with Democrats to pass the government funding legislation. Some even say that compromising with Democrats could put Speaker of the House Rep. Kevin McCarthy (R-CA) at risk for being booted from the speakership.

The bottom line is that there are numerous roadblocks to achieving year-end legislation by September 30—or even by the end of December. The challenges run the gamut from timing, policy disagreements, funding levels disputes, and pure raw partisan politics. A government shutdown is a real risk.

Prospects: Most Washington insiders think Congress will have to enact a short-term continuing resolution (CR) to keep the government’s lights on past September 30. Speaker McCarthy has already advised House Republicans that he believes a CR—probably lasting until mid-November, but possibly going into December—will be needed. Senate Majority Leader Sen. Chuck Schumer (D-NY) agrees that a CR will be required. But there is opposition to a CR, and it is by no means certain that one can pass Congress before October 1. So, the risk of a government shutdown is very real. And the convoluted politics of the effort could ultimately determine whether any “add-on” issues—like, for example, the SECURE 2.0 catch-up contribution effective date and/or other retirement savings law technical corrections—can hitch a ride on whatever year-end funding bill the Congress can approve.

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.