While the 2020 US election has some races still to be determined, the overall picture is clear. Former Vice President Joe Biden will likely be confirmed and sworn in as President on January 20, 2021; the Democrats will retain control of the House of Representatives, albeit with a very slim majority; and the US Senate control hangs in the balance as the country waits for the outcome of the Georgia run-off elections on January 5, 2021.
The 2020 election resulted in the Republicans gaining seats in the House of Representatives bringing the party breakdown to around 212 Republicans and 223 Democrats. In the US Senate, Republicans will hold a 50-48 majority with 2 Senate races in Georgia to be determined in a run-off election on January 5, 2021. Should the Democratic candidates win both seats, they will control the US Senate with the Vice President breaking any tie votes. However, if the Republicans win one or both seats, they will retain their majority.
President Trump and the current Congress must fund the government beyond the end of this year – we have already seen the COVID relief package agreed and there is increasing pressure around the annual National Defense Authorization Act.
Looking into 2021, President-Elect Biden has strong bipartisan relationships in Congress given his 40+ years in the US Senate. Biden and Congressional leaders will face challenges in finding consensus on issues such as defense and civilian spending under a growing budget deficit, tax and economic policy, healthcare reform, immigration reform, and an overhaul of the nation’s infrastructure.
In addition to the challenges mentioned above, President-Elect Biden has outlined four major priorities for his incoming Administration: (1) COVID-19; (2) economic recovery; (3) racial equity; and (4) climate change. His actions will reflect these priorities in policy, personnel, and politics.
The public health and economic crises will command the majority of the Biden Administration’s early actions. Among his first official actions was the creation of a COVID-19 Advisory Board to address the global COVID-19 case surge, to ensure the safe and equitable distribution of vaccine(s), and protect at-risk populations. The new Administration will also provide support to businesses and individuals struggling through the ongoing economic downturn.
On issues important to Department of Defense and Health and Human Services federal contractors, we anticipate the changes outlined below.
President-elect Biden indicated he will return federal agencies to full workforce capacity and that he believes that a strong and dynamic workforce is key to his Administration’s success. The federal contracting budget totaled $600 billion in 2019 and is not expected to decrease under Biden. However, Biden stated his federal contracting rules will include programs to promote businesses owned by women, minorities, and wounded veterans. The new Administration will push for increased wages (minimum $15 per hour wage under all new federal procurements) and benefits for federal contractors, while also reinstating diversity training programs. On procurement, expect growing pricing competition, continued retrenched incumbents due to cautious contracting officers, focus on “Buy American”, and the establishment of a Federal Procurement Center to support women and minority-owned businesses.
The Biden Administration will face difficult fiscal decisions given recent deficit spending increases resulting from the pandemic. On February 1, 2021, the Biden Administration is expected to release its first annual budget request. This will be the first public document outlining the new President’s policy and spending priorities for the coming years. The Biden Administration must delicately balance discretionary spending between defense and non-defense accounts and will face pressure from legislators to either increase or decrease spending on each side of that ledger.
Democratic progressives are likely to pursue reductions to the current FY21 Department of Defense budget of $740.5 billion. However, Biden has stated that he does not plan significant defense budget cuts and indicated his willingness to work with legislators in pursuing consistency in Department of Defense spending at $740 billion for FY22.
President-elect Biden’s victory likely put an end to legislative efforts to “repeal and replace” the Affordable Care Act (ACA) since he will not sign into law any bill repealing the ACA. While Biden avoided calling for a national government-funded healthcare system, he will work to protect and improve the ACA, while expanding the health care exchange offering to include a federally-funded public option. Biden’s ACA-proposed reforms include expanding ACA premium support and tax credits so lower and middle-income families can afford to enroll through the ACA exchanges, auto-enrolling beneficiaries who meet certain income limits in the public option, and improving the quality of the plans offered on the exchanges.
Moreover, the US Supreme Court is expected to rule on the constitutionality of the ACA in late spring/early summer of 2021. The ruling may necessitate minor action on the ACA should the court leave the law in place or a major overhaul should the court rule the law unconstitutional.
President-Elect Biden faces many challenges in the first year. These include quickly and effectively addressing the COVID-19 pandemic and establishing a foundation for an economic recovery for individuals, families, and employers. Biden must do this while navigating a slim partisan majority in the US House, most likely a Senate controlled by the Republicans, and compromising with the various groups within each Party that will try to pull him to the left or right on all these issues.