Congress Sends Largest Defense Bill in History to Biden’s Desk

Plus: Senate will delay holiday recess to seek border deal ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Happy Thursday! Congress just passed the biggest pay raise for troops in more than two decades. Here’s what you need to know about the $886 billion annual defense policy bill and other fiscal developments. Schumer said the Senate will come back next week. (Sipa USA) Senate to Delay Holiday Recess in Hopes of Reaching Border Deal The Senate will delay its planned holiday recess and return to the Capitol next week in an attempt to give negotiators more time to reach an elusive deal on a $110.5 billion supplemental spending bill including border policy changes and aid to Ukraine, Israel and Taiwan. “Members need to be here next week. We have to get this done,” Senate Majority Leader Chuck Schumer said Thursday. “Our Republican colleagues, who have said action on the border is so urgent, should have no problem with continuing to work next week. We hope to come to an agreement, but no matter what, members should be aware that we will vote on a supplemental proposal next week.” Talks between the White House and Senators from both parties will continue over the weekend in hopes of reaching a framework agreement, Schumer said. Any such framework would then need to be turned into legislative text. But Schumer said he has already laid the procedural groundwork to enable the Senate to consider any proposed deal — or an alternative plan. “This might be one of the most difficult things we have ever had to work through,” Schumer said, “but we all know that so much hangs on our success. We know autocrats like [Russian President Vladimir] Putin and Xi [Jinping, the president of China] are hoping for us to fail. We need to try with everything we have to get the job done.” The White House on Thursday indicated that negotiations were “going in the right direction.” It has reportedly offered up major policy changes, including expanded authority to expel migrants, some of which have alarmed progressives. Even so, key Republicans indicated Thursday that the talks still had a long way to go. “Everything right now is still conceptual,” Sen. John Thune of South Dakota [told reporters](. “There hasn’t been anything nailed down, agreed upon, let alone reduced to paper.” Thune reportedly said he doesn’t see a realistic path to passing the bill before Christmas. Sen. Lindsey Graham was also doubtful given the lack of legislative language at this point: “At this moment a deal by the end of the year is just not remotely possible,” he said. The Senate has other unfinished business to take up next week, including reauthorization of Federal Aviation Administration programs set to lapse on January 1 and confirming nominations. But the House on Thursday adjourned for its holiday break, meaning that unless Speaker Mike Johnson calls members back — which is extremely unlikely — lawmakers there won’t be around to vote on any Senate deal before the new year. Congress Passes $886 Billion Defense Bill, Sending It to Biden The Senate approved the 2024 National Defense Authorization Act late Wednesday and the House quickly followed suit Thursday morning, sending the record $886 billion bill to President Joe Biden’s desk for his signature. Although there was some uncertainty in recent weeks about the fate of the bill, which defines national defense policy and authorizes defense spending, lawmakers were able to reach an agreement, maintaining a decades-long streak of passing the NDAA every year on a bipartisan basis dating back to 1961. The vote in the House was 310-118, with more Democrats (163) backing the bill than Republicans (147). In the Senate, the vote was 87-13. Alabama Republican Rep. Mike Rogers, chairman of the Armed Services Committee, highlighted the bipartisan nature of the legislation. “This bill is a compromise,” he said, “but it’s a good compromise.” Plenty of controversy: Lawmakers have been battling over the bill for months, with the House passing a version last summer that included controversial provisions touching on hot-button issues like abortion access and transgender health care in the military. Those provisions were largely stripped from the final bill, although a few of the culture-war elements remained, part of conservatives’ effort to end what they call “wokeness” in the Pentagon. The watering down of the anti-wokeness provisions angered some conservatives in the House. Texas Republican Rep. Chip Roy railed against the bill Thursday morning for failing to advance conservative priorities. “There is no justification for supporting a bill that does not materially change the direction of our military away from social engineering,” Roy said on the floor. “A vote for this bill is a perpetuation of the woke policies undermining our military, bringing down the morale, driving down recruiting and now undermining the civil liberties of the American people.” A last-minute effort by Roy to adjourn the House before the NDAA vote could be held failed. Another controversial measure in the bill revolved around the short-term reauthorization of Section 702 of the Foreign Intelligence Surveillance Act, which relates to a warrantless surveillance program. Critics on both the left and the right say the program violates privacy by allowing the government to eavesdrop on communications that could include American citizens, but national security officials say it’s an essential intelligence tool. The 2024 NDAA extends the program until mid-April. Rep. Jim Himes, the House Intelligence Committee’s senior Democrat, called on lawmakers to allow Section 702 to continue while working on a better version. “By God, let’s reform it. But do not let it expire,” he said. “If it expires, Americans and allies will die." (Read more about Section 702 [here]( and [here]( What else is in the bill: The 2024 NDAA will keep the Pentagon and defense-related efforts at other agencies funded through the 2024 fiscal year, which began in October. Some highlights from the roughly 3,100-page bill: * Authorizes $886 billion in defense spending, a roughly 3% increase from 2023. * The topline figure breaks down into $168 billion for procurement, $145 billion for research and development, $289 billion for operations and maintenance, $216 billion for personnel, $17 billion for military construction, and $32 billion for nuclear programs. * Provides a 5.2% pay raise for service members, the largest boost in more than 20 years. * As part of the strategic shift toward China, the bill authorizes $14.7 billion for the Pacific Deterrence Initiative, which includes assistance for Taiwan. * The bill prohibits the teaching of “critical race theory” in the military and eliminates the position of the Chief Diversity Officer at the Department of Defense. It also eliminates funding for “drag shows, Drag Queen Story Hours, or similar events” as well as the Countering Extremism Working Group, which Republicans say is “politically biased.” * The cases of about 8,000 service members who were discharged from the military for refusing to take the Covid-19 vaccine will be reviewed for possible reinstatement. * The bill includes a measure that would prevent a U.S. president from unilaterally withdrawing from NATO. Number of the Day: $4.5 Trillion Health care spending in the U.S. totaled $4.5 trillion in 2022, according to new [data]( from the Centers for Medicare and Medicaid Services. As a share of the overall economy, health care spending slipped to 17.3% in 2022, CMS said, driven in part by strong economic growth. By comparison, health care spending accounted for 18.2% of GDP in 2021 and 19.5% of GDP in 2020 — the highest level on record. Quote of the Day “The Fed right now looks pretty dang good, in terms of how things are turning out.” Michael Gapen, head of U.S. Economics at Bank of America, as quoted by [The New York Times]( in an article looking at the possibility that the Fed has engineered a soft landing in which inflation recedes without the economy plunging into a recession. “In short,” writes the Times’s Jeanna Smialek, “the pandemic problems that the Fed had expected to prove temporary did fade. It just took years rather than months.” --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to [sign up here]( for their own copy of this newsletter. --------------------------------------------------------------- Fiscal News Roundup - [House Passes Defense Policy Bill, a Rebuke of GOP’s Far-Right Fringe]( – Washington Post - [House Passes Sweeping Defense Policy Bill That Includes 5.2% Pay Raise for Members of the Military]( – CNN - [Senate Will Be In Next Week as Border Talks Pick Up Steam]( – Roll Call - [Senate Democrats Extend Session in Hope of Ukraine, Border Deal]( – Bloomberg - [Congress Approves Bill Barring Any President From Unilaterally Withdrawing From NATO]( – The Hill - [Congress Approves Short-Term Extension of Warrantless Surveillance Powers]( – The Hill - [Progressive Caucus Opposes Defense Bill Over Excess Spending, FISA Extension]( – American Prospect - [Jeffries: Government Will Shut Down Unless House GOP Yields on Demands]( – The Hill - [Biden Forgave Billions in Student Debt. Poll Shows It’s Not Enough for Gen Z]( – Bloomberg - [US Special Ops May Be Buying Too Many Armed Overwatch Planes, Says GAO]( – Military Times Views and Analysis - [Democrats, Make a Border Deal to Save Ukraine]( – Bloomberg Editorial Board - [Washington Dysfunction Could Get a Lot of Ukrainians Killed]( – Josh Rogin, Washington Post - [A Compromise on the Border Would Be Good for Biden (and for Ukraine)]( – Marc A. Thiessen, Washington Post - [A Critical Day for White House, Senate Negotiators on Border]( – Leigh Ann Caldwell and Theodoric Meyer, Washington Post - [Is Jerome Powell’s Fed Pulling Off a Soft Landing?]( – Jeanna Smialek, New York Times - [The New Global Climate Deal Is Mostly Hot Air]( – Eric Levitz, New York - [Point: Social Security Can’t Grow Its Way Out of Trouble]( – Marc Goldwein and Chris Towner, DC Journal - [Counterpoint: Balanced Economic Growth Provides the Best Route for ‘Fixing’ Social Security]( – Dean Baker, DC Journal - [Vibes, the Economy and the Election]( – Nate Cohn, New York Times Copyright © 2023 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](