July 2021 Federal Update from The Partnership for America’s Children

FEDERAL UPDATE:

Fiscal Legislation – Implications for Children and Families

Congress is picking up speed on a variety of issues  as the August recess approaches. The focus of this update is the various pieces of fiscal legislation that will affect children: a bipartisan traditional infrastructure package, a budget resolution that will open an opportunity for reconciliation (with components of the American Jobs Plan and American Families Plan), and appropriations.

Also keep in mind that the debt ceiling will need to be addressed this fall; the two-year suspension expires July 31 but the real deadline will be sometime later depending on how long the Treasury can manage the debt using extraordinary measures. The debt ceiling could be raised in a reconciliation bill requiring only 51 votes, but the reconciliation bill may not be ready before the real deadline is reached. In that event, Republican leaders may try to use any legislation to raise the debt ceiling that requires 60 votes (that is, anything other than a reconciliation bill) to try to pass legislation to limit federal spending in pursuit of shrinking the government. The Budget Control Act of 2011, which put in place 10 years of appropriations caps, was created as part of a deal to raise the debt level after Republicans tried to force other, even more damaging, provisions to control federal spending. The negotiations over that bill were so contentious that we actually hit the debt ceiling before a bill was passed and the S and P downgraded its rating of US debt from AAA to AA+. That act finally expired this year. If the debt ceiling needs to be raised before a reconciliation package is ready, the Democrats may try to raise the debt ceiling by including the provision in a “must pass” bill such as the continuing resolution to keep the government open once the current fiscal year ends, since we don’t expect appropriations legislation to be completed by September 30.

There are some other important developments as well: There are ongoing joint House-Senate negotiations around the George Floyd Justice in Policing Act; negotiators developed a framework for an agreement but there are still major sticking points, including qualified immunity. When efforts to pass a bipartisan bill creating a January 6 commission failed, Speaker Pelosi created a House investigation commission. And after the Senate failed to pass broad legislation around a range of democracy initiatives in the For the People Act, Democrats have made progress toward a narrower voting rights bill. However, they will either need to pick up Republican votes (which still seems unlikely) or persuade Manchin, Sinema and others to waive the filibuster for this bill. There is also an effort to include immigration legislation in the reconciliation bill.

Infrastructure Bill

The President has endorsed a bipartisan package developed by 10 Senate Democrats and 10 Senate Republicans. This package is considerably smaller than the President’s original proposal, and one possibility is that Democrats will move a variety of provisions that were in that proposal to a one party reconciliation bill that can be passed with only Democratic support.

The President originally said that he would only sign the infrastructure bill if a reconciliation bill also passed; he has backed down from this position after Senator McConnell objected, but Speaker Pelosi and Senator Schumer apparently still hold to it. We suspect that the effort to link the two bills is partly to keep the Democratic progressives on board and partly to make sure that Senator Manchin and other moderate Democrats will vote for the reconciliation package – it’s not about Republican support for the reconciliation package, which is extremely unlikely. Meanwhile, the House has passed an infrastructure bill that is similar in size to the Senate deal but sets different priorities, which would require negotiations between the House and Senate.

The infrastructure bill is a children’s issue, because much of the funding for our water systems would help get rid of lead in our water systems, and depending on how the transportation provisions work, the package would invest in communities of color by removing roads that cut communities from opportunities near city centers as well as improve upon public transportation for those communities. It also could help address climate change.

Budget Resolution and Reconciliation Bill

The goal is to have a budget resolution on the House floor by mid-July, that would set the top line dollar amounts and framework for the reconciliation bill. Many advocates have pushed for a guarantee that care provisions (that would be included in reconciliation instructions) do not get left behind if the bipartisan infrastructure package passes.  A vote on the budget resolution would then happen in September, with the work on the actual reconciliation bill in the fall. This would also push appropriations into the fall, so we can expect a continuing resolution to keep the government funded after September. Conversations are happening now about topline number allocations for the budget resolution.

Senate Budget Chairman Bernie Sanders released an early summary of a $6 trillion budget resolution proposal with $2.4 trillion in new taxes to help offset the cost. Hopefully a large part of the FY 2022 budget resolution and reconciliation instructions will be pre-negotiated, similar to the process with the American Rescue Plan. If this relief package follows the same process, the House will pass a budget resolution and the Senate would make changes (instead of having a conference process to resolve the differences) and send it back to the House for adoption.

As a reminder, anything that makes permanent budget changes in reconciliation has to be offset so that there is no budgetary impact outside the 10 year window, while changes that end within a 10-year window do not. However, moderate Democrats may insist that at least some of the provisions within the 10-year timeframe also be offset in order to minimize the debt. Many Democratic legislators have distanced themselves from the revenue raisers included in the President’s proposal for the American Jobs Plan or suggested that they can only support them at lower levels. There is pushback on increasing the capital gains tax and corporate tax rate increase, which could result in billions lost in potential revenue raisers. Some advocates are pushing for revenue raisers that were not in Biden’s plan, such as the millionaire surtax. Advocates are also pushing for pushing for savings within healthcare (which is counted as an investment in healthcare).

Conversations on the Hill are currently focused on the size of the budget resolution package, how much we can raise in revenues, and the most important things to keep in the package either permanently or for the short term (as well as assessing which, if any, short-term provisions should be financed within the 10 years). Some policymakers are focusing on the most important priorities to make permanent, while others want to leave everything on the table for two to three years. (The latter could be complicated for provisions that require a state match or state decisions. It also assumes that Democrats will retain control of the House and Senate after the 2022 elections.) Now is the best time for advocates to voice their opinions regarding committee allocations and the size of the package. As policymakers are having these conversations about priorities within the reconciliation package, please note that child care advocates are seeking at least $700 billion in direct spending for child care and early learning. Advocates are also pushing for the enhancements to the Child Tax Credit to become permanent.

Senate Republicans are circulating information that makes it seem like Democrats are encouraging unnecessary increases in domestic priorities while cutting large portions of the defense budget, but the opportunity to invest in programs that create a better infrastructure for children and families is now.

SNAP Enhancements

The temporary boosts to SNAP in effect during COVID-19 has been critically important  to providing nutrition to children. However, the 15 percent increase in SNAP benefits ends on September 30 unless Congress takes action. Also, households that have been receiving maximum benefit amounts through SNAP Emergency Allotments will no longer receive the maximum benefit without federal or state pandemic health declarations. Advocates are encouraging nutrition program investments in the American Families Plan (that is, the reconciliation bill) as well as the Child Tax Credit provisions to continue to boost SNAP benefits and avoid a benefit cliff for families who are facing food insecurity.

Appropriations

The House adopted a deeming resolution to set topline spending for FY2022 appropriations. The House Agriculture committee had its subcommittee and full committee mark-up. Below is a timeline for future mark-ups:

• 7/12 Commerce, Justice, and Science; Labor, Health, and Human Services, Education, and Related Agencies; and Transportation, Housing and Urban Development subcommittees
• 7/15 Commerce, Justice, and Science; Labor, Health, and Human Services, Education, and Related Agencies full committees
• 7/16 Transportation, Housing and Urban Development full committees

The Senate is waiting until the Budget Resolution is passed to set the topline appropriations amounts. This is going to delay the appropriations process and force a short term Continuing Resolution in October to keep funding the government in FY 2022 at the FY 2021 levels. While a short term CR would be acceptable, a longer term or full year CR would create problems.

Administrative Development

USDA is undertaking a review of the Thrifty Food Plan, directed by the 2018 Farm Bill. This formula is used to set the amount provided for SNAP. The current funding formula does not reflect what families realistically need to live on a basic diet. Advocates are hoping that the review will lead to a permanent increase in the value of the Thrifty Food Plan. This increase, which could be implemented by October 1, would help mitigate the extreme loss of the 15 percent boost that is scheduled to sunset on September 30.

USDA also removed a final rule under the Trump Administration that limited state’s ability to protect SNAP benefits for 700,000 adults in areas with insufficient jobs through area waivers for Able-bodied Adults Without Dependents (ABAWD). The waiver allows states to have the ability to ask FNS to temporarily waive the 3 month time limit (within a 3 year period) for adults without dependents in areas with an unemployment rate over 10 percent. The rule limiting that waiver would have been harmful for non-custodial parents or guardians who care for children directly or indirectly with food provided through SNAP.