As mentioned in the previous piece, one major issue Congress will be tackling in the next few weeks will be passing a new federal spending bill, whose passage would ultimately avoid another government shutdown. Congress and President Biden had previously agreed to a three-month continuing resolution in early December, kicking the can down the road to February 18 when funding will run out again. Despite the rapidly approaching deadline, both the Senate and House of Representatives are dragging their feet while looking for compromise.
One option is to pass another continuing resolution. Such legislation, though, is only meant to be a stopgap. Democrats, with infighting over the Build Back Better bill continuing, will be wary to go into the midterm elections without proper funding for the government.
The alternative is to find a spending package that is acceptable to President Biden and Congressional Democrats, including set-fast Senator Joe Manchin, who continues to hold to his concerns about inflation. On May 28, 2021, President Biden released his proposed budget for Fiscal Year 2022 (FY 2022), requesting $6 trillion in total mandatory and discretionary spending for the upcoming fiscal year. For perspective, such a plan would see the national debt surpass its all-time high, set during World War II, within a few years and reach 117% of economic output by the end of 2031, up from about 100% last year. Of course, what the President requests and what is enacted are two separate matters.
Unfortunately, we know little right now about the spending bill’s status. Expect conversation on the spending bill to heat up in the first week or so of February.