President Joe Biden and Vice President Kamala Harris were sworn in on January 20, 2021, and wasted no time getting to work. With Democrats now in control of the Administration and both the U.S. House and U.S. Senate, there is ample opportunity to move to a more progressive agenda and roll back some of the Trump Administration initiatives.
Each weekday through the end of January, President Biden took executive action centered around specific themes such as climate, economic relief, health care and immigration. Some of those actions included a review of the Defense Production Act to address supply chain issues and public health measures, providing economic relief in areas of
unemployment insurance, Medicaid and Pell Grants, as well as addressing workforce recruiting and retention issues. The four identified crises that the Administration hopes to address longer term are: the coronavirus pandemic, the climate, the economy, and racial and gender equity.
American Rescue Plan – COVID-19 Proposal
True to his promise, President Biden proposed a massive $1.9 trillion COVID-19 package to provide stimulus to the economy and address some of the most pressing issues caused by the pandemic. Dubbed the “American Rescue Plan,” some of the key proposal provisions include:
- $350 billion state and local aid;
- $170 billion for K-12 schools and institutions of higher education;
- $50 billion for COVID-19 testing;
- $20 billion for a national COVID-19 vaccine program in partnership with states, localities and tribes;
- Increasing the federal minimum wage to $15 per hour;
- Direct payments of $1,400 to most Americans, bringing the total relief to $2,000 including December’s $600 payments; and
- Extending eviction and foreclosure moratoriums until end of September 2021.
Senate Republicans countered with a $600 billion proposal, but President Biden recently doubled down on the size of the COVID-19 package. Furthermore, Democrats have a straight path to passing a bill on the scale of President Biden’s proposal, using a powerful legislative technique called budget reconciliation.
How Does Budget Reconciliation Work?
The reconciliation process is a special process that makes passing legislation easier in the U.S. Senate since it only requires a simple majority rather than the 60-vote requirement. Reconciliation bills can only be
used to change spending or revenues. Debate time for reconciliation is limited (20 hours), Senators are unable to filibuster, and only certain types of amendments can be offered to reconciliation bills. These limitations serve to protect the minority party in the Senate.
Budget reconciliation provides a fast-tracked process for consideration of bills to implement the policy choices embodied in the annual congressional budget resolution. A reconciliation bill requires a reconciliation instruction, and a reconciliation instruction requires a congressional budget resolution. A congressional budget resolution is available for each fiscal year. Since Congress never passed a fiscal year (FY) 2021 budget, a Democratic Congress potentially has two bites at the apple this calendar year
(2021). The Congress has opportunities to generate reconciliation bills associated with both a FY-2021 and a FY-2022 budget. This process was used by Republicans in their FY-2017 budget resolution to attempt to repeal the Affordable Care Act (ACA) and also used later in the year in the FY-2018 budget resolution to pass the Tax Cuts and Jobs Act (TCJA).
Senate Majority Leader Chuck Schumer has already taken steps to begin work on a stimulus package that would make a bill passable without buy-in from Republicans. Earlier this week, Democrats voted unanimously to begin debate on a budget resolution, the first step in the reconciliation process.
Future Tax Bill?
With the economy still struggling, there may be some reluctance early in the
year to seek the tax increases proposed in President Biden’s tax agenda. However, Democrats may view things differently in the fall should the economy improve. As it now stands, a reconciliation bill will likely be used to pass the large stimulus package while a second reconciliation package could be used later in the year to pass substantial tax reforms supported by President Biden and his congressional majorities. Expected to be included in a second reconciliation bill are provisions that could result in changes to corporate tax rates, capital gains, and treatment of carried interest. Also, a large infrastructure spending package potentially could be included in a second reconciliation bill.
Congressional Review Act
The Congressional Review Act (CRA)
is another legislative tool that is likely to be used by President Biden and the 117th Congress. Making formal regulatory changes under the Administrative Procedure Act (APA) is difficult, as is the unwinding of those changes. The CRA provides a process for repeal of a final rule by a simple majority in Congress.
Congress has a window of time lasting 60 legislative days (days that Congress is actually in session, rather than simple calendar days) to disapprove of any given rule by a simple majority vote. Otherwise, the rule will go into effect at the end of that period. A resolution repealing the regulation can be introduced in Congress. If passed by the House of Representatives and the Senate and signed by the President, not only is the regulation stricken from the books, but it
also prohibits any future administration from promulgating a substantially similar rule in the future.
This future limitation may persuade President Biden to use the rulemaking process rather than using the CRA, which would prevent him from promulgating different, but similar rules in the future. It is expected that President Biden and Congress will use the CRA to unwind a number of administrative actions taken by President Trump during his term, including undoing actions related to health care nondiscrimination, association health plans, and short-term insurance. Not expected to be overturned through the use of the CRA are actions taken by the Trump Administration on price transparency and individual coverage HRAs.