SUMMARY
US electoral risk to geopolitics hasn’t yet displaced macroeconomics among investors working through unrelenting headlines and developments. But the 2024 elections are the compelling factor in DC policy risk analysis as candidate Trump attempts to dictate the House of Representatives’ legislative agenda. The Senate early this morning sent the House an amended version of a $95 billion war assistance package. The bipartisan passage and content of the Senate bill begs the questions of when and under what circumstances the House proceeds. Our call hasn’t changed: we see Israel and Ukraine receiving US help this quarter, with a faint but fading possibility of a February enactment.
OUTLOOK
House Speaker Johnson’s reaction to the Senate action was predictable, reiterating challenges he’ll confront no matter how he attempts to plot his Conference’s next move. Prerogatives of the full House matter but the Speaker’s endgame strategy obviously begins with discovering what his Conference will bear.
Context usually matters in processes when knowledge of Roberts Rules of Order (a book on parliamentary procedures) either pertains or helps anticipate the range of possible outcomes (more on that shortly). But in this case, momentum is an informative factor. In the Senate this morning, 70 of 99 members casting a ballot supported the bill including 46% of Senate Republicans voting (22 of 48). During five days of very active consideration, every vote to move the bill forward garnered 66 or more votes. Support that only grew upon final passage. That is momentum in any system.
Back to the context, it is a less reliable indicator but provides parameters of what might be ahead for the House. Border policy was originally demanded by the GOP as the price for completing the pending FY24 war supplemental spending request for Ukraine. That changed two weeks ago when Speaker Johnson followed other commenters declaring the bipartisan Senate border agreement dead on arrival. Also, the Speaker said the war funding package would have to be split so the House could vote separately on Israel and Ukraine aid.
In the House, Trump’s mounting electoral influence ended talk of border legislation, even while promoting the prospect of campaigning that President Biden and Democrats have ignored the subject. Then, an Israel-only bill failed to garner a House majority. In contrast, a narrowly divided Senate produced surprisingly seminal immigration reform, laid it aside per the House GOP leadership’s flipped demand, and approved war funding for both countries by a super-duper majority margin.
We have no insight on the House process, and we are not alone. A few House GOP members in the past 12 hours have privately, mostly unanimously recognized the Senate bill would easily pass the House if allowed a straight up-or-down vote. This sentiment along with increasingly public threats to paint opponents as acolytes of the theocracy in Tehran and President Putin underpin our call appropriations will be enacted. A White House memo reportedly read a bit like a campaign ad script, just to underscore that political point.
Of all the ways this tranche of FY24 war funding question might be resolved, we still rely on recent history as a guide. Debt ceiling accommodation, and two rounds of shutdowns avoidance all became law with a majority of each House party. But those outcomes only followed after House votes on GOP-drafted legislation that lacked a majority of House support. Of course, past performance is no guarantee of future results.
An immigration bill, HR 2, passed the House last November under a procedure requiring at least two-thirds of House members’ support. No roll call was taken, so one cannot be sure on the next border policy House vote count, which very likely will require a recorded vote now that the Senate offers an alternative – if only in concept. A simple majority of the House can force a vote on legislation the leadership otherwise does not support. Discharge petitions have only worked twice this century and is one reason we doubt it is the more likely path. However, the House has rarely been such a complicated place of legislative business, meaning a successful discharge could elegantly belong in the annals of the 118th Congress. Our call remains war assistance will flow this quarter. Beyond that, we like you, will watch and learn with interest.
