Politicians encounter a crowded schedule following elections, with federal funding and debt ceiling concerns looming ahead.
The upcoming November elections, where the control of the White House and both houses of Congress are up for grabs, will reshape the political landscape, casting doubt over how legislators will address the forthcoming challenges. Moreover, the future leadership of the Republican party in both the House and Senate remains uncertain, which will significantly influence how legislative disputes are handled.
Upon the elections, funding the government will take center stage as lawmakers grapple with a December 20 deadline for funding during the lame-duck session – the interval before the newly elected Congress is sworn in.
Furthermore, there are growing demands for Congress to swiftly pass additional disaster relief in response to hurricanes Milton and Helene, and the widespread damage caused by the storms.
The new Congress will convene in early 2025, and legislators will be forced to address the federal debt limit, which will be reinstated on January 2, a complex and high-stakes issue that frequently comes down to the wire on Capitol Hill.
Funding tug-of-war
Congress set up a funding tug-of-war at the end of the year following the approval of a stopgap bill in late September to fund the federal government until December 20.
Shifting the funding deadline to December raises questions about how lawmakers can prevent a holiday season shutdown. Additionally, the election outcome will determine how strong – or weak – a position House Speaker Mike Johnson and other Hill leaders have in spending negotiations.
Numerous legislators, including conservatives, oppose sweeping spending packages known as an omnibus. However, Hill leaders may be pressured to either adopt this approach or pass another stopgap bill due to limited time for passing individual appropriations bills for various government agencies after the election.
Lawmakers will similarly have to tackle the disaster relief issue when they return to Washington.
President Joe Biden and other leaders have warned that Congress will soon need to pass additional funding to replenish the federal government’s rapidly depleting disaster-relief funds, following two devastating hurricanes in the Southeastern US.
The Small Business Administration’s disaster loan program has already exhausted its funding due to high demand from continuous extreme weather disasters, adding urgency to the pleas for Congress to act. The SBA’s fund is distinct from the Federal Emergency Management Agency’s disaster relief fund, which offers assistance to individuals impacted by hurricanes.
Debt Ceiling
The debt ceiling will reemerge as a major concern in early January when it is reinstated on January 2, posing a hurdle for the new Congress. Addressing the debt limit is essential to enable the federal government to continue borrowing to meet its existing financial obligations that have already been approved by lawmakers and presidents.
Once the limit is reinstated, the Treasury Department can employ what are known as “extraordinary measures” and utilize the cash on hand to extend the amount of time before a default could occur. It is challenging to determine the timing of the so-called X date, the point when the US would be unable to pay all its bills in full and on time, leading to a potentially disastrous situation with far-reaching global economic consequences.
This deadline may not manifest until several months after the debt limit is reinstated, and legislators often wait until the last minute to act. However, pressure will mount on the new Congress and the new presidential administration to either raise or suspend the debt limit once it is reinstated in early January.
The US has never defaulted on its payments, and leaders from both parties desire to avoid a default. However, fiscal conservatives and deficit hawks are likely to try to force spending and budget cuts in exchange for addressing the debt limit, a tactic they employed in 2023, and may have some leverage, particularly if Republicans fare well in the November elections.
The unpredictability of pinpointing the “X date” with precision, in conjunction with the fact that the debt ceiling has become highly subject to political brinksmanship, makes addressing the limit a risky proposition for legislators.
“Congress thrives on deadlines and operating at the last minute,” said Shai Akabas, the executive director of economic policy at the Bipartisan Policy Center. “But when it comes to the debt limit, there is no definitive last minute because we don’t know exactly when that point will arrive, unlike a government shutdown.″
Akabas continued, “I definitely think the dynamics next year create a particularly uncertain and potentially more volatile situation than we have seen in the past, and that will unfortunately depend on the elections, but we know that there’s going to be a new administration, and that there could be new majorities in both the House and the Senate.”
Defense policy bill and other notable issues
Another agenda item during the lame-duck session will be for Congress to approve a final, consensus version of the National Defense Authorization Act for fiscal year 2025.
The House and Senate have proposed their respective versions of the annual, essential defense policy bill, and top lawmakers now need to reconcile those two measures — including discrepancies in spending levels and policy provisions — by crafting a unified version that can pass both chambers.
The NDAA establishes the policy agenda for the Department of Defense and the US military and authorizes spending for Pentagon priorities, though it does not appropriate the funds itself.
The Republican-controlled House passed its version of the bill for fiscal year 2025 in June, while the Senate Armed Services Committee, led by Democrats, has advanced that chamber’s version of the legislation.
Lawmakers are also facing a year-end deadline to renew key agricultural policy when Congress returns post-elections.
The Farm Act, a comprehensive law determining food and agriculture policies in the USA, is usually revamped every five years. However, it can also be revived through temporary extensions of shorter durations. In 2023, the 2018 Farm Act was extended by Congress for a year, valid up to September 30. However, crucial programs under the Farm Act won't lose funding until December 31, mounting another critical deadline uncannily close at the year's end, demanding immediate action from Congress during the lame duck session.
Upon the legislators' return to Washington, the pressure falls heavily to renew the legislation by either approving a fresh five-year Farm Act or another brief-term extension.
Additionally, important sections of the Tax Cuts and Jobs Act of 2017, the cherished legislation of ex-President Donald Trump, are due to expire by the end of 2025. This includes over $3.4 trillion worth of income and estate tax cuts. As a consequence, tax package negotiations will pose a considerable challenge for the incoming Congress and the newly-elected administration.
This report was contributed to by CNN's Lauren Fox and Ted Barrett.
In the midst of the funding tug-of-war, the election outcome will significantly influence the position of House Speaker Mike Johnson and other Hill leaders in spending negotiations.
Following the elections, addressing the federal debt limit, which will be reinstated on January 2, 2025, will be a complex and high-stakes issue for the new Congress.
