Washington Update - December 18, 2023

Billy Moore    Dc2

Repeating a pattern of how Congress has enacted almost all of its major legislation this year, the Defense authorization passed the Senate last week by a huge bipartisan majority (87-13) and passed the House with the support of more Democrats (163) than Republicans (147). The pattern was established earlier this year on legislation to avoid a default and to prevent government shutdowns.

In January, the House and Senate are scheduled to be in session only 9 days before one of the two current Continuing Resolutions (CRs) expires. Congressional leaders have not reached agreement on a fiscal 2024 topline spending number and neither chamber has passed all of the annual appropriations. With House Speaker Mike Johnson vowing he will not permit an additional short-term CR, a year-long CR – freezing policy and spending at 2023 levels – seems to be the only alternative to avoid a government shutdown, although it is unclear what majority coalition can be assembled to pass one. 

Last week’s House party line vote to launch a speculative impeachment investigation of President Joe Biden makes Democrats reluctant to help Republicans avoid a shutdown catastrophe. A year-long CR is a failure of the annual appropriations process; failure this year bodes ill for the process in the coming year.

The House has adjourned until next year and the Senate is in session, hoping bipartisan negotiators can reach a compromise over supplemental spending for Israel, Taiwan, Ukraine, the southwest border, and immigration policy. While they wait, Senators continue confirming nominees, especially federal judges, which account for most of congressional Democrats’ accomplishments this year.

The Federal Reserve kept rates steady last week and signaled that inflation has improved more rapidly than expected, suggesting as many as three rate cuts next year – igniting a stock market rally that set new record highs for the Dow-Jones average.