Your Congress in Action: September 27, 2021

09/27/2021 1:46 PM | ACRAsphere Blog Team

Your Congress in Action is a series that highlights the Capitol Hill news that affects CRM firms the most. Be sure to subscribe to the ACRAsphere to ensure you don't miss an update.

Congress and the White House are headed into a make-or-break week as the outcome of a number of complex issues could determine the ultimate success of President Biden’s agenda – and the shape of the economy for months, or even years, to come.

Even as they continue to haggle over massive infrastructure and social spending bills (more on that below), policymakers are coming up against two immovable deadlines. First, on Sept. 30 the current fiscal year ends; if Congress does not pass appropriations bills for the new year starting Oct. 1, many parts of the government could shut down. Second, at some point in October, the Treasury Department will run out of borrowing authority to pay its bills; unless Congress raises or suspends the debt ceiling, the U.S. government could default on its debts for the first time in history, with major ramifications for the global economy.

The House attempted to deal with both issues last week, passing a so-called “continuing resolution” that extends government spending at current levels until Dec. 3. The bill includes $28.6 billion in additional disaster relief spending and an additional $6.3 billion to support Afghanistan evacuees. In addition, the bill suspends the debt ceiling, the provision in law which places a cap on how much the government can borrow, until December 2022. (It’s important to note that raising the debt ceiling does not give Congress the power to increase spending; it enables the government to pay debts already incurred.)

However, the bill is likely to go nowhere in the Senate, because Congressional Republicans have said they will not vote to raise or suspend the debt ceiling under any circumstances. Senate Republican Leader Mitch McConnell (R-KY) has said that, since Democrats control the White House and Congress, it is up to them to raise the debt ceiling (even through Democrats supported debt ceiling increases under the Trump administration). Without the support of at least 10 Senate Republicans to bypass a filibuster, the House bill is dead on arrival.

Democrats can raise the debt ceiling as part of their budget reconciliation bill, since that requires just 50 votes (plus a tie-breakers from the Vice President), but Democrats are leery of raising the ceiling – and the political anger it engenders – on their own.

What would a government shutdown, or a default, mean? The impact of a shutdown would depend on how long it lasted; the 35-day shutdown in 2019 impacted air travel due to Transportation Security Administration furloughs, slowed some FBI investigations, and cost taxpayers $5 billion in lost tax revenue and fees at National Parks. A shorter shutdown might have little or no impact.

A default, on the other hand, could be extremely damaging for the economy. In the immediate term, Social Security checks would not go out, government contractors would not get paid, and families would not receive their monthly child tax credit. In the longer term, the nation’s credit rating would sink, and interest rates would likely rise. At the end of the day, it is unlikely Congressional leaders and the White House will allow the government to default on its debt, but the brinksmanship will probably continue for some time.

Even as they confront the fiscal year and debt ceiling deadlines, Democrats are trying to maneuver their domestic agenda through a very difficult path to passage. As the White House and Congressional Democrats continue to negotiate between the centrist and progressive wings of the party on the $3.5 trillion budget reconciliation bill, House Speaker Nancy Pelosi (D-CA) announced that a final vote on the $1 trillion bipartisan infrastructure bill would be pushed back to Thursday. Originally, she promised House centrist Democrats a vote on the bill today, but at least 60 progressive Democrats have said they would oppose the infrastructure bill unless the reconciliation bill was passed first by both chambers. On Sunday, the Speaker said it was "self-evident" that the $3.5 trillion price tag will drop due to opposition from at least two Senate Democrats.

Despite the seeming chaos, there was good news for the CRM industry in at least two areas last week.

  • First, the House approved an amendment to the annual defense authorization bill that partly addresses an issue raised by ACRA relating to the Paycheck Protection Program (PPP) and CRM firms that seek contracts from federal agencies and state DOTs. Under federal rules, firms that have PPP loans forgiven need to credit the value of the loan back to agencies when they contract for projects, potentially leaving CRM firms in the position of losing money on government contracts. The bipartisan amendment to the defense bill eliminates the credit-back requirement on contracts with the Department of Transportation and state DOTs.
  • Second, the Senate Energy and Natural Resources Committee held a confirmation hearing for Sara Bronin as Chair of the Advisory Council for Historic Preservation (ACHP) on Sept. 21, a key step in getting her in position at the Council. At the hearing, Bronin said that, if confirmed, she would work with Congress and other stakeholders “to ensure the ACHP continues to take a leadership role in advancing and modernizing preservation practice nationally.” Bronin’s nomination is expected to move easily through the Senate.

As Washington continues grappling with a set of thorny issues, stay tuned to ACRASphere for the latest on how they will affect the CRM industry.

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