January Washington D.C. Preview

QUICK FIX

— CEOs of major tech companies are set to testify before the Senate Judiciary Committee about their “failure” to remove content that sexually exploits children.   — With AI-generated tools becoming mainstream, a key issue to watch as the 2024 presidential election grows closer is how Congress, federal agencies and the administration deal with the possible cyber threat.   — The fallout from December’s hearing on antisemitism on college campuses has only furthered lawmakers’ interest in why a long-awaited rule to combat antisemitism and other discrimination on campuses has been delayed.

AGRICULTURE Ag appropriations fight ahead: Time is running out for Republicans and Democrats in Congress to strike an agreement to fund the USDA, the FDA and a handful of other departments before the current stopgap funding measure lapses on Jan. 19.   Republican and Democratic negotiators failed to land on even a rough outline of a compromise before lawmakers left for the holidays. They’ll return in January with only a few days to avert a partial government shutdown.   — House Republicans ditched plans to try to pass their Ag-FDA spending bill on the floor after it failed earlier this fall amid opposition within GOP ranks, as POLITICO has reported.   Just before he was elected speaker, Johnson signaled to his Republican colleagues that he was willing to hammer out a compromise plan to pass the agriculture spending bill. But an intraparty row over abortion policy and steep USDA cuts has triggered anger among vulnerable Republicans in districts that supported Biden as well as GOP members in agriculture districts.   Johnson and his team have privately told several House GOP lawmakers that removing the mail delivery ban on abortion pills in the bill would trigger larger opposition than keeping it in. Given that reality, the speaker will likely need to hammer out some sort of funding compromise with Senate Democrats who are staunchly opposed to House GOP spending cuts and abortion policies in the bill. — Meredith Lee Hill

TRADE China tariff review: The Biden administration is expected to complete its review of Trump-era tariffs on China sometime early in the year. That review will likely keep most of the tariffs in place, though some adjustments are possible. In particular, Biden’s team has considered raising tariffs on high-tech goods like electric vehicles while potentially lowering tariffs on some simpler consumer goods and intermediate products used by U.S. manufacturers. The exact timing of the review is unclear.   — Trade legislation gets going: In Congress, trade activity is expected to pick up early in the year. Lawmakers on the House Ways and Means Committee are expected to unveil an Indo-Pacific trade bill in the first weeks of 2024 that will push Biden to adopt a more robust trade agenda for the region.   Committee lawmakers are also close to an agreement to reauthorize the Generalized System of Preferences, a long-expired tariff exemption program. They are further from a deal to reform the de-minimis loophole — which allows packages under $800 to enter the U.S. duty-free — but there is bipartisan momentum to alter that program.   And throughout the year, China hawks in both parties are likely to push for a vote to repeal China’s permanent normal trade status — a gambit to put the Biden administration in a tight spot during election season.   — WTO ministerial looms: Worldwide, leaders will prepare for the World Trade Organization’s 13th ministerial meeting, known as MC 13, slated for February in Abu Dhabi. Major agreements are not expected due to the continued U.S. blockade on judges for the WTO’s appellate body and Washington’s recent decision to walk away from digital trade positions it supported under Trump. But the meetings will likely shed light on whether the global trade body can persist in an era of rising protectionism and economic nationalism. — Gavin Bade

EDUCATION House antisemitism investigations: Republicans on the House Education and the Workforce Committee are expected to launch their investigations into colleges' responses to antisemitism on campus. Harvard University, Massachusetts Institute of Technology and the University of Pennsylvania are on the top of their list after the leaders of those institutions failed to sufficiently condemn protests calling for “Jewish genocide” in a five-hour hearing in December. Lawmakers say more schools are also expected to be investigated.   Republicans were already pressing Education Secretary Miguel Cardona to explain the Biden administration’s decision to delay a long-awaited rule to combat antisemitism and other discrimination on campus. The fallout from last month’s hearing only increases lawmaker interest in knowing why the rule, once expected in December 2023, is now designated as a “long-term action” with a proposed rule expected in December 2024.   — FAFSA delays: The Education Department has soft-launched its new simplified federal student aid application. Most students are expected to start filling out the form in January, but education advocates say the two-month delay in releasing the form could hurt low-income student enrollment. Advocates and the department will keep a close eye on the form’s rollout to ensure students can complete the application and receive an estimate on what colleges they can afford to attend. — Bianca Quilantan

DEFENSE Stopgap scenario looms over Pentagon: The new year begins with old concerns about the lack of full-year Pentagon funding.   — Defense programs, except for military construction projects, are funded through Feb. 2 — the second deadline in Republican’s two-step stopgap gambit. But lawmakers will have just a few weeks when they return to session to meet that deadline, and they may punt funding even further with another stopgap.   Expect Defense Secretary Lloyd Austin and top Pentagon brass to step up their warnings about the consequences of continuing to operate under short-term funding, which freezes spending at the previous year's levels and doesn't allow the military to start new programs.   Austin, Joint Chiefs Chair Gen. C.Q. Brown and the military service chiefs have already cautioned lawmakers about the consequences of a long-term continuing resolution. In letters to congressional leaders, top officials have warned that thousands of programs could be impacted, including Navy shipbuilding, modernization of the U.S. nuclear arsenal and efforts to ramp up missile production through multiyear procurement contracts. — Connor O’Brien

TECHNOLOGY Chipping away at microchip projects: As he gears up for a grueling reelection fight, President Joe Biden is reportedly eager to highlight projects funded through several spending bills he’s shepherded across the finish line. The Commerce Department, which has doled out only $35 million for one microchip project so far, is under tremendous pressure to award more CHIPS and Science Act grants in 2024 to support bigger projects before the presidential campaign kicks off in earnest.   — Gridlock caused by environmental permitting could stall new microchip projects: Senators attempted, and failed, to insert a provision in the year-end defense bill that would streamline permitting for chip projects. The issue will likely remain a live one on Capitol Hill going into 2024. The Senate unanimously passed the exemption as a standalone bill, sending it to the House just as lawmakers there left for December recess. Its sponsor, Sen. Mark Kelly (D-Ariz.), has also said he is eyeing the two upcoming funding deadlines as potential vehicles for the measure.   — Tech CEOs to testify on child sexual exploitation: The top bigwigs at Meta, TikTok, Snap, Discord and X (formerly known as Twitter) will appear before the Senate Judiciary Committee on Jan. 31 to testify about their “failure” to remove content sexually exploiting children. And Snap, Discord and X had to be subpoenaed to appear. Pressure is building on Congress to pass bills requiring platforms to strengthen online protections for kids. In the meantime, at least five states have passed their own laws. More than 40 states sued Meta in October over claims the platform’s harmful and addictive products violated state consumer protection laws.   — Federal agencies stare down AI deadline: Expect major AI developments across the federal government by the end of January, when nearly a dozen agencies will hit a 90-day deadline set by Biden’s October executive order on artificial intelligence. Two of the biggest moves to watch for: a regulatory proposal from the Commerce Department to compel cloud computing providers to report to the government when foreign entities use their services to train AI models capable of cyberattacks and new rules from the Department of Homeland Security to modernize the H-1B specialty occupation worker program.   — A spectrum auction snafu: A key committee leader sees renewed hope for negotiating a wide-ranging package of wireless airwaves legislation that would reauthorize the Federal Communications Commission’s authority to auction spectrum, which lapsed March 9. This legislation could earmark billions of dollars in future spectrum auction revenue for key public policy priorities, such as ripping Huawei gear out of rural U.S. telecom networks or upgrading the nation’s 911 system.   Senate Commerce Chair Maria Cantwell (D-Wash.) told POLITICO in late December that new negotiation is afoot after the Biden administration finally started briefing members of Congress on classified findings around whether it can sell or share Pentagon spectrum for commercial wireless use. She recently submitted ideas to the Congressional Budget Office and will use its answers to help determine next steps for what legislation might ultimately look like and help set the table for early 2024.   — Net neutrality comments, take two: A second round of comments is due Jan. 17 in the Federal Communications Commission’s net neutrality rulemaking, which would revive Obama-era restrictions on internet service providers blocking and throttling their customers’ online traffic. December’s first round featured the traditional tussling, with the telecom industry balking at heavy regulation and consumer advocacy groups cheering the rules’ likely return. January’s comment cycle will allow parties to respond to one another’s arguments, which could allow for more nuanced debate over what the new rules do and to what extent they may override any existing state net neutrality protections. — Brendan Bordelon, Mohar Chatterjee, John Hendel, Rebecca Kern, Christine Mui

HEALTH CARE Doc pay: Congress’ failure to address looming pay cuts to physicians is poised to become a massive challenge for providers and patients, several doctor groups have told POLITICO, and they are looking to the Biden administration for help. Doctors had been bracing for a 3.4 percent cut to Medicare reimbursement on Jan. 1. Many physicians assumed lawmakers would reduce — or eliminate — those cuts as part of a government-funding package. But the decision to punt the spending fight into January leaves doctors without their fix. Instead, the Centers for Medicare and Medicaid Services promised that if Congress offers retroactive relief in 2024, it will reprocess the claims it has already paid under the new rates. It’s likely the best outcome doctors could hope for, but it creates two problems, they say: First, doctors could be waiting months for the government to reprocess the claims. Second, they might have to hound patients for an updated copay based on a percentage of the total fee.   — PEPFAR funds: Negotiations to extend U.S. global HIV/AIDS relief work are deadlocked — and that jeopardizes a program credited with saving 25 million lives and that has long enjoyed bipartisan support. PEPFAR supporter Rep. Michael McCaul (R-Texas) has been unable to bridge the divide between his Republican colleagues who say the Biden administration is using the program to fund abortion providers overseas and House Democrats who refuse to reinstate Trump administration rules that prohibited foreign aid to groups that provide or counsel on abortions.   The program’s best hope is a government spending process beset by delays and divisions and slated to drag through February. PEPFAR can hobble along without reauthorization unless there’s a prolonged government shutdown. But its backers say without a long-term U.S. commitment, groups fighting HIV and AIDS will struggle to hire staff and launch long-term projects.   — FDA changes: The agency is preparing for the departure of Principal Deputy Commissioner Janet Woodcock after almost 40 years of experience. FDA Chief Scientist Namandjé Bumpus is slated to succeed her. The impact of Woodcock’s retirement on the agency’s regulatory stance toward drug oversight and day-to-day operations will ripple for a long time. Also, the agency will reorganize its inspection workforce with the rebranding of the Office of Regulatory Affairs as the Office of Inspections and Investigations. The goal? Strengthening the agency’s field-based oversight program, partly in response to the agency’s handling of the infant formula crisis and increased scrutiny by Republican lawmakers of the FDA’s foreign drug inspection program.   — Stakes in the states: State legislatures, except those in Montana, Nevada, North Dakota and Texas, will convene in 2024. High-profile health issues will take center stage and will likely serve as a counterweight to renewed calls from former President Donald Trump to repeal the Affordable Care Act. Health care costs will likely remain top of mind as states look at industry consolidation, establish health care and prescription drug affordability boards, reduce premiums through public health insurance options and benchmark costs.   Some issues to look at in state capitols include expanding health care access, debating how to spend billions in opioid settlement dollars, establishing parity and improved access to mental health and substance use disorder treatment and taking up several reproductive health-related policies. — Pro Health Care Staff

CYBERSECURITY Election security: It’s going to be a record-setting year for elections worldwide in 2024, but for the first time, it comes with AI-generated tools going mainstream.   — How Congress plans to clamp down on disinformation and deepfakes will be a key issue to watch on the Hill as major elections go full tilt. The fear is that generative AI technologies, like ChatGPT, will make it easier for foreign state-backed actors to increase content production in influence campaigns. Because the U.S. presidential election nears, there is growing awareness not only on the Hill but also in federal agencies and the administration to deal with the cyber threat.   Along with the United States, key elections this year include the United Kingdom, European Parliament, India, Pakistan, South Africa and Mexico.   But the first test of the year is Taiwan’s election on Jan. 13, which cyber-strong Beijing has a marked interest in. — Joseph Gedeon

ENERGY FERC’s full agenda: The Federal Energy Regulatory Commission often gets overlooked in the federal bureaucracy, but it’s playing an increasingly important role in the nation’s economy, particularly in the transition to clean energy. And though some major issues are on its agenda for 2024, the agency will start the year at a diminished capacity, with two of its five seats vacant. The commission seemed to operate smoothly enough with a 2-2 Democratic-Republican split this year, but with Democratic Commissioner Allison Clements’ term expiring at the end of June, its quorum may be in jeopardy, though she can stay on until the end of the year.   — And the items on its to-do lists are weighty. The commission will have to decide what changes, if any, to make to the sprawling transmission planning rule proposed under then-Chair Richard Glick in 2022. The rule as proposed would require developers to consider a future low-carbon mix of resources when planning new lines and give states more authority over contentious questions of how transmission costs should be allocated. It’s a key issue in clearing the roadblocks to new transmission the country will need to meet sharply rising demand and fight climate change.   — FERC will need to decide whether to approve Venture Global’s mammoth Calcasieu Pass 2 liquefied natural gas terminal in Louisiana. The project would be the largest in the world, capable of exporting more than 20 million metric tons per annum. FERC is under pressure from energy companies worldwide to finalize the project — but U.S. green activists are adamantly opposed to it as a project that will add pollution to the local community and lock in new fossil fuel consumption for years.   — FERC commissioners voted in December to look into large investment funds’ ownership stakes in utilities — and whether the deep-pocketed companies exercise too much control over power and water providers' consumer rates, competition and ESG policies. — Pro Energy Staff

EMPLOYMENT AND IMMIGRATION Two big bills: The House committee covering labor passed two major pieces of legislation last month: one to reauthorize the nation’s federal workforce programs and another to allow Pell Grants for short-term job training programs. In a win for Republicans, the Pell bill would allow for online and for-profit schools to benefit from the new expansion if they meet certain quality requirements.   Both bills were the result of months of negotiations and had overwhelming bipartisan support within the committee. But passing in the full House could prove to be a challenge as Speaker Mike Johnson picks his priorities for the new year. — Also on the Hill: The bill funding most of the labor agencies faces a Feb. 2 expiration date. Expect conflict over major proposed funding cuts on the House side — the difference between the House and Senate versions of the bill was the greatest by dollar value of any of this year’s appropriations bills.   — Regulatory front: The Labor Department seeks comments on whether to expand the list of Schedule A occupations allowed to bypass some immigration-related hurdles, which could bring more AI experts to the U.S. Comments are also open for a Labor Department rule proposed in December that would unwind a Trump-era health insurance rule. The previous rule on association health plans had made it easier for small businesses to purchase health insurance together and avoid some regulatory requirements mandated by the Affordable Care Act.   A long-awaited final rule on the definition of an independent contractor could be coming soon but still hasn't been released, after the department blew past estimates of rolling it out last year. — Olivia Olander

TAX Lawmakers seek a tax cut deal, but time isn’t on their side: They have punted a long list of decisions on tax policy until January.   — Lawmakers hope to pass a long-awaited deal expanding the Child Tax Credit and restore a trio of popular business breaks. They also want to move a bill granting treaty-like tax benefits to Taiwanese semiconductor companies operating in the U.S. And, with Congress passing few tax bills these days, any legislation will surely attract demands from rank-and-file members to address other issues.   But lawmakers won’t have a lot of time to reach a deal.   They face a Jan. 19 deadline for funding the government and have already postponed decisions on a number of other big issues, including aid to Ukraine and Israel and what, if anything, to do about border security.   The Senate won’t be back until Jan. 8.   All of that could potentially leave lawmakers without enough bandwidth to move a tax package.   — Meanwhile, the tax world will be watching the beginning of the 2024 filing season, especially with the IRS preparing to launch a pilot program that would allow some people to file their taxes online for free with the agency. The initiative is controversial, and missteps by the agency will surely get a lot of attention. — Brian Faler