November Washington D.C. Preview

With the control of the House and Senate at stake, lawmakers are gearing up for a busy lame-duck session in November and December. In this month’s CEO Report, POLITICO Pro’s policy teams outline what they’re watching in the last few weeks of this Congress.

— Avoiding a shutdown will be at the top of lawmakers’ agenda, as government funding is set to run out on Dec. 16.   — House and Senate Armed Services leaders are on the hook to finalize defense policy legislation and get to the president’s desk before the end of the year.   — Expect Democrats to try and resurrect efforts to update energy permitting rules, but don’t expect Republicans to play ball if they win control of either chamber.

AGRICULTURE Lame duck agriculture moves: With a potential shift in power on Capitol Hill, time is the enemy of Democrats as they look to pass major agriculture legislation and confirm key nominees in the upcoming lame-duck session.   Nominees: A handful of key ag nominees are still waiting for a floor vote. Republicans and Democrats expect Doug McKalip, Biden’s pick to be chief agricultural trade negotiator at the U.S. Trade Representative, and Alexis Taylor for undersecretary for trade and foreign ag affairs at the Agriculture Department, to eventually be confirmed with bipartisan support. Sen. Cory Booker has privately voiced concerns about Jose Emilio Esteban to be the top food safety official at USDA. Booker voted against Esteban when he came up for a vote in the Senate Agriculture Committee, due to some concerns with Esteban’s written answers about food labeling issues and other policy areas. The two are expected to meet eventually and it’s likely Esteban can iron out the issue before his nomination comes up for a vote.   Bills: Democrats have added the bipartisan Cattle Price Discovery and Transparency Act and Meat and Poultry Special Investigator Act on the Senate calendar. The former aims to force the sale of more cattle in the open cash market and the latter would install a special investigator for antitrust in the meat and poultry sector within USDA. It’s possible one or both of the bills come up during farm bill talks if they’re not passed by the end of the year.   It’s a longshot that the Senate will take up the Farm Workforce Modernization Act . The bill, which most major ag groups support, would create a pathway for undocumented farmworkers to receive legal status and would also expand the number of year-round H-2A visas available for farmworkers. Advocates say it would help alleviate some labor crunches in the U.S., but Republicans and Democrats have been long stalled on talks to compromise on the bill and larger immigration efforts this Congress. — Meredith Lee Hill

BUDGET AND APPROPRIATIONS Four weeks to strike a funding deal: When Congress returns to the Capitol Building next week, lawmakers will have just four weeks to cement a government funding deal that boosts federal agency budgets in the new fiscal year and averts a shutdown on Dec. 16.   Much will hinge on the midterms and which party is set to control the House and Senate in 2023. But for now, congressional leaders and appropriators seem willing to strike a funding agreement that allows the 118th Congress to start with a clean slate in January.   The so-called omnibus, or 12-bill appropriations package, would be the biggest piece of bipartisan legislation to pass before lawmakers break for the holidays, with the highest stakes. Expect lawmakers to duke it out in the coming weeks over funding levels and what will hitch a ride on the package, including another round of Ukraine aid and hurricane relief.   Democrats will almost certainly push for long-stalled Covid-19 and monkeypox aid, in addition to a revival of the expired Child Tax Credit enhancement. Republicans want to revive a tax benefit for businesses that allowed them to immediately write off their research expenses.   Lawmakers are also eyeing a host of health-related ride-alongs, including a health insurance fix for Puerto Rico when a Medicaid funding boost expires at the end of the year and provisions to overhaul how the FDA regulates dietary supplements and cosmetics. — Caitlin Emma

TAX Big tax fight brewing: Battle lines have already been drawn in the lame duck over two tax provisions: An R&D tax credit that benefits big defense contractors and the Child Tax Credit.   On one hand, lawmakers such as Sens. Todd Young (R-Ind.) and Maggie Hassan (D-N.H.) are anxious to roll back the five-year amortization of R&D costs that went into effect at the beginning of 2022 under the Tax Cuts and Jobs Act .   On the other hand, the New Democrat Coalition, led by Rep. Suzan DelBene (D-Wash.), along with a group of senators including Sherrod Brown (D-Ohio), Michael Bennet (D-Colo.) and Cory Booker (D-N.J.), have issued thinly veiled ultimatums that full R&D expensing should be accompanied by a reimplementation of the enhanced Child Tax Credit.   The progressives understand they have leverage, since research-intensive companies such as Boeing and Lockheed Martin are set to pay billions more in taxes next year. But Republicans are not exactly jumping at reviving the expanded child social policy that, according to the Committee for a Responsible Federal Budget , would cost $1.2 trillion over the next decade.   Both policies could ultimately be shunted into a year-end tax extender bill, along with provisions that would raise the age for required minimum distributions from tax-advantaged retirement accounts, create a new refundable retirement saver’s credit for low-income workers and crack down on tax benefits from charitable land donations. — Benjamin Guggenheim

DEFENSE Defense policy scramble: Leaders of the House and Senate Armed Services committees are on the hook to finalize annual defense policy legislation and get it to President Joe Biden's desk in the lame duck. A compromise version of the National Defense Authorization Act will endorse a Pentagon budget that's tens of billions more than the $802 billion the administration requested.   First, the Senate must pass its own version of the bill . Senators will take up the defense legislation and consider hundreds of amendments next week with the aim of quickly passing it and launching talks with the House.   The NDAA is likely to be a vehicle for numerous measures that can't pass in the lame-duck session, though not all bills attached by either chamber will survive in the final version of the NDAA.   The House included cannabis banking, public lands and drug sentencing provisions in its defense bill . Senators, meanwhile, have already attached State Department, intelligence, Coast Guard and water resources bills to the NDAA. Senators may also weigh other measures in the coming weeks, including changes to the process of counting electoral college votes and reforms to permitting for energy projects. — Connor O'Brien

ENERGY A lame duck permitting push for energy: Democrats are hoping to resurrect an unsuccessful effort to update energy permitting rules during the lame-duck session — but Republicans may not want to play ball if they win one or both houses of Congress.   Proponents see two potential paths forward to passing permitting reform by the end of the year: attaching legislation to the annual defense policy bill that's expected to be considered later this month or December’s government spending bill.   Without changes to expedite projects, Democrats fear the billions of dollars in clean energy incentives provided by the Inflation Reduction Act could be stranded. And Republicans who have long complained about permitting delays could lose an opportunity to implement reforms that would benefit energy technologies they support such as hydrogen and natural gas.   But the parties are far apart on some elements of a potential permitting reform package. The GOP is advocating for wholesale reform of environmental laws and less exposure to lawsuits over permits to build pipelines, while Democrats favor narrower changes to ease approvals of transmission lines to spread clean power. — Josh Siegel

HEALTH CARE The government’s savings is a doctor’s revenue: There aren’t many issues that bring Sens. Rand Paul (R-Ky.) and Elizabeth Warren (D-Mass.) together — but looming Medicare payment cuts to providers have their attention.   The pair were among 46 senators who signed a letter urging leadership to use the lame duck to avoid payment cuts scheduled to take effect in the new year.   The letter came the day after the Centers for Medicare and Medicaid Services released its final rule confirming the cuts, which are required by law.   In the House, Reps. Larry Bucshon (R-Ind.) and Ami Bera (D-Calif.) have introduced legislation that would stop the cuts .   Lawmakers are also expected to revisit riders that were left off the FDA user fee reauthorization during the end-of-year omnibus bill to fund the government. This potentially includes diagnostics, cosmetics and dietary supplement reform, as well as tweaks to the agency’s accelerated approval pathway for drugs and an effort to boost clinical trial diversity.   Congress will also likely consider whether to extend a 5-percent payment increase to incentivize alternative payment models. The congressional push isn’t far removed from the final rules from CMS earlier this month, which effectively promote Accountable Care Organizations, or groups of providers who coordinate patient care for Medicare beneficiaries. It also comes after ACOs visited the Hill in September to lobby for a payment boost.   The Senate may also consider legislation that would keep expanded Medicare telehealth access in place through the end of 2024. The House version , which passed 416-12 in July, would let Medicare as well as federally qualified health centers and rural health clinics continue to cover virtual visits from patients’ homes. It would also extend a waiver allowing patients to avoid in-person mental health visits.   The eased rules are currently set to end five months after the end of the Covid-19 public health emergency, which could come as soon as January. — Dan Goldberg

EDUCATION What to expect on education in the lame-duck session: Democrats aren’t likely to revive pushes for their big-ticket education proposals — like free community college or universal pre-K — in the waning weeks of this Congress. But education programs will be at stake as lawmakers hammer out a government funding package, one of their final major pieces of unfinished business for this year. The negotiations over a spending package to fund the government beyond the Dec. 16 deadline will likely hinge on which party is expected to be in power come January.   The funding package will determine how much spending various federal education programs receive for the remainder of the 2023 fiscal year. House and Senate appropriators have both proposed increases to K-12 and higher education programs, including a $500 boost to the maximum Pell Grant.   Republicans could use the appropriations process to push back against the Biden administration’s student debt relief plan, which they’ve called an illegal abuse of authority and unfair handout. GOP lawmakers already balked at giving the Education Department more flexibility to spend money for its student aid operations, including canceling student debt, as part of the stopgap government spending bill Congress passed in September. They’ll likely oppose Democratic efforts to fund the cancellation of student debt at the Education Department. — Michael Stratford

EMPLOYMENT AND IMMIGRATION Tying up loose ends: Unions continue to push hard for a Senate vote on the PRO Act in the lame duck. Spoiler alert: That probably won't happen. Same likely goes for a piecemeal immigration fix, which employers have been lobbying for.   Here's what will happen: The backers of the Pregnant Workers Fairness Act , which requires reasonable accommodations for pregnant workers, will likely try to attach it to an expected omnibus if they are unable to reach a time agreement to consider it on the floor. The measure has true bipartisan backing on the Hill as well as from the likes of the U.S. Chamber of Commerce and the ACLU, but has gotten buried under other leadership priorities (and opposition from Sen. Rand Paul makes hotlining it impossible).   The House and Senate must also find a common ground on their retirement reform package so they can clear that before the end of the session. As it stands, while their two bills are relatively similar, there are still dozens of provisions that need to be rectified.   Sen. Tim Kaine (D-Va.) is also pressing for a Senate vote on his anti-Schedule F bill , which would block GOP efforts to strip federal employees of their civil service protections.   Within the appropriations cycle itself, there are several provisions we're watching. Advocates want robust funding for child care, an industry that is still struggling post-pandemic and was skipped over in the Democrats’ reconciliation package . And the NLRB says it needs more money to rebuild after cuts made during the Trump administration and to implement General Counsel Jennifer Abruzzo's ambitious agenda. We'll also be keeping an eye on cash for the struggling unemployment insurance system, particularly ahead of a looming recession.   Last but not least, lawmakers will need to step in if railroad workers vote to strike this month after their cooling-off period ends. They're expected to vote to extend the cooling-off period, which forbids strikes and other work actions — or impose the recommendations of a presidentially-appointed emergency board, which employers are hoping for. — Eleanor Mueller

TRADE Trade action on two fronts: Any trade policy action after the midterm elections will likely be focused on two vehicles — the National Defense Authorization Act and a potential year-end tax extenders package.   NDAA: Backers of a long-debated measure to increase oversight of American investments in China will try — once again — to get their bill attached to the yearly defense spending bill, referred to as the NDAA. The sponsors have come up short many times, failing to get the bill attached to last year’s NDAA and the CHIPS Act this summer. But the White House is now close to issuing an executive order on the same subject , and that could give the sponsors more momentum to codify the new investment review into law, rather than just presidential action.   Also concerning China, a little-noticed provision in the draft of the NDAA set to be debated in the lame duck would block imports of advanced microchips from large Chinese semiconductor firms, ratcheting up the tech competition between the superpowers. Whether that provision ( Section 5871 ) will survive the amendment process remains to be seen.   Tax extenders: Capitol Hill tax writers are also hopeful they can ram through a year-end tax extenders package after the midterms . On trade, both parties want to renew the Generalized System of Preferences and Miscellaneous Tariff Bill, two expired tariff exemption programs. Democrats want a renewal of Trade Adjustment Assistance, which compensates victims of offshoring, while Republicans have balked at any movement on that front until Biden opens new international trade negotiations, which remains unlikely. While there still remains some debate over which products should be given tariff-free treatment in GSP and MTB, a deal to renew those programs appears the most likely in the lame duck. — Gavin Bade

CANNABIS All about banking: The cannabis industry is hoping that the lame-duck session might finally be the time to get banking legislation across the finish line.   The proposal has passed the House five times , either as a standalone bill or as part of a broader package, and enjoys strong bipartisan support. But the proposal has gone nowhere in the Senate, largely due to concerns from progressive Democrats that it’s a giveaway to wealthy marijuana companies but doesn’t do anything to address criminal justice concerns.   That dynamic has shifted in recent months, however, in a way that makes cannabis advocates hopeful this push may be different. Key lawmakers, most notably Senate Majority Leader Chuck Schumer , have indicated an openness to passing the banking proposal if it’s paired with some criminal justice provisions. Providing grants to states to create expungement programs for marijuana offenders, for example, is one idea that has bipartisan support.   The key questions are whether lawmakers can settle on a package that placates progressive Democrats without alienating conservative Republicans, and whether there will be any willingness to take up cannabis policy in what’s expected to be a packed legislative agenda. — Paul Demko

FINANCIAL SERVICES Possible crypto vote: Lawmakers and lobbyists are eyeing a potential Senate Agriculture Committee markup of a bill that would give the CFTC oversight of digital asset exchanges . The bill by Senate Agriculture Chair Debbie Stabenow (D-Mich.) and Sen. John Boozman (R-Ark.) received favorable reviews from industry when they introduced it earlier this year. Its treatment of decentralized finance (DeFi) has since become a flash point among crypto developers who worry their startups would be shut down.   — Housing industry seeks lifeline: Housing lobbyists are pushing Congress to pass two bipartisan bills designed to boost the supply of affordable housing. The Neighborhood Homes Investment Act would establish a new business tax credit to help finance the development and rehabilitation of homes in economically disadvantaged areas. The Affordable Housing Credit Improvement Act would revise and expand the existing Low-Income Housing Tax Credit, a tax incentive for the construction of affordable rental housing. Supporters argue that building more affordable homes would bring down inflation by reducing shelter costs. — Sam Sutton and Katy O’Donnell