Lame Duck Congress Outlook
November 5, 2024
Tonight’s election results will begin to set the stage for legislation and regulation in 2025, but the most immediate impact will be on the legislative agenda for the outgoing Congress and President Joe Biden.
Why it matters: Government funding expires after Dec. 20, 2024, and there are a number of unfinished items Congress needs to address before next year. Party leadership may be incentivized to wait until 2025 in the hope of gaining better policy outcomes with new/larger majorities or they may try to act in November and December if an issue is unlikely to advance in the next Congress.
CREFC members should not expect major policy actions specific to the industry in the lame-duck session, but several items of broader macro interest could be in the mix.
- Government funding and flood insurance expiration after Dec. 20;
- Smith-Wyden Tax Bill H.R. 7024, which passed with a large majority in the House, but was blocked by the Senate GOP; and
- Cannabis banking safe harbor legislation (SAFER Banking Act).
Below, we briefly cover each of the topics and rate the likelihood of action in the lame-duck session.
Government Funding and NFIP Extension: Very Likely.
- Regardless of the election outcome, Congress must act to avert a government shutdown ahead of Dec. 20. The National Flood Insurance Program (NFIP) will also lapse without action.
- In the event of a GOP sweep or Trump victory, Republicans may be incentivized to go with a shorter term government funding extension into 2025 if they expect to be in a better position to shape the funding bill. Speaker Mike Johnson’s (R-LA) original plan had extended funding through March 2025.
- But if the GOP loses the House, it is unclear how the strategy would play out for an outgoing Speaker, especially with a Harris victory.
Smith-Wyden Tax Bill Passes: Unlikely.
- As we’ve previously covered, H.R. 7024 would expand Low-Income Housing Tax Credit (LIHTC) availability for affordable housing as well as enhance deduction calculations for certain real estate.
- The bill had passed the House 357-70, but failed to advance in the Senate as the Republican Senate tax committee was cut out of the negotiation process.
- Since Republicans are expected to take the Senate and be in a position of greater negotiating power, there won’t be much incentive to advance the bill.
- A Harris victory with a Democratic House could spur action if the GOP thinks this deal is better than anything they would get in the 2025 tax debate. But then Senate Democrats may hold out for a better deal.
Cannabis Banking Passes: Unlikely.
- The legislation to create a federal safe harbor to bank state-authorized cannabis businesses has been known by several names (SAFER Banking Act, formerly the SAFE Banking Act) and has had many fits and starts.
- Various bills have repeatedly passed the House and this year the Senate Banking Committee advanced the SAFER Banking Act out of committee on a bipartisan (albeit narrow) majority.
- But the bill has encountered new obstacles from the Right and the Left, which have continued to stymie progress. And influential GOP senators Mitch McConnell (R-KY) and Mike Crapo (R-ID) have been opposed to the measure, which means the bill is unlikely to get standalone consideration on the busy Senate floor.
- Senate Dems could be incentivized to add the bill to a must-pass deal, but that would require buy-in from GOP Senate leadership. Even then, a Republican House leadership may not be on board with the current formulation.
- While lame duck consideration is unlikely, 2025 could present new opportunities for federal decriminalization or legalization of cannabis businesses. Florida has a ballot initiative to legalize recreational cannabis, which Trump is supporting. Both Harris and Trump could present opportunities to legalize cannabis, and new Senate GOP leadership may not be as adamantly opposed as outgoing GOP leader McConnell.
The bottom line: Even for an outgoing Congress, elections have consequences. The November and December months will be busy with spending debates and lawmakers looking to wrap up action on must-pass bills like the National Defense Authorization Act (NDAA) and the Farm Bill. Plus, if Trump wins, expect Senate Dems to jumpstart the process of confirming judges into overdrive.
Contact David McCarthy (dmccarthy@crefc.org) with questions.