The Final Vote of the 117th Congress

Outgoing House Speaker Nancy Pelosi leaves the Capitol after Friday's vote
Reuters
By Yuval Rosenberg

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Say Goodbye to the 117th Congress: House Passes $1.7 Trillion Spending Bill

In the final vote of the 117th Congress, the House on Friday passed the $1.7 trillion package funding the government through the fiscal year that ends in September. The Senate approved the so-called omnibus on Thursday and it will now head to President Joe Biden’s desk.

The 4,155-page bill boosts discretionary federal spending by about 9% over fiscal year 2022 levels, including a roughly 10% increase in defense spending to $858 billion and a 4.6% pay increase for military servicemembers. It provides about $772.5 billion in nondefense discretionary funding, with $47.5 billion for the National Institutes of Health and $9.2 billion for the Centers for Disease Control and Prevention. It also includes $85 billion in aid to Ukraine and disaster relief as well as an electoral count reform and a host of other year-end priorities. On the other hand, it does not include a number of priorities for both parties, including some popular tax breaks.

Friday’s action also prevents a government shutdown at midnight, when current funding expires, as lawmakers approved a stopgap extension of funding through December 30, allowing time for the larger full-year bill to be processed and sent to the president.

The package was approved by a vote of 225-201, largely along party lines. Nine Republicans joined Democrats in supporting the bill while one Democrat, Rep. Alexandria Ocasio-Cortez of New York, voted against it and another, Rep. Rashida Tlaib of Michigan, voting present. Many House members voted by proxy, taking advantage of a pandemic-era option introduced by Democrats that Republican plan to eliminate when they take control of the chamber next year.

House Republicans were not involved in negotiating the spending package and conservatives blasted the 18 Senate Republicans who had supported it. In a lengthy speech before the vote, House Minority Leader Kevin McCarthy (R-CA), who is looking to become the next speaker in the face of opposition from a handful of right-wing Republicans, railed against the package, the process used to pass it and the past two years of Democratic control of Congress.

“This is a monstrosity. That is one of the most shameful acts I’ve ever seen in his body,” McCarthy said. “The appropriations process has failed the American public, and there’s no greater example of the nail in the coffin of the greatest failure of a one-party rule of the House, the Senate and the presidency.”

Rep. Jim McGovern (D-MA), the House Rules Committee chair, took a jab at McCarthy in response. “After listening to that, it’s clear he doesn’t have the votes yet,” he said.

Biden signs NDAA: Earlier in the day, President Joe Biden signed the annual defense policy bill that calls for $847 billion in Pentagon and Energy Department spending, including a $45 billion boost to the defense budget he had proposed. The law, passed by Congress with bipartisan support, marks the 62nd straight year that a defense authorization has been enacted.

This year’s law will also end the administration’s military Covid-19 vaccine mandate, a change that the White House and Pentagon opposed. The bill “doesn’t bar the Pentagon from issuing a new vaccine requirement in the coming months,” Politico’s Connor O’Brien notes, meaning a new vaccine policy could be announced after the current one is repealed. “That would likely spark a battle with the GOP-led House next year, when Republicans are expected to continue to press the Pentagon over reinstating troops who were kicked out and giving them back pay.”

The bottom line: With Friday’s vote, we can bid goodbye to the 117th Congress and look ahead to what’s more than likely to be a turbulent 118th.

Inflation Shows Signs of Cooling as We Head Into 2023

Inflation showed further signs of easing in November, as the personal consumption expenditures (PCE) price index rose just 0.1% on a monthly basis and 5.5% over the last year, the Bureau of Economic Analysis said Friday. The 12-month result for November was the smallest increase since October 2021, and a significant softening from the 6.1% growth rate recorded a month earlier according to the revised data.

The core PCE measure – which strips out food and fuel costs and is closely watched by the Federal Reserve – also declined, falling to 4.7% on an annual basis, down from 5.0% the month before.

Spending by households also showed signs of slowing down in November, the BEA said, coming in flat on a month-over-month basis after adjusting for inflation.

“All in all the data releases painted a picture of a slowing economy heading into the end of the year, which should help support a continued deceleration in inflation as we head into 2023,” Sam Millette, fixed income strategist for Commonwealth Financial Network, said, per Bloomberg.

CNBC’s Ron Insana said the data adds weight to the argument that the Fed has already done enough to bring inflation under control. “Maybe this is a temporary respite from ever-higher prices or just maybe — as some of us have forecast all along — the economy hasn’t been going through a 1970s style inflation spiral,” he wrote Friday. “Instead, it was going through a pandemic and war-related disruption that boosted inflation for a limited time before the economic world edged back toward normal.”

Nevertheless, although inflation is showing signs of cooling, it remains well above the Fed’s 2% target, and most analysts expect the central bank to continue to take a tough stance in its effort to bring price increases under control.

IRS Delays New $600 Tax Reporting Threshold for eBay, PayPal Sales

The Internal Revenue Service on Friday delivered something of a Christmas gift to heavy users of payment services including Venmo, PayPal and CashApp and taxpayers who rack up sales on platforms like eBay and Etsy. The agency said it is delaying a change in the reporting thresholds for such payment services that had been set to take effect for the coming tax season and would have required tax forms be sent to users with more than $600 in transactions. The previous threshold was $20,000, with a minimum of 200 transactions.

The change, part of the American Rescue Plan of 2021, is being delayed for one year.

"The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan," Acting IRS Commissioner Doug O'Donnell said in a statement. "To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes. The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements."

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