What’s to be expected as lawmakers in the 118th Congress work to enact the dozen spending bills that fund government before the October 1st start of fiscal year 2024? What about the expiring Farm Bill? Possible cuts to defense spending? Hit play for the Taxpayers Guide to the 118th Congress with host Steve Ellis and TCS Senior Policy Analysts Wendy Jordan and Josh Sewell.

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Episode 37: Transcript

Announcer:

Welcome to Budget Watchdog All Federal, the podcast dedicated to making sense of the budget, spending and tax issues facing the nation. Cut through the partisan rhetoric and talking points for the facts about what’s being talked about, bandied about, and eat about and pushed to Washington, brought to you by Taxpayers for Common Sense. And now a host of Budget Watchdog AF, TCS President Steve Ellis.

Welcome to All American Taxpayers Seeking Common Sense. You’ve made it to the right place. For over 25 years, TCS, that’s Taxpayers for Common Sense, has served as an independent nonpartisan Budget Watchdog group based in Washington DC. We believe in fiscal policy for America that is based on facts. We believe in transparency and accountability because no matter where you are in the political spectrum, no one wants to see their tax dollars wasted.

It’s January 10th, 2023 and the 118th Congress is finally in session. The protracted pre-game drama surrounding the election of the new speaker of the House, Kevin McCarthy, is over. The work of the legislative branch of your federal government has now fully restarted. Thankfully, the tasking of funding government for fiscal year 2023 was taken care of by the last Congress, as it should have been, but in short order, speaker McCarthy will invite President Biden to deliver the State of the Union address and then Congress will receive the president’s fiscal year 2024 budget request. So what’s new and what’s to be expected as lawmakers in the 118th Congress work to enact the dozen spending bills that fund government before the October 1st start of the fiscal year 2024? What about the expiring farm bill, possible cuts to defense spending, rules changes affecting the House operations? Joining us now to give you a taxpayer’s guide to the 118th Congress are TCS Senior Policy Analyst, Wendy Jordan and Josh Sewell. Welcome to the podcast and Happy New Year.

Wendy Jordan:

Hey, Steve, Happy New Year to you.

Josh Sewell:

My new year starts October 1st, but Happy New Year to you.

Wendy Jordan:

Oh, jeez. What an appropriations nerd.

Steve Ellis:

All right. Leading up to the speaker votes, several concessions were made to the recalcitrant lawmakers. Before we get into some of the concerning ones and what that means for governing, I’d like to flag a couple that, well, are really taking us back to regular order. Basically, they vote on all 12 appropriations bills individually. There’s a requirement, basically so that they can read the bills, that they get 72 hours of ability to read the bills ahead of time. They get to vote on striking earmarks. Josh, these all sound positive, right?

Josh Sewell:

Yeah, and I wish them the best on keeping to them. But the thing is, you can make all the rules and promises you want, but for those rules to work, you have to stick with them. And that’s where I’m a bit worried. Again, I have to say, there are some good rules, some good rule changes in here, but just as an example, we’ve had past rules where legislation had to be available for 72 hours before a vote, and remember how that evolved?

Steve Ellis:

Good point. Yeah. I mean eventually 72 hours turned into three days, which of course it is, but then three days was interpreted as it could come out at 11:00 PM on a Monday and then they could vote at 9:00 AM on a Wednesday, and that way it’s three separate calendar days, but certainly not 72 hours.

Josh Sewell:

Right. So creative reinterpretation of seemingly common sense rules. It’s a challenge and a side effect of having so many lawyers in Congress. For me, I question what happens when, not if, but when there is some backsliding on these various rule changes. So another big change, which we’ve heard a lot about, is the motion to vacate the chair.

Steve Ellis:

So listeners, how is that a big change in this Congress? Any one member can introduce a privileged motion to vacate the chair, which is DC speaker for depose the speaker. This means the House must stop what it’s doing and debate whether or not to have a speaker election. We’ve already seen how that throws a gear in the wrench of the operations of Congress. And even if it’s not evoked, it’s a big threat to the speaker and their leadership going forward. That’s a big one. What else is going on, Wendy?

Wendy Jordan:

Another big thing, which is also a wrench in the gears, or it could be for specific federal employees, is the reinstatement of something called the Holman Rule, named for its original sponsor back in the mid 1880s William Holman of Indiana, and what this does is when an appropriations bill is on the floor, it allows any member to bring to the floor an amendment to “retrench” or strike the specific spending in that appropriations bill for either one single federal employee or an entire agency. And it would be considered in order to offer that amendment. It came into being in the mid 1880s to deal with the issue of ghost employees who had patronage jobs given to them by federal lawmakers and it was a tool used sparingly to deal with that sort of thing. Tip O’Neill in 1983 removed the Holman rule from the House rules and we’ve been bumping along without it ever since, except for one, two-year period when it was brought back.

So it’s kind of a sort of Damocles over the head of federal employees, and by the way, this is not just political appointees, but career federal employees. It would have an unfortunate, we believe, quelling effect on the actions of federal employees if they have to constantly worry if they cross the wrong member of Congress, will their pay or their office, or maybe their entire agency, suddenly be on the chopping block during a vote on the appropriations bill that funds their agency? So you can combine the Holman rule with one of the first actions taken by the 118th Congress, which was to establish a new select subcommittee on the “weaponization” of the federal government. This select subcommittee will be under the committee on judiciary, which is chaired by Congressman Jim Jordan, and the likelihood that investigations into actions taken by the federal government, under whatever they deem to be weaponization of the federal government, you combine that with this new Holman rule and you have a recipe for federal employees becoming targets of the Congress.

Steve Ellis:

Well, just the name weaponization of the federal government, I wonder who gets to be the ranking Democrat on that committee. I could just see it on their webpage, on their business card. I’m sure they’ll be thrilled by that, ranking member, subcommittee on the weaponization of the federal government. All right, Josh, what else is going on?

Josh Sewell:

Well, there’s something that jumped out of both Wendy and me and it’s this thing about federal land conveyances. So there’s a rule change that brings back a previous House order that’s stipulating that conveyances of federal lands, which is a transfer of federal land to someone else other than the federal government, “shall not be considered as providing new budget authority, decreasing revenues, decreasing revenues, increasing mandatory spending, or increasing outlays.” We just got to point out that it’s impossible without a review of the specifics of each proposed conveyance to know if that’s true. Federal lands often produce revenue, and if land is transferred to states or other entities, taxpayers, you and I, will not accrue that future revenue. And in fact, depending on the new use of the land, that transfer may actually increase mandatory spending or outlays.

Steve Ellis:

Well, it’s certainly something that taxpayers has actually been interested in the past, have testified on land transfers, and a lot of times legislated land transfers are a bad deal for the federal government. That’s the reason why they’re actually being legislated instead of actually being negotiated. Okay, so there’s been talk about cutting federal spending down to fiscal year 2022 levels. Are they giving them any tools to do that, Josh?

Josh Sewell:

Half a tool, maybe. And again, trying to be optimistic about some of this stuff. So there’s a change in the rule this year for this Congress that goes from modifying what’s known as pay as you go rules in favor of cut as you go. And so it’s almost as simple as it sounds in some ways. So under pay as you go, legislation that increases spending in mandatory programs, so these are the things that are not annually appropriated, if you mix those changes over a five or 10-year period, those changes must be offset with reductions in other programs or increases in revenue. So cut as you go, however, would eliminate that second option of increasing revenue to pay for a spending increase in those mandatory programs. So in theory, what this change does is any creation of a new mandatory program, known as an entitlement, would require an equal cut to some other mandatory program. Now, the rule also, in these changes, includes a change that requires any bill that seeks to increase federal tax rates must get a three fifth super majority in order to get active.

Steve Ellis:

So, good or bad?

Josh Sewell:

Good luck. I mean, I’m trying. Again, I’m really, really trying to not be cynical, but I mean we’ve had statutory pay go on the book since I think it was 2010, and that already applies to mandatory programs and it’s routinely waived. And Congress tried annual budget caps and automatic cuts as part of the Budget Control Act of 2011, the last time we had a really big fight over raising the debt ceiling, and frankly, it leads to some really creative accounting and a tendency to find BS offsets. It gets back to you can have the greatest rules, the best procedures, but if you change them once the political blowback starts, we’re stuck with business as usual.

Steve Ellis:

Yeah, and I mean certainly trying to balance the books without accounting for revenue is certainly fighting the budget with one arm tied behind your back.

You’re listening to Budget Watchdog All Federal, the podcast dedicated to making sense of the budget, spending and tax issues facing the nation. I’m your host, TCS president Steve Ellis, and we continue now with Wendy Jordan and Josh Sewell.

So now we’ve covered the first couple days. What’s up with the rest of this Congress, at least this first session?

Wendy Jordan:

Well, Steve, we mentioned that one of the first votes that the Congress took was to create that new select committee on the weaponization of the federal government. Well, the actual first legislative action that Congress took once they had established themselves with a set of rules was to cut $80 billion that the Inflation Reduction Act had included for the Internal Revenue Service. And while that might be a good messaging point, the Congressional Budget Office, which is the nonpartisan score keeping arm of Congress, found that the action will save just $714 million this year, which is a substantial amount of money, but it would then add to the deficit every year after in the 10-year scoring period, adding eventually $114 billion to the debt.

Steve Ellis:

Right, and that’s because the funding in the IRA, the IRAF, that it was meted out over 10 years. So you claw back all the budget authority in the first year, but the actual outlays or save spending would be over 10 years. And so basically what would be happening is that, and the Congressional Budget Office estimated that, giving this additional revenue or this additional funding to the IRS would actually generate a lot of revenue. And a lot of that is because basically we’ve got an understaffed agency that doesn’t have enough employees. They have one of the oldest workforces in federal government. There’s going to be 50,000 retirements over the next decade. So yes, they’re adding 87,000 new employees, but that’s really kind of backfilling for some of this.

Also, anybody who’s called to IRS in recent years knows that they get voicemail. They don’t actually get a human being for a long period of time, and this is actually going to help that. And then the last thing too, that also is going to help with tax administration, is the fact that some of their computer systems that they rely on are… maybe the previous generation was an abacus. It’s like it’s been around for 60 years. It’s programmed in cobalt. And so this is also going to help in that front. And then finally, I guess I should add one more, is that it’s intended to go after exotic tax avoidance schemes, these abusive tax shelters, and so these are all going to generate revenue for the taxpayer. And so it’s an investment rather than just a savings.

So Budget Watchdog AF listeners, we have a five fast facts on taxpayer.net that you can get on this and it’s a really important issue, and as Wendy said, it may be scoring political points, but it’s certainly going to cost taxpayers. And the fact that this majority’s very first vote is to actually increase the deficit by $114 billion over 10 years seems ludicrous considering some of the discussion that we’ve heard. All right. Josh, we’ve talked a lot about the rules. Wendy brought us into some of the most recent actions. What else is on the horizon here for this first session of the 118th Congress?

Josh Sewell:

Well, there’s a big thing in the near term, which is the debt ceiling. Right now the federal debt ceiling sits at $31.4 trillion and we are currently at about, when you look at all the accounts that go against that number, $31.36 trillion. Now that being said, there are some extraordinary measures that the Federal Treasury can take to delay the actual breaching of the debt limit, but at some point this summer or into September, we’re going to hit that debt ceiling. And I can’t stress enough and say it enough times that the debt ceiling, as much as we do not like trillion dollar deficits, we don’t like massive debt, the debt ceiling itself merely allows the federal government to pay for the spending that Congress has already approved. Raising the debt ceiling does not create new spending, but failing to raise the debt ceiling will result in the US government going into default. And that would most likely, with very little doubt, send the entire global economy into turmoil. You have to do it.

Steve Ellis:

Raise the debt ceiling?

Josh Sewell:

You have to raise the debt ceiling. You don’t have to go into turmoil. Raise the debt ceiling.

Steve Ellis:

Yes. Yes. And it risks the full faith and credit of the US Treasury and we’re the reserve currency of choice in this world and are able to, as a nation, borrow at very low levels. And anybody who’s had credit recognizes that once you’ve failed to pay your debts, your credit rating is shot and so all of a sudden you have to pay more interest to service that debt. And that’s going to be a challenge-

Wendy Jordan:

And I think that that’s… I think that’s missing from the debate a lot of times is that common sense point that you just made, Steve, which is people know what will happen to themselves if they don’t pay their credit card bill, but when we use the fancy phrase the full faith and credit of the United States, that doesn’t resonate with people like, “Hey, if you didn’t pay your Visa bill, what would that do to your credit rating?”

Steve Ellis:

Right, cause we’re still going to be operating in deficits and they’ve got to finance that deficit, and so you’ve got to borrow money and people are going to make you pay more to borrow money from them if they don’t think you’re trustworthy and you’re not going to pay your debts.

Wendy Jordan:

Exactly.

Steve Ellis:

So it is sadly something that we’ll be dealing with again in the future and certainly talking about on future podcasts. All right. So Josh, since I have you here and the farm bill expires at the end of this fiscal year, what is happening on the farm bill in this Congress?

Josh Sewell:

Well, I’m glad you brought that up. So there is discussion about passing a new farm bill. And so perhaps ironically, the new House Ag Chair, Glenn Thompson, had to actually cancel his first listening session, which he was going to hold in Pennsylvania, because there wasn’t a speaker and he couldn’t have that action under the new committee because we didn’t have rules. We didn’t really have a Congress. He wasn’t a sworn member of Congress.

Steve Ellis:

He was a representative elect from Pennsylvania.

Josh Sewell:

Exactly, and so he couldn’t spend monies to go do that and have an official farm bill hearing. But yes, the farm bill, this is the year for the farm bill for Congress. And so Congress will be taking up another farm bill debate. This happens every four or five, six years, kind of depends, but it’s an extremely important legislative vehicle for setting our nation’s financial safety net for agricultural businesses. It unlocks the largest nutrition assistance program called SNAP, Supplemental Nutrition Assistance, which allows impoverished people to get some assistance in buying groceries, and it’s very important for conservation spending, for rural development and for tackling climate change and helping farmers help themselves to get off the government dull when it comes to needing assistance.

But most of the programs in the bill expire at the stroke of midnight on September 30th. And so getting a bill done is going to be tough. Farm bills are contentious vehicles, they’re unwieldy beasts, there’s a lot in them. But in such a divided Congress and with a legislative branch divided amongst Democrats and Republicans by chamber and then with the Democratic president, we expect unfortunately a lot of disagreement on some things that could be a good bipartisan bill for reform. So we could probably have numerous podcasts on the farm bill, and I’m sure we’ll have a few in the future, but this is definitely farm bill year. Something has to get done.

Steve Ellis:

Absolutely. We’re going to definitely have some podcasts on the farm bill and some of the implications, bring in outside voices, including farmers, to talk about some of the implications and some of the ways farmers actually need rather than what lobbyists here in Washington say farmers need and have their hands out for. Okay Wendy, let’s circle back to you to bring us all back into some context about what we’re looking at and what the rules and everything is laid out and some of what we’ve heard in the last week, what that means going forward in this Congress.

Wendy Jordan:

Right. One of the things we mentioned at the top of the podcast was the idea of regular order for appropriations bills. So what does that exactly mean, and more importantly, who sets the rules for how appropriations bills are considered on the floor of the House? So regular order, in its purest form, is moving the 12 appropriations bills separately from one another through the House of Representatives and sending them to the Senate where they are considered separately. And the committee meets on each of those bills in a separate conference committee to hammer out the differences between the House and Senate versions. And then they are passed separately and signed separately by the president, which hasn’t happened in donkey’s years. Another part of regular order is that members in the house are allowed to offer amendments to appropriations bills. So a member can step up to the well of the House, write down an amendment on the back of an envelope, hand it to the clerk, the clerk reads it and a debate starts on it. That’s very old school.

Steve Ellis:

I move to strike the last word.

Wendy Jordan:

Exactly. That’s part of what you would do to get your amendment read by the clerk. So I think most likely thing is going to happen is that we will have a few appropriations bills run under a modified open rule, and we’ll see how that goes and they’ll go from there.

Steve Ellis:

Gotcha. And also, Wendy, while I have you here, at the top of the podcast, we also talked about that there’s this whole talk of taking defense spending, actually all spending, back to FY 22 levels, and so what can you tell me about that?

Wendy Jordan:

Well, I can tell you I think that that is politically highly unlikely in Pentagon spending. Although we could and have over the years offered plenty of programs for the chopping block. But the pure bare knuckle politics of this debate is that defense hawks in both parties, Democrats and Republicans, are going to band together to stop any rollback in top line for the Pentagon. Since National Security’s the largest slice of discretionary spending, it would take huge cuts to non-defense discretionary to bring the cumulative top line down to FY 22 if National Security is excluded.

Steve Ellis:

Well, there you have a podcast listeners, your tax dollars are the lifeblood of this government and the team at TCS is standing watched to make sure they aren’t wasted. This is the frequency, mark it on your dial, subscribe and share and know this, Taxpayers for Common Sense has your back, America. We read the bills, monitor the earmarks, and highlight those wasteful programs that poorly spend our money and shift long-term risk to taxpayers. We’ll be back with a new episode soon, and I hope you’ll meet us right here to learn more.