Congress Races Against the Clock to Avoid Shutdown

Happy Tuesday! On this date 45 years ago, C-SPAN went on air for the first time, televising the floor proceedings of the House of Representatives. "The solution for the lack of confidence in government," then-Rep. Al Gore of Tennessee said that day, "is more open government at all levels."

Here’s what’s going on with your government today.

Congress and White House Reach Funding Deal. Now the Race Is On to Pass It

They have a deal. Now they just need the votes.

President Joe Biden and congressional leaders announced Tuesday morning that they had reached an agreement on the contentious appropriations bill for the Department of Homeland Security, the last of the six remaining full-year funding bills to be settled.

The deal means that the appropriations process for the fiscal year that started in October, nearly six months ago, is finally nearing completion, though the legislative text must still be finalized, and the entire six-bill package must be passed by the House and Senate. It remains unclear whether those steps can be completed in time to avert a brief government shutdown that would otherwise start after midnight on Friday.

"House and Senate committees have begun drafting bill text to be prepared for release and consideration by the full House and Senate as soon as possible," House Speaker Mike Johnson said in a statement.

In addition to the Homeland Security funding, the package includes the Defense, Labor-HHS-Education, Financial Services, Legislative Branch and State-Foreign Operations appropriations bills providing funding through the end of September. The package is expected to total about 70% of the $1.66 trillion in discretionary spending agreed to for the current fiscal year. The other six annual appropriations measures, totaling some $460 billion, were enacted earlier this month.

Biden said he would sign the latest bill immediately once it reaches his desk, but the timing could be problematic. House Republican leadership has committed to allowing 72 hours for members to read the legislation ahead of any vote. Johnson might choose to waive that rule, at the risk of further alienating conservatives already angry over the spending package. Even if he sticks to the rule, there is still a chance that the House and Senate can both vote on the package on Friday, but it would require a high degree of coordination and cooperation.

But if the text of the bill isn’t released until Wednesday, that could also push a House vote to Saturday, after the Friday night deadline. The Senate process could then mean that final passage is delayed until Monday. In other words, the process could result in a brief appropriations lapse, albeit one that’s unlikely to cause any serious disruption.

Another short-term measure to keep the government funded past the deadline may also still be possible.

Roll Call’s Aidan Quigley suggested Monday that the congressional calendar, or even college basketball fever, might help speed the process, noting optimistically that "lawmakers’ desire to start their two-week Easter recess on time — and catch the start of March Madness this weekend — could inspire quicker action."

The bottom line: The end of the prolonged budget and appropriations process for fiscal year 2024 is in sight, even as the 2025 process has just gotten underway this month with the release of Biden’s budget request.

Number Of the Day: 100,000

IRS Commissioner Danny Werfel said Monday that the tax agency needs to increase its overall employment level by about 10,000 employees to be fully effective. "We're at 90,000 now," he told students at American University’s business school. "I think to get into a right-size position over the next two to three years, we need to be above 100,000, but not that much above 100,000."

Marking the one-year anniversary of his taking the helm at the tax agency, Werfel laid out his vision of a fully modernized and digitized IRS, a project made possible by the $80 billion over 10 years in additional resources provided by the Inflation Reduction Act — an amount that has already been reduced by $20 billion by Republican lawmakers.

"As I consider the world that you live in and what you have come to expect to do digitally, on your phone and tablets, without paper, from wherever you are in the world, I have come to realize that the modernization of the IRS is a generational imperative," Werfel told the assembled students.

Werfel made the case for Congress to provide the remaining $60 billion from the promised funding, saying it would be money well spent. "The IRS is a good investment," he said. "Not only are we going to ease stress and anxiety and create an easier way for you to do your taxes, get things done in less time, get your issues resolved, protect you from scams, but the work we do to recover taxes from those that are noncompliant, it generally runs about a 6-to1 ratio of $6 for every $1 invested."

The IRS hasn’t had more than 100,000 employees in more than two decades, and since 2010, repeated budget cuts have pushed total employment levels down from about 94,000 to roughly 73,000 by 2019. IRS employment peaked at 123,000 in 1988, during the last year of the Reagan administration.

Quote of the Day: Inflation Redux?

"The worry is that the low-hanging fruit associated with a healing of supply chains and drop in goods prices has been plucked, while a floor may be forming under service sector prices."

− Diane Swonk, chief economist at KPMG, quoted in a New York Times article about the Federal Reserve’s two-day policy meeting that wraps up on Wednesday. Fed officials are weighing whether they should start cutting interest rates, but recent inflation data suggest that they may delay any cuts amid worries that inflation has lost its downward momentum, especially in the services sector, and could be heating up again.

Analysts increasingly think the risk of higher inflation points to fewer rate cuts this year. "The Federal Reserve should not be in a race to cut rates," Joseph Davis, Vanguard’s global chief economist, told the Times. "We have a growing probability that they don’t cut rates at all this year."

Fiscal News Roundup

• Shutdown Threat Meter: Yellow. Congress’ Final Funding Seal Is Going Down to the Wire – Politico
• Congressional Leaders Strike Deal on Final Spending Bill Ahead of Shutdown – New York Times
• Congress Announces a Deal to Avoid a Shutdown, Resolving Homeland Security Dispute – NBC News
• Spending Deal Done, Though Final Action Could Slip Past Deadline – Roll Call
• The Government May Shut Down This Weekend. Here’s What to Know – Washington Post
• Deadlock on U.S. Aid Hangs Over Talks to Secure Support for Ukraine – Washington Post
• Business Tax Breaks Face ‘Now or Never’ Moment in Senate – Wall Street Journal
• These Democrats Are Trying to Raise Taxes on the Wealthiest Americans. Here’s What They Want – USA Today
• The Fed Is Playing a Waiting Game on Rate Cuts. The Rules Are Starting to Change – Wall Street Journal
• Fed Could Cut Rates Fewer Times Than Expected as Economy Keeps Growing, According to CNBC Survey – CNBC
• Fed Meets Amid Worries That Inflation Progress Might Stall – New York Times
• After Years of Ransomware Attacks, Health-Care Defenses Still Fail – Washington Post
• UnitedHealth Group Has Paid More Than $2 Billion to Providers Following Cyberattack – CNBC
• Governments Across the U.S. Are Handing Residents Cash—No Strings Attached – Wall Street Journal

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