Budget hearings will take up much of Congress’s time this week. The Department of Transportation (DOT) will be big, plus there is a vote on a nomination to a crucial DOT agency. To get the rundown on all of this, the Federal Drive with Tom Temin spoke with Loren Duggan, Bloomberg Government’s Deputy News Director Loren Duggan.

Interview transcript:

Tom Temin  It seems like this Congress, which had a funny start because of the speaker battle, etc., has kind of reached cruising altitude to stick with the DOT metaphor there.

Loren Duggan To some extent. Yes. I mean, they’ve had some fits and starts here, it took a while to get both chambers up and running, but they have done so now. And we’ve really seen an uptick in recent weeks of hearings in both the House and the Senate. The budget, obviously, every time that arrives on Capitol Hill that forces more budget hearings to start happening. So that’s quickened the pace as well. But we’re seeing more bills come to the floor, we’re seeing more bills come out of committee. So we’re definitely getting into a more normal rhythm with Congress as the weeks go on here.

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Tom Temin And this coming week, what will the budget agenda look like?

Loren Duggan Well, I think the key hearings might again be with Janet Yellen (D-N.Y.), who was up on the Hill last week to talk about budget stuff. But any time she’s there, she’s going to get asked about everything going on with the tax issues or even banking, which has become a big issue for Congress to weigh in on. So I think that her hearings will be closely watched, because something she says may move markets. But in terms of more traditional review of the budget, will see Pete Buttigieg (D-Ind.) to judge go up and talk about the Transportation Department budget, which, asks for some key investments after things like the bipartisan infrastructure law that was signed back in 2021. So, he’ll make a case for the programs he wants to see increase. And I think we’ll see a number of these hearings start to kick into gear, both in the appropriations committees, but then also the authorizers, like the Haskins, the Armed Services Committees that are writing the defense authorization bill, they’re looking at programs that they want to get information about as well.

Tom Temin And [Federal Aviation Administration (FAA)] has been reauthorized?

Loren Duggan That bill has to be taken up at some point this year. So in addition to confirming leadership, one of the top things Congress wants to do this year is pass a new FAA authorization, probably a multi-year one, to ensure that all the taxes that help fund the programs are continued and use this as an opportunity to maybe change some FAA operations, because as we’ve known from recent hearings on this, there is a lot going on at the FAA. Whether it was the system that shut down and ground aviation to a halt for a short period of time or near collisions. There’s a lot going on with the FAA that Congress is going to want to weigh in on through this legislation.

Tom Temin Yeah, often there’s some sort of a crisis that shines light on a crucial need in air traffic control. At one time in the fifties, regrettably, it was horrible midair collisions that showed how primitive air traffic control was. We don’t have that issue now. But that [Notice to air missions (NOTAMS)] idea showed that a crucial piece of the safety apparatus, anyway, in FAA. Goodness, it hadn’t been updated in decades and they’re still a decade away from updating it.

Loren Duggan Right. And one of the things that the Commerce Committee, who will be considering Phil Washington’s nomination is also considering, is a bill that create a task force on that NOTAM system. So that’s already something they’re trying to work on, even if they don’t want to wait for the larger, longer FAA reauthorization to be finished, maybe they’ll peel off that one piece and do that quicker.

Tom Temin And Phil Washington looks like he’s not going to necessarily sail through his vote as administrator of FAA. There’s been some opposition that came in late last week from Republicans.

Loren Duggan Yep, he’s run into trouble with Republicans who have questioned his experience to do this job. There’s also been a question hanging over him about whether he needed a waiver, because of his military experience when FAA is supposed to be headed by a civilian, although, there seemed to be a memo coming out that maybe downplayed the need for that. But this nomination has been long stalled. It hasn’t moved. They’ve had fits and starts. And there’s been some legal action involving Phil Washington that has also come into play here and kind of hit the pause button once or twice. If they have the votes on the committee, they can get it to the floor and presumably they’d have the votes on the floor as well, at that point. They rarely put somebody up only to go down on the floor. So my assumption is that they’re continuing to push forward. They probably have the support they need, but they’ll be counting every vote between now and then, I’m sure.

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Tom Temin Yeah, I mean, it’s probably debatable how much aviation experience the administrator needs, because it’s the deputies and the career people that make a lot of that machinery work. And you’ve got a complicated piece of machinery in the FAA, but that’s for Congress to debate. We’re speaking with Loren Duggan, deputy news director at Bloomberg Government. And getting back to Janet Yellen, besides people skittish over flying, they’re also skittish over having money in the bank. And despite her repeated protestations that the banking system is sound, the markets aren’t showing that they believe it. Individual investors or bank share or bank account holders aren’t either. And so it seems like she can’t escape these questions no matter what she’s talking about in the coming week.

Loren Duggan No, she won’t. I think anytime she’s in front of members of Congress, she’s going to get asked these questions, and I’m sure do all that you can to try to calm the markets down, calm investors down, calm individual banking customers down, too. I think, Congress hasn’t really said what they want to do here. There’s been some immediate calls from members of Congress to maybe undo a 2018 change that was made to the level of assets that subjective due to higher regulation or lower regulation that’s been pointed to by some people. It’s not clear to me that that would move through, given that the split control of Congress may make that difficult. But, there could be other ideas that they come up with, work on that over the next couple of weeks and months. But surely, the most important thing right now, is to try to get confidence back in the system. And members of Congress will probably do what they can to help you all and get there, but they will have tough questions for her on things that they’re doing. And I think things like moral hazard will come into play as well. Do we still have a $250,000 limit on [Federal Deposit Insurance Corporation (FDIC)]? Or is it more than that? I think that’s the question members of Congress have asked and have thought about and may have some opinions about, given their their general outlook.

Tom Temin And I think the Toxic Asset Relief Program from the 2008-2009 meltdown is actually still in business. And I don’t think anyone wants another wave of toxic assets coming into government receivership, because these things have long tails.

Loren Duggan Right, absolutely. It can go on for a while, But a lot of what’s happened so far has been a mix of government. But as we saw, other banks banded together to try to help First Republic out last week, which is kind of the industry trying to take care of itself, too. So there’s a lot happening on a lot of fronts on that.

Tom Temin And the House Republicans, they’re in Florida for part of the week. What are they doing down there right now?

Loren Duggan They’re Ponte Vedra Beach. They’re having their annual issues conference where they have the chance to be alone in a different area, bring guests in and plot out their agenda for the rest of the year. This is a big year for them. They just took control of the House, they have a lot they want to get done. So this is a chance for them to have this kind of retreat and talk about that. So they’re down there through Tuesday night, and then the House will come back into session on Wednesday with Republicans and Democrats going out legislating, once again. But it’s a chance to get away, do a little golfing and talk a little shop.

Tom Temin And maybe hear from Ron DeSantis (R-Fla.), who is suddenly in the Republican swirl, with respect to 2024.

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Loren Duggan It could be, I haven’t seen all the guests. But certainly, he’s the governor of the state and as we saw when the Democrats met in Baltimore, Democratic Governor Wes Moore (D-Md.) went and met with them. So it’s always possible.

Tom Temin Yeah, Well, good. And I wanted to also ask you about the repeal of the Authorization for the Use of Military Force. These go back a couple of decades. But is that a piece of housekeeping? Or are there politics around that also?

Loren Duggan Well, the concern here by people who want to repeal it, we’re talking about the 1999, 1991 one excuse me, around the Gulf War and the Kuwait invasion, and then the 2002 one that was passed to enable that Iraq war. The interest in getting rid of those is they have been used to justify other military action related to Iraq, but not always. And for some good governance and some housekeeping, they’d like to take those off the books. It wouldn’t take out the 2001 authorization of the Use of Military force, which was the post-9-11 one right after the attacks that was signed into law. That would still be there and is used often as a reason for taking military action abroad. But there is interest in clearing some of these things off the books. Some people would like it to be as part of a broader overhaul of authorizations of the use of military force. But at the very least, this is the vote the Senate has before it next week, chopping out these Iraq ones.

Tom Temin And just to wind back to the budget hearings, of course, the discussion is on the skinny than the fat but fatter budget that was submitted by the administration last week. But that doesn’t really get them any closer to a counterproposal from the Republicans in the House. If they have how they want agency spending to look, which means all of this debate doesn’t really seem to get closer to that October 1 resolution that everyone dreams of.

Loren Duggan That’s correct. And the general tone here is the Biden administration asked for increases for most agencies. As we know, House Republicans want to push spending down in most areas except defense and a couple of other key areas. So they have to reconcile what their top lines are going to be and how they’re going to write these bills. The House and Senate appropriators do want to move quickly and try to get back to regular order, but it’s going to be hard to do regular order too much if you’re on completely different wavelengths on the House and the Senate side. But there are a lot of questions still hanging out there. The other things that were in the budget about mandatory spending changes or revenue changes as part of a debt limit debate, that’s also something that will be joined once everybody’s back into town. So there’s no shortage of things to talk about on the budget side.

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