Congressional Update

New Year, Same Congress, Same Problems. Last weekend, Speaker Johnson and Senate Majority Leader Schumer announced that they had reached an agreement on spending levels and, in a surprise to anyone who wasn’t paying attention, it was the same deal that former Speaker McCarthy struck with President Biden last summer. Since this announcement, members of the far-right-wing House Freedom Caucus have been discussing their options for opposing this deal, up to and including the possibility of replacing the replacement Speaker because he “got rolled worse than Kevin” in this deal.

So why did Speaker Johnson “cave” if he knew it would draw the ire of his right flank? Three reasons: (1) the spending levels are enshrined in law (Fiscal Responsibility Act of 2023), so he is simply following the law; (2) there is NO agreement that will satisfy the Freedom Caucus and remain passable in the Democrat-controlled Senate; and (3) he is learning that the view is very different when you are responsible for keeping the wheels of government turning than when you’re lobbing politically charged grenades from the back bench. In short, Johnson has recognized that he cannot pass any Senate-palatable spending bills without House Democrats, so he must accept a deal that can secure two-thirds of House Members.

It is worth noting that several of the House Republican funding bills were not even capable of securing enough Republicans to pass the House, whereas the Senate has bipartisan support of its entire slate of funding legislation. As such, most lawmakers outside of the Freedom Caucus were not taking the House-proposed spending bills too seriously.

Still, this spending agreement is far from a done deal, because while Speaker Johnson has committed to top-line the funding level, the funding levels for each of the 12 bills have not been determined, and Johnson has not committed to a Continuing Resolution nearly all agree is needed to allow House and Senate appropriators to reach agreement under the deal. Additionally, in order to avoid completely alienating his caucus, Johnson has said that far-right members will be able to include a number of “conservative” policy riders that should allow them to exert power over the Administration. Of course, those riders would never pass the Senate, so this path forward is untenable as well.

With a topline number of $1.7 trillion, the agreement includes $886 billion for defense (a three percent increase over FY 2023) and $773 billion for nondefense programs (less than a one percent decrease from FY 2023).

The defense and nondefense numbers essentially mirror those established in the Fiscal Responsibility Act of 2023 (FRA/the debt limit agreement). In agreeing to the FRA numbers, Speaker Johnson was able to secure additional offsets, including $10 billion from the IRS and approximately $6 billion in unspent COVID relief. Despite all this, earlier this week, members of the Freedom Caucus rejected a rule from House Leadership as a rebuke to the Speaker’s deal with Majority Leader Schumer and at this point, members of the Freedom Caucus are calling on the Speaker to renege on his deal, which would almost certainly trigger at least a partial government shutdown.

Fortunately, the House managed to pass a resolution striking a Federal Highway Administration rule eliminating domestic sourcing requirements for certain EV charging components. This comes after House Freedom Caucus members temporarily rejected the rule bringing the resolution to the floor in an act of defiance following the Speaker’s agreement with Senate Democrats. Still, while passage is a significant rebuke of the Administration’s dismissal of Buy America requirements on EV charging equipment, the President is expected to veto the resolution when it reaches his desk, and Congress is unlikely to have the necessary votes to enact the law over such veto.

At the same time, Senate Energy and Natural Resources Committee Chair Joe Manchin (D-WV) held a hearing to attack the Biden Administrations implementation and oversight of the EV tax credit, which he believes is too deferential to China. His criticism stems from the belief that the White House is not implementing the credit the way he and other Senators had envisioned when they incorporated the EV tax credit into the Inflation Reduction Act.

While the White House is playing for the draw on the repeal of the EV charging rules, the Department of Transportation (DOT) has awarded $623 million for charging stations in 22 states and Puerto Rico. This is the first tranche of funding from the $2.5 billion Charging and Fueling Infrastructure Discretionary Grant Program established under the Infrastructure Investment and Jobs (IIJA) Act. About half of the chargers are expected to be located in community centers, like schools and multi-family housing developments. The remainder will mostly be built along highway corridors, and 70 percent of the investment from the overall project is expected to be targeted towards disadvantaged communities.