Democrats look to salvage tattered legislative agenda as they face 2022 midterm elections
- Congress returns in 2022 with a long to-do list before November's midterm elections.
- The top priority for Democrats is President Joe Biden's Build Back Better Act, which stalled out in the Senate this month.
- Government funding, Federal Reserve nominations, a research and development bill, and voting rights legislation are also among Congress' priorities.
Congressional Democrats will return next year and try to check a few long-floundering items off their to-do list before the 2022 midterms consume Washington.
The next few months in the Capitol could shape the economic health of U.S. households for years to come. The scope of Democrats' accomplishments could also play a role in whether they hold control of one or both chambers of Congress for the second half of President Joe Biden's first term.
Biden's Build Back Better Act weighs the most heavily on Democratic minds. The $1.75 trillion investment in social and climate programs hit a wall this month when Sen. Joe Manchin, D-W.Va., said he would oppose it.
"It would be really, really sad as someone who worked really hard on this, if we were not successful," Senate Budget Committee Chairman Bernie Sanders, I-Vt., told MSNBC after Manchin announced his stance this month. "But it would be even sadder if the American people said, 'these people stand for nothing. Not only can't they get anything done, they don't believe in anything.'"
Though Senate Majority Leader Chuck Schumer has vowed to bring the bill up for a vote next month, it is all but doomed. Even so, Democrats hope to revive it in some form that could win support from every member of their Senate caucus.
The congressional tasks that hold wide-ranging economic implications do not end with Build Back Better. The Senate will hold votes on whether to confirm Federal Reserve Chair Jerome Powell and Governor Lael Brainard – Biden's choice for vice chair – to lead the central bank as it tries to tackle an economic recovery and the highest inflation in decades.
Congress will have to pass a government funding bill by mid-February to prevent a government shutdown that could lead to furloughs of federal workers. In addition, the Senate and House will work to resolve disagreements on a bill that would pile a quarter of a trillion dollars into research and development to catch up with Chinese investments in technology.
Democrats' legislative agenda also includes a bill that some in the party believe is the biggest priority of all: The party will try to pass voting rights legislation to counter restrictive bills introduced by state legislatures around the country. Elections proposals stalled repeatedly last year as all Republicans opposed them and at least two Democrats resisted efforts to bypass the filibuster.
Build Back Better
Democrats see the social spending and climate plan as their top domestic priority and a key to showing voters what they can accomplish before November. Manchin's stance has stopped the bill in its tracks, and it has no clear path forward.
The Senate will return to Washington next week, followed by the House a week later.
Schumer aims to bring a version of the House-passed plan to the Senate floor this month. As Democrats look to approve the bill with a simple majority in the face of unified GOP opposition, a no vote from Manchin alone would sink it.
"We are going to vote on a revised version of the House-passed Build Back Better Act – and we will keep voting on it until we get something done," Schumer wrote to Senate Democrats earlier this month.
Democrats will likely have to lop off pieces of the bill to win Manchin's support. They could face hard choices in the coming weeks about whether to scrap some policy priorities to ensure others pass.
The House-passed bill includes a one-year extension of the enhanced child tax credit, child-care subsidies, four weeks of paid leave, an expansion of Medicare to cover hearing aids and more than $500 billion in green energy programs, among a slew of other measures. The strengthened child tax credit — which expires at the end of the year — and paid leave could fall first as Democrats try to appease Manchin.
The conservative West Virginia Democrat, who has a personal financial interest in the coal industry, pushed Democrats to cut a major climate program from the bill as they trimmed its price tag to $1.75 trillion from $3.5 trillion. The White House's talks with Manchin and Sen. Kyrsten Sinema, D-Ariz., led to a framework agreement in the fall.
But Manchin never endorsed it. He expressed concerns that the bill would further fuel inflation. He also criticized his party for using revenue generated over a decade to fund programs that, in some cases, would expire after a few years or less.
Earlier this month, Manchin joined Senate Democrats on a conference call to discuss how to move forward with Build Back Better. On the call, Schumer said the party would keep trying to pass the legislation, according to NBC News.
"I know we are all frustrated at this outcome," he said. "However, we are not giving up on BBB. Period. We won't stop working on it until we pass a bill."
The Fed
For the Federal Reserve, 2022 promises to start with some excitement.
The Senate Banking Committee is expected to hold confirmation hearings in January for both Powell and Brainard. Biden in November nominated Republican Powell to a second term as Fed chair and chose Democrat Brainard to be the central bank's next vice chair.
Both are expected to clear the confirmation process, though Powell could face gripes from progressives like Sen. Elizabeth Warren, D-Mass., who say he is not tough enough on big banks. Brainard, meanwhile, will likely hear complaints from Republicans like retiring Sen. Pat Toomey of Pennsylvania, who say her recent focus on climate and equity go beyond the Fed's scope.
The Fed's board is comprised of seven members including the chair and vice chair. With Vice Chair for Supervision Randal Quarles having left and Vice Chair Richard Clarida's term expiring at the end of January, Biden has multiple board seats to fill in 2022.
On the policy side, the Fed has signaled – and markets expect – it will continue to taper its monthly purchases of Treasury bonds and mortgage securities. The central bank began to buy $120 billion a month of U.S. debt in the spring of 2020 to help support the economy and provide marketplace liquidity as Covid-19 and business closures threatened to snuff out brick-and-mortar shops.
With the economy making a rebound, the Federal Open Market Committee projected at its December meeting that it would hike interest rates three times in 2022. The Fed's policymaking committee has been under pressure from politicians on both sides of the political aisle – but especially Republicans – to pull back on its easy money policies to help keep inflation in check.
Congress tasks the Fed with maximizing employment and maintaining tame inflation, which the central bank considers to mean an average of 2% on a year-over-year basis. The Labor Department's most recent consumer inflation report showed that prices increased 6.8% in November from the same time a year ago.
China competition bill
Senate Democrats and Republicans banded together in June to pass a version of a bill that, if enacted, would channel about $250 billion over five years into scientific research and development to improve U.S. competitiveness with China.
The U.S. Innovation and Competition Act would invest billions into emerging technologies, critical supply chains and semiconductors in what would amount to one of the most significant government interventions in industrial production in decades.
While Biden said at the time that he looked forward to signing the bipartisan legislation, the bill has since been stuck in the House thanks to disagreements between the chambers.
House Democrats have taken a piecemeal approach to the bill and advanced its various components in different committees in part to water down portions of the Senate legislation. The slower approach has frustrated Senate Democrats and Republicans, who say that the bill is a national security priority and that investments in the nation's critical technologies should begin as soon as possible.
Dewardric McNeal, a managing director at government affairs-focused Longview Global, told CNBC that disagreements between lawmakers have largely driven the delays. But Congress may also be waiting for a stronger signal from the White House, which McNeal said has been vague on how it plans to deal with Beijing.
"The Administration has been very active and hands on with the major domestic legislation but has remained on the sideline of the China legislative process," he wrote. "Very few staffers on the Hill know what the Administration wants with respect to China policy and this has also contributed to delays."
Schumer, a longtime China hawk in the Democratic Party and champion of the current legislation, tried to attach the competition bill to the latest National Defense Authorization Act before meeting GOP resistance and abandoning the effort.
Still, Democrats are expected to make the China bill a chief priority in 2022. If House Speaker Nancy Pelosi, D-Calif., is unable to persuade her caucus members to pass the existing legislation, the Senate could opt to approve components of the bill one by one.
Government funding
Government funding will take almost immediate priority in 2022 after Democrats earlier this month punted the deadline from December to February.
Congressional leaders will need to devise and pass a new funding resolution before Feb. 18, when a lapse would trigger the start of a partial government shutdown. While it's too early to say if a shutdown is likely after the holiday season, Democratic leaders Schumer and Pelosi have thus far managed to avoid such a disruption during the Biden administration.
Shutdowns are not a popular political outcome for either party since voters tend to punish those they view as responsible for holding up business and furloughing government workers and contractors.
Still, the odds of a February shutdown are likely linked to how Democrats prioritize their other agenda items in the first few weeks of the new year.
If the party opts to rekindle Biden's embattled Build Back Better legislation, they could risk losing bipartisan support weeks later.
Tackling other agenda items, such as Fed appointments or the bipartisan China bill, could make it easier for lawmakers to reach a longer-term deal on extending government funding.
Voting rights
Many Democrats consider protecting the right to vote to be an even higher priority than Build Back Better as anti-democratic sentiments gain traction around the U.S. The issue took on more urgency after former President Donald Trump deployed conspiracy theories to try to overturn the 2020 election, helping to fuel the deadly Jan. 6 attack on the Capitol and inspire restrictive state voting laws.
Schumer has told Democrats the Senate will take up a voting rights bill "as early as the first week back" in the new year. Passing legislation will likely prove as daunting as it did last year.
States including Texas and Georgia passed restrictive voting laws in 2021. Democrats aim to restore provisions of the Voting Rights Act of 1965, which were weakened as part of a 2013 Supreme Court ruling, in an effort Republicans have described as a federal power grab.
The GOP has filibustered recent Democratic efforts to approve an elections proposal. After Manchin stopped Build Back Better in its tracks, Democrats coalesced around finding a filibuster carveout that would allow them to pass a voting rights bill with a simple majority.
The strategy gained more traction among senators including Raphael Warnock, D-Ga., after the chamber bypassed the filibuster to raise the debt ceiling this month.
"I have to tell you that the most important thing that we can do in this Congress is to get voting rights done. Voting rights are preservative of all other rights. They lay the ground for all of the other debates," Warnock, one of three Black senators and a preacher at Martin Luther King Jr.'s Ebenezer Baptist Church, said on the Senate floor this month.
"And so to my Democratic colleagues, I say while it is deeply unfortunate, it is more than apparent that it has been left to us to handle alone the task of safeguarding our democracy," he added.
Biden and Schumer both indicated they support the strategy.
"If Senate Republicans continue to abuse the filibuster and prevent the body from considering this bill, the Senate will then consider changes to any rules which prevent us from debating and reaching final conclusion on important legislation," Schumer wrote to Democrats this month.
Schumer's own caucus could stop the plan from proceeding. Both Manchin and Sinema have indicated they will not support bypassing the filibuster to pass an elections bill.