Senate Skips Town With Shutdown Deadline Looming

Sipa USA
By Yuval Rosenberg

Happy Thursday! The United States and Russia completed a historic prisoner swap today that included the release of Wall Street Journal reporter Evan Gershkovich and former Marine Paul Whelan from Russian captivity. The exchange was the largest since the Cold War and reportedly involved 24 detainees and seven countries.

President Joe Biden celebrated the release, which represents a significant foreign policy achievement for him and his administration, even as it’s also a victory for Russian President Vladimir Putin’s form of hostage diplomacy. “After enduring unimaginable suffering and uncertainty, the Americans detained in Russia are safe, free, and have begun their journeys back into the arms of their families,” Biden wrote on X, where he shared a photo of the freed prisoners on a plane with an American flag.

In a speech from the White House, Biden emphasized the importance of having strong relations with U.S. allies. “This deal would not have been made possible without our allies Germany, Poland, Slovenia, Norway, and Turkey. They all stepped up, and they stood with us,” Biden said. “So, for anyone who questions whether allies matter, they do. They matter.”

Here’s what else you should know.

Senate Republicans Block Bipartisan Bill to Expand Child Tax Credit

A bipartisan bill that would expand the child tax credit and restore several business tax breaks was blocked by Senate Republicans Thursday. The procedural vote was 48 to 44, with the bill falling well short of the 60 votes required for advancement.

The $78 billion package would aid millions of families by making more of the child tax credit refundable, providing larger cash payments to households with children. It would also restore tax breaks for research and development expenditures that had expired as part of the 2017 tax law. The cost of the tax breaks would be offset by ending the Employee Retention Tax Credit, a pandemic-era support program that has been marred by fraud, ahead of schedule.

The legislation, co-authored by Democratic Sen. Ron Wyden and Republican Rep. Jason Smith, easily passed the House earlier this year in a bipartisan 357 to 70 vote. Although it was clear that the bill would not pass the Senate due to Republican opposition, based in part on a lack of work requirements for the child tax credit enhancement, Majority Leader Chuck Schumer said the substance of the bill should be enough to push it through. “This should be a no-brainer,” Schumer said. “Even House Republicans united long enough to pass this.”

But Senate Republicans showed little interest in handing Schumer a victory ahead of an election that could deliver control of the upper chamber to the GOP in just a few months. “I think we can do better next year,” said Sen. John Cornyn, Republican of Texas.

The vote provided Democrats with an opportunity to attack Sen. JD Vance, the Ohio Republican who is now former President Donald Trump’s running mate. Vance, who missed the vote to attend a campaign event, has disparaged Democratic leaders as “childless cat ladies” who have no stake in the future of the country. Democrats were happy to highlight Republican opposition to policies that help ordinary families.

“Senate Republicans love to talk about how they are the party of family and business. So it’s very odd to see them come out so aggressively against expanding the child tax credit and rewarding business with the [research and development] tax credit,” Schumer said.

Wyden, the bill’s co-author, made a similar argument earlier this week. “[Republicans] just haven’t been willing ... to actually follow through with their kind of rhetoric. The rhetoric is that they care so much about kids and family,” he said. “But then when you look at what happened ... they haven’t been there.”

Sen. Mike Crapo, the senior Republican on the Finance Committee, dismissed the whole thing as a “show vote” held on the last day before the Senate’s long summer break. Crapo accused Democrats of “fabricating a narrative that Republicans don’t support small business, children or alleviating poverty.”

The bill also had the backing of big business, and lobbyists expressed frustration at the lack of progress on the measure. “The prolonged uncertainty surrounding the extension of these policies has curtailed American businesses’ ability to invest, compete and grow, and we urge Congress to find a path to restoring them this year,” said Watson McLeish, the senior vice president for tax policy at the U.S. Chamber of Commerce.

Senate Skips Town With September Shutdown Deadline Looming

With the tax relief bill blocked, the Senate on Thursday started its summer recess, with no new votes scheduled until the ninth of September, 39 days from now. Before lawmakers departed, the Senate Appropriations Committee voted on an overwhelmingly bipartisan basis to advance four annual spending measures for fiscal year 2025, including a bill that would provide $852.2 billion in defense funding, an increase of $27.2 billion, or 3.3%, over the 2024 level.

The House has approved $833 billion in defense funding, which represents a 1% increase, in keeping with the limits set by the bipartisan 2023 Fiscal Responsibility Act.

In all, the four Senate bills advanced Thursday call for nearly $1.2 trillion in federal funding for the departments of Defense; Treasury; Energy; Labor; Health and Human Services; and Education. They also would fund the federal judiciary, the Small Business Administration and other agencies and provide a $319 million increase in spending on port and harbor maintenance, raising that pot of money to more than $3.1 billion.

Thursday’s votes mean the Appropriations panel has now cleared 11 of the 12 annual spending bills, with the delayed bill for the Department of Homeland Security remaining. “We are continuing to work hard to get to a bipartisan agreement on the Homeland Security bill,” Appropriations Committee Chair Patty Murray said. “The additional time will allow us to take a closer look at issues such as the Secret Service budget as we learn more from the assassination attempt of former President Trump just over two weeks ago, and my hope is that we will be able to mark that up when we return.”

Congressional appropriators will have much work to do when they get back, and they’ll have just days left before a government shutdown deadline at the end of September. House Republicans have passed just five of the 12 annual appropriations bills, and they did so on a partisan basis, meaning that even the measures they have approved would stall out in the Democratic-led Senate. The remaining bills have been bogged down by GOP infighting. The process on the Senate side has been more bipartisan, but none of the 12 bills have been brought to a full floor vote — and Senate appropriators are looking to increase spending beyond what was called for in a bipartisan deal reached last year.

In short, Congress will more than likely need to pass a stopgap funding bill to keep government agencies running until after the November elections and buy time for appropriators to figure out their path forward.

“I'm confident if Speaker [Mike] Johnson learns the lessons of the past few times and works in a bipartisan way, we can avoid a shutdown.” Senate Majority Leader Chuck Schumer told reporters Thursday.

Can you believe it's already August? Email us at yrosenberg@thefiscaltimes.com.

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