Not having a House Speaker is threatening tax and other key areas

Work in Congress has ground to a halt as Republicans search for a new speaker, threatening Ukraine aid and delaying consequential business legislation.

Among the items now stalled are a measure to extend federal banking protections to marijuana companies operating in states where the drug is legal and negotiations to restore tax breaks for business spending on research and development.

Here’s a look at some key areas impacted:

Business tax breaks

Business lobbying groups have set a high priority on extending a series of tax breaks. That includes a provision allowing companies to deduct the full cost of research and development in one year instead of spread out over five years and another allowing immediate deduction of equipment purchases.

Democrats have sought an expansion of the child tax credit and housing-related breaks for middle-income people as a condition for backing the business breaks. Those kinds of deals require the attention of high-level party leaders such as the speaker, and tax breaks can become more difficult as Republicans make reducing the deficit a priority.

Ukraine aid

The White House’s request for billions to help Ukraine defend itself from Russia’s invasion is in doubt now amid hardline Republican opposition. While the assistance has widespread support in Congress, the issue has split the GOP. It’s not clear whether the next speaker will support Ukraine.

Hardline conservative Jim Jordan, who is running to replace McCarthy as speaker, told reporters Wednesday he would oppose aid to Kyiv. His rival for the job, Steve Scalise, has supported Ukraine aid. 

The temporary funding package keeping the government operating through Nov. 17 dropped Ukraine aid to make it easier to pass muster with House Republicans.

Government funding

McCarthy’s ouster after backing short-term funding to keep the government open is sure to deter his replacement from doing the same.

Analysts including Goldman Sachs have said the leadership vacuum in the House ratchets up the risk of a government shutdown when the current funding expires Nov. 17. The upheaval also eats away time to work on broader annual spending plans.

A funding lapse would have a cascading economic impact as millions of workers go without pay, private contractors aren’t paid and consumer anxiety grows.

Defense legislation

House gridlock threatens to sidetrack a critical defense policy bill — the $866 billion National Defense Authorization Act. 

The annual U.S. defense policy bill is widely supported by Republicans and is typically considered as must-pass because it authorizes pay increases as well as compensation for troops in harm’s way. Senators still expressed confidence Wednesday that it would get done but said the upheaval in the House would likely cause delay. 

Chip plant construction

Tucked into the defense legislation is a bipartisan measure intended to speed up planning and construction of a new generation of U.S. semiconductor plants making chips used in everything from nuclear missiles to electric vehicles and consumer electronics.

The measure would exempt any semiconductor project that receives grants or loans under the Chips Act from often lengthy environmental reviews. Companies have made plans to invest more than $230 billion in U.S. chip manufacturing since the law passed, including sprawling facilities planned by Taiwan Semiconductor Manufacturing Co. in Arizona and Intel Corp. in Ohio.

Commerce Secretary Gina Raimondo told a senate panel on Wednesday she expects to begin awarding the subsidies this fall. Delays in acting on the measure could slow down the projects.

Marijuana banking

Legislation that would offer federal protections to banks that provide financial services to cannabis businesses, closely watched by Wall Street, could be another casualty. 

The measure, which Schumer has vowed to bring to a vote soon, has been promoted as improving safety for cannabis-based businesses that may currently rely on cash because of federal prohibitions on banking with cannabis firms. 

McCarthy joined a slim majority of House Republicans in supporting an earlier version in 2021. The two announced candidates to replace him, Scalise and Jordan, both opposed it. 

Quick action on any other legislation in the Senate, meanwhile, is imperiled by the ongoing deadlock over funding the government. A group of 20 Republican senators pledged to oppose work on any other matter until annual federal spending is resolved.

Farmer subsidies

Washington’s dysfunction also threatens to hold up a farm bill projected to cost some $1.5 trillion, including biofuel incentives, farm subsidies and food assistance for millions of Americans. 

The legislation, which is typically bipartisan and reauthorized roughly every five years, expired Sept. 30.

The legislation is caught up in clashes over climate spending and food assistance to the poor.  Still, Congress typically extends the existing subsidy system for a year if it can’t come to an agreement on a new five-year farm bill.

— With assistance from Mackenzie Hawkins and Erik Wasson