May Washington D.C. Preview

 

QUICK FIX

— House Republicans’ debt limit bill includes a politically explosive proposal to raise the age limit for adults who must work in order to receive federal food aid, and would also restrict states’ ability to waive some work requirements.   — The American Rescue Plan for Covid relief allocated some $2 billion to modernize the systems, but not all of it has been obligated. The bill passed by House Republicans would claw back unobligated Covid-related funds.   — House Republicans’ plan to raise the debt ceiling requires many Medicaid recipients to work 80 hours per month, an idea that may prove to last longer as a talking point than in actual legislation.

AGRICULTURE SNAP in GOP crosshairs: House Republicans’ debt limit bill includes a politically explosive proposal to raise the age limit for adults who must work to receive federal food aid, and would also restrict states’ ability to waive some work requirements.   The bill narrowly passed the chamber April 26 only after GOP leaders made a middle-of-the-night tweak to speed up the implementation of new restrictions on the Supplemental Nutrition Assistance Program, the country’s largest anti-hunger program for low-income Americans.   — To win over Republican lawmakers from the Midwest, GOP leaders agreed to preserve some of the tax credits and incentives for biofuels that the initial draft legislation proposed to repeal. The controversial plans are part of a broader Republican effort to rein in spending on SNAP, formerly known as food stamps, which expanded significantly during the Covid-19 pandemic. They could result in millions of low-income adults losing food assistance. Democrats vehemently oppose such measures, setting up a fraught negotiation with the Biden White House as fears over a possible U.S. default on its debt continue to rise. — Emily Cadei

EMPLOYMENT AND IMMIGRATION Covid money clawback would sideline unemployment revamps: The plan would rescind $1.5 billion intended to update state unemployment insurance systems, according to an analysis of the legislation by Democrats.   — The American Rescue Plan for Covid relief allocated some $2 billion to modernize the systems, but not all of it has been obligated. The bill passed by House Republicans would claw back unobligated Covid-related funds.   — The majority of unspent Covid funds were designated for troubled union pension funds, according to a Reuters analysis released before the House Republican bill passed. Reclaiming the aid could also take back some $47 billion related to retirement benefits, Reuters found.   — Republicans’ bill also would establish a process for requiring congressional approval for some agency rules found to have a large annual impact on the economy. That could give Congress more sway over priorities of the Department of Labor, coming in part from House GOP labor leadership that already has an icy relationship with the DOL. Of course, President Joe Biden and Senate Democrats oppose the Republican proposal, making it essentially a non-starter. We covered the possible impact of Biden’s proposed budget on labor policy in March, which is similarly indicative of his priorities, and similarly unlikely to pass as-is. — Olivia Olander

HEALTH CARE Work requirements return: House Republicans’ plan to raise the debt ceiling requires many Medicaid recipients to work 80 hours per month, an idea that may prove to last longer as a talking point than in actual legislation. The bill would mandate able-bodied adults ages 19 to 55 without children to work, partake in community service or be in a work-training program for at least 80 hours per month to maintain eligibility for Medicaid.   — The proposed health provisions in the bill face unyielding opposition from Biden and congressional Democrats. Republicans argue that work requirements are essential to lifting people out of poverty and keeping people from government dependence. They were a hallmark of the Trump administration’s effort to reform Medicaid, though federal courts ultimately stymied those efforts. Still, Republicans at both the state and federal levels believe it’s an important way to reduce government spending and encourage people to find jobs. — Dan Goldberg

EDUCATION Student debt relief on the table: House Republicans are using their leverage in the debate over the debt ceiling to overturn Biden’s student debt-relief agenda, which they argue is too expensive and unfair to Americans who didn’t attend college.   — House Speaker Kevin McCarthy’s legislation to raise the debt ceiling that Republicans passed last week includes provisions that would take a hammer to Biden’s plan to cancel up to $20,000 of student debt per borrower, even as it remains in limbo at the Supreme Court. The legislation also blocks Biden’s new income-driven repayment plan that would lower monthly payments and permanently prohibits the Education Department from issuing any regulation or executive action that results in a one-time increase to the cost of the federal student loan program. The Congressional Budget Office says the increased borrower payments to the government under the GOP plan would lower the federal deficit by $460 billion over the next decade. That’s separate from the significant reductions in overall federal spending that GOP lawmakers also seek in the bill.   — The White House, which has said it won’t negotiate over the debt ceiling, is hoping to cast the House GOP plan as out of touch and radical. The Education Department issued a state-by-state breakdown of how many borrowers would be denied student loan forgiveness if the GOP plan passes – and what the likely spending cuts would mean for federal education programs. — Michael Stratford

TRADE U.S. economic leadership at risk: National Security Adviser Jake Sullivan and Treasury Secretary Janet Yellen have taken pains in recent speeches to emphasize that the U.S. is not seeking to decouple its economy from China’s, even as the Biden administration takes steps to cut off exports of high-end computer chips and manufacturing equipment to China.   — The president is expected to soon release a long-awaited executive order that would limit some American investments in China for the first time — another key effort to curtail Beijing’s technological and military rise. Still, the U.S. and Chinese economies remain, at this point, deeply intertwined. A U.S. default would be a “self-imposed calamity” for the country as Yellen warned in January, but it also would be a blow to a world economy struggling to hold off recession. That could further dampen demand for U.S. exports abroad, widening America’s trade deficit. It also could make it harder for Washington to convince foreign countries, many sitting on the sidelines in the intensifying geopolitical rivalry with Beijing and Moscow, to follow U.S. economic leadership. — Emily Cadei

DEFENSE Dollar-for-dollar on defense: The debt limit package passed by House Republicans doesn’t dictate that military spending should be cut, but it could crimp efforts to secure another sizable Pentagon budget boost for the coming fiscal year.   — The GOP's first bid proposes rolling back overall discretionary spending to fiscal 2022 totals, roughly $130 billion below the current level. Republicans on the House Appropriations Committee are aiming to avoid cuts to the Pentagon — and even increase it beyond Biden's $842 billion request for fiscal 2024.   — Cutting overall spending while protecting the defense budget means that for every dollar that goes toward a defense increase a dollar must be cut elsewhere. It’s a framework that Democrats say they won’t support because it would lead to deep cuts in domestic programs they support in the name of preserving national security funding.   — Across the Capitol, Democratic and Republican spending leaders are forging ahead with funding bills they hope can win bipartisan support. Pentagon funding legislation would likely see more money. The Senate Armed Services Committee is also weighing its own Pentagon bump in defense policy legislation, which could exceed what the House approves. — Connor O’Brien

ENERGY The energy-debt ceiling battle: McCarthy has explicitly linked the GOP’s interest in permitting reform with Congress’ need to raise the debt ceiling, positioning the policy idea as one that would promote economic growth by making it easier to build energy and transportation projects.   — Biden and Senate Majority Leader Chuck Schumer are also prioritizing permitting reform that helps reduce costs by making it easier for consumers to access energy, and ensuring that clean energy subsidies from the Inflation Reduction Act are not wasted. But the parties remain far apart in defining their priorities as part of that push. Senators of both parties have expressed skepticism toward linking permitting to the debt ceiling, not wanting to insert an unrelated policy debate into such a high-stakes battle that has to be addressed on a speedier timeline than it might take to work out the kinks on permitting. — Josh Siegal

TAX House GOP targets IRS funding: The House’s debt limit and spending cut package would take a meat cleaver to the $80 billion in additional funding that Democrats gave the IRS last year. Ironically, though, doing so would add to the deficit. GOP lawmakers made rescinding most of the money one of their top priorities when they took over the House.   — According to a POLITICO analysis, their legislation would claw back $45.64 billion for enforcement of tax laws; $25.33 billion for operations, including IT upgrades; $403 million for the Treasury Inspector General for Tax Administration, the agency’s watchdog; $105 million for the Treasury Department’s Office of Tax Policy; $153 million for the U.S. Tax Court; $50 million for Treasury Department offices responsible for administering and overseeing the spending; $15 million to study a possible free, IRS-run tax filing system, though that process has been underway and a feasibility report is expected in May.   — The cuts would derail the Biden administration’s ambitious plans to modernize the IRS and bring in more revenue by ramping up audits of corporations and wealthy taxpayers and corporations who may be dodging their tax obligations. In fact, the Congressional Budget Office says the Republican legislation would reduce tax collections by $191 billion. The Senate, of course, is poised to reject the plan and Republicans would face an uphill battle to get congressional Democrats and the White House to accept any of those cuts if the two sides get down to serious bargaining over the debt limit. Instead, GOP lawmakers are likely to turn their attention to rolling back IRS funding through the regular appropriations process. — Toby Eckert