The Next Fiscal Fight Is Just Days Away

The Next Fiscal Fight Is Just Days Away

Speaker Mike Johnson
By Yuval Rosenberg and Michael Rainey
Monday, November 20, 2023

Happy Monday! President Joe Biden turns 81 today, and he celebrated in part by pardoning a pair of turkeys — named Liberty and Bell — for Thanksgiving and joking that he wasn’t at the White House for the first such ceremony 76 years ago. “The best birthday gift the oldest president in American history could hope for would be a strategy for assuaging voters’ concerns, but that has been hard to come by,” Peter Baker writes in The New York Times.

Here's what else is on our radar.

Talking Turkey: Thanksgiving Just a Break Before Congress’ Next Fiscal Fights

Congressional lawmakers have left themselves loads of work to tackle when they return from their current Thanksgiving break — and some real questions about just what they can get done.

While Congress managed to avoid a government shutdown this year through bipartisan action, it has made relatively little progress toward funding the government for the full fiscal year that began seven weeks ago. On top of that, the process thus far has left hardline conservatives angry at new Speaker Mike Johnson, casting doubt about how he will navigate the negotiations that lie ahead.

“Setting those 2024 spending levels will require consensus between the GOP-led House and Democratic Senate before the next fiscal deadlines, teeing up what many expect to be an even more contentious battle that will center on Johnson’s ability to lead his deeply divided conference,” The Washington Post’s Marianna Sotomayor wrote this weekend. “But while appropriators and governing-minded lawmakers in both parties believe they can strike [a] compromise and avoid an automatic 1 percent cut across all federal departments early next year, far-right hard-liners have suggested rejecting any compromise that does not fulfill their spending requests and have flirted with the idea of supporting a government shutdown if the Senate does not accept their demands.”

House Republicans still have to pass five of the 12 required annual spending bills, and the ones that are left all face difficulties, including significant intraparty clashes that have left Republicans unable to pass their own appropriations measures.

The Senate, meanwhile, has yet to pass nine of the 12 annual spending bills, but lawmakers on that side of the Capitol have been working in more bipartisan fashion and have agreed to set topline funding levels above the $1.59 trillion ceiling set as part of the deal to raise the debt limit earlier this year. The GOP-led House, in contrast, is looking to slash spending below that agreed-upon level. Senate Majority Leader Chuck Schumer reportedly said last week that House and Senate leaders and top appropriators have been negotiating a top-line number.

Before lawmakers resolve those differences, they are set to take up the White House request for an additional $106 billion in funding, primarily for supplemental aid to Ukraine, Israel and the Indo-Pacific. President Joe Biden’s request includes $13.6 billion for border security initiatives, but given rising Republican opposition to additional funding for Ukraine, the fate of the full package likely rests on lawmakers’ ability to reach a deal on border policies.

Senators in both parties reportedly have indicated that additional support for Ukraine will depend on reaching a bipartisan deal to address immigration at the southern border.

“Each of the groups that we’ve talked to — we’ve said this is going to determine whether or not there’s funding for Ukraine, Israel and Taiwan,” Republican Sen. Mike Rounds of South Dakota told Punchbowl News about a Senate delegation’s meetings at a security forum. “Because how do you go back home and say you’re justifying their defense but you’re not protecting our own southern border? Without the border being addressed appropriately, nothing is going to move.”

The bottom line: Lawmakers will have just a few weeks to deal with the supplemental funding package, a defense authorization bill and full-year funding, among other items. House conservatives could still complicate spending negotiations, again leaving Johnson in the precarious position of trying to decide how to contend with legislation that divides his conference and balance competing demands.

Quote of the Day

“One of the more frustrating aspects of this saga is that the Fiscal Responsibility Act that suspended the debt ceiling established discretionary spending caps for this fiscal year, which *should* have made the spending saga relatively clean and efficient.

“Our base case remains those levels (3.2% boost for defense & non-defense flat), though it may well take until late April for resolution ... nearly 10 months after the FRA was signed into law. Great use of time & energy for a process that could have been an email.”

Analyst Chris Kreuger of TD Cowen Washington Research Group in a note Monday about the next phase of the battle over government funding – a battle that many thought was essentially over when the Fiscal Responsibility Act was agreed to earlier this year. Kreuger expects a funding package for Israel, Ukraine and the southern border to occupy most of lawmakers’ time for the rest of the calendar year, to be followed in the new year by more legislative combat over government funding for the 2024 fiscal year.

Significant Drop in Medicaid Enrollment Expected in 2024

As states continue to purge their Medicaid rolls following the end of the Covid-19 pandemic last spring, officials expect the large declines in enrollment — now exceeding more than 10 million overall — to continue.

In a survey released last week, the healthcare foundation KFF found that of state directors expect their Medicaid rolls to fall by 8.6% in fiscal year 2024. Spending, however, will continue to rise, though at a slower pace. Total Medicaid spending rose by 9.8% in 2022, as enrollment soared to record levels following the loosening of regulations during the pandemic. In 2023, spending rose 8.3%, but growth will slow to an estimated 3.4% rate in 2024, according to the survey.


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