Election outcome

The 2022 midterm elections yielded another narrowly divided Congress with Democrats keeping control of the Senate and Republicans picking up a slim majority of House seats. The 118th Congress has begun its work after spending much of January focused on organizational activity such as electing leadership, establishing procedural rules, and setting committee structures and membership. Following party leadership elections in both congressional chambers, the Senate will retain the same leadership of Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY). House Republicans and Democrats have elected Speaker Kevin McCarthy (R-CA) and Minority Leader Hakeem Jeffries (D-NY), respectively.

Debt Ceiling

The divided government faces a significant challenge early in this new session of Congress – the need to raise the statutory debt ceiling, or limit on federal government borrowing authority. The debt limit is set by law and has been increased numerous times over the years to finance federal government expenditures. On January 13, Treasury Secretary Janet Yellen wrote (PDF) to Congress indicating that the outstanding debt of the United States was expected to soon reach the current statutory debt limit of $31.381 trillion. Congress raised the government’s borrowing authority to this level in December of 2021. On January 19, Yellen informed (PDF) Congress that the statutory debt limit had been reached and that Treasury would begin taking so-called “extraordinary measures” to avoid defaulting on government obligations. In recent years, Secretaries of the Treasury in both Democratic and Republican administrations have taken such authorized steps to avoid default while Congress works on a legislative solution to the government losing the ability to borrow funds. As indicated in Yellen’s latest letter, such steps are already in motion. It is not certain exactly how long Treasury will be able to utilize these bookkeeping maneuvers to avoid default, but at this point Treasury projects to have such wiggle room until sometime this summer. Agreement on an increase will be challenging. Republicans have advocated for combining the next debt limit increase with cuts in federal spending as expressed a January 27 letter from twenty-four Senate Republicans to President Biden. The Biden administration has argued that Congress should move forward with a debt ceiling increase forthwith to avoid default, arguing that an increase is necessary to meet commitments already authorized. On February 1, President Biden and House Speaker Kevin McCarthy held their first discussion in what is expected to be a multi-month back and forth over protecting the full faith and credit of the United States and managing government expenditures.

Farm Bill

Another major legislative priority for the new Congress is reauthorizing the Farm Bill (PDF). The House and Senate Agriculture Committees will be led by seasoned legislators as new farm policy legislation takes shape. Michigan Senator Debbie Stabenow, who has recently announced she will not seek re-election in 2024, will continue to chair the Senate Agriculture Committee alongside Ranking Republican John Boozman of Arkansas. Reversing their previous roles in the minority and majority respectively, Pennsylvania Congressman Glenn “GT” Thompson is the new Chairman of the House Agriculture Committee and Georgia Congressman Scott is now the Ranking Democratic Member. Both Agriculture Committees held numerous farm bill hearings last year in anticipation of the September deadline for reauthorizing the five-year farm policy law. Chairman Thompson hit the ground running this year as he hosted a delegation of House members for a January 19 listening session with agriculture industry representatives at the Pennsylvania Farm Show. The Senate Agriculture Committee kicked off the new year with a February 1 hearing focusing on the horticulture and trade titles of the Farm Bill. With the September 30 deadline fast approaching, Ag Committee leaders have a challenging row to hoe as they negotiate a new bill and work through differing priorities such as nutrition and conservation programs. As the new year gets underway, Members are hopeful they can craft a bipartisan package in the coming months.

United States-Mexico-Canada Agreement (USMCA)

Another recent example of bipartisan Ag Committee activity is a January 27 letter (PDF) from Chairwoman Stabenow and Ranking Member Boozman urging the Office of the United States Trade Representative (USTR) to continue to “hold Canada accountable” to its obligations under the U.S.-Mexico-Canada Agreement (USMCA) to provide American dairy farmers with market access. Their January 27 letter urged USTR to request a second dispute settlement panel regarding Canada’s dairy tariff-rate quota allocation process. USTR prevailed in a prior USMCA dispute settlement panel proceeding on U.S. concerns with Canada’s dairy TRQ practices. On January 31, USTR Katherine Tai announced the United States will establish a second USMCA dispute panel on Canada’s TRA allocation policies, noting that Canada’s revised policies following the first dispute process continue to “undermine market access” for U.S. dairy farmers that were guaranteed in the USMCA. Further information on this latest USMCA enforcement action can be found in the panel request (PDF).