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This week (February 1 - 5)

Congress: The House and Senate will be in session. Both chambers are planning to act on an FY2021 budget resolution to tee up the budget reconciliation process for President Biden's $1.9 trillion COVID/stimulus bill in the event Republican support doesn't materialize soon.

Last week (January 25 - 29)

Biden stimulus plan: Democrats are full steam ahead to try to quickly pass President Biden's $1.9 trillion COVID relief/stimulus "American Rescue Plan," with or without Republican support that has yet to materialize. Putting their approach into context: Democratic leaders want to avoid settling for a small package and repeating what Senate Majority Leader Chuck Schumer (D-NY), in the New York Times, "referred to as the 'mistake' of 2009, when the Democratic Party was in control of both chambers and the White House but was 'too timid and constrained in its response to the global financial crisis.'" Some details:

• Go big, move fast - President Biden said January 29: "We have learned from past crises the risk is not doing too much, the risk is not doing enough. And this is a time to act now. It's not only that people will badly, badly hurt if we don't pass this package in terms of increased rate of debt, in terms of poverty, a whole range of things. But we will also be hurt long-term economically, economically. We need to make these investments so the economy can grow for the remainder of this year and next year." Treasury Secretary Janet Yellen, meeting with Biden, said, "We need to act now and the benefits of acting now and acting big will far outweigh the costs in the long run."
• Not splitting the package — The White House is taking a hands-off approach to how the bill moves — whether on a bipartisan basis or under budget reconciliation — but Press Secretary Jen Psaki has repeatedly said the Administration doesn't support splitting the package. (Some have suggested seeking bipartisan approval of broadly supported items under the plan, then moving the more divisive elements under reconciliation.) "We're not going to break it apart," Psaki said January 29.
• Moving ahead with reconciliation — House Speaker Nancy Pelosi (D-CA) said January 28, "I'll bring a budget resolution to the floor next week, and then we'll send it over to the Senate. Then if they change it, then we'll take it back and address it. By the end of the week, we will be finished with the budget resolution, which will be about reconciliation, if needed. And I hope we don't need it, but if needed, we will have it." Senator Schumer has told members the chamber may vote on a budget resolution as soon as the week of February 1. House Majority Leader Steny Hoyer (D-MD) indicated committees could be focused on writing reconciliation legislation during the second and third weeks in February.
• Deadline - Democrats, including Senator Schumer, are setting up the March expiration of unemployment and other programs as a deadline. Of the deadline, Psaki said January 26, "[T]he way the president thinks about this is what the cost of inaction is. So, if you look ahead, it's critical … that we don't get anywhere near the March cliff, which would mean the end of eviction and foreclosure moratoriums, the end of $300 additional UI assistance … " (Under year-end 2020 legislation, the Pandemic Unemployment Assistance (PUA) program, Federal Pandemic Unemployment Compensation program (FPUC), and $300 per week supplement expire March 14, 2021.)

Reconciliation rhetoric: Some Republicans are critical of Democrats potentially turning to reconciliation, which would allow the bill to pass the Senate with the support of all 50 Democratic members plus VP Harris, rather than be subject to the 60-vote filibuster threshold. Senator Rob Portman (R-OH) — who announced January 25 that he will not run for re-election in 2022 — was quoted as saying it "would be not just a big mistake at this stage at the start of this administration, but irresponsible given what's happened with the COVID-19 package. We're willing to work with them … " Portman is part of a group of 16 centrist senators that have opened a dialogue with the Administration on a next COVID/stimulus bill. Bloomberg reported another member of the group, Senator Todd Young (R-IN) — who, like Portman, is a member of the Finance Committee — as saying he hoped the group could meet in the next 24 to 48 hours to work on bipartisan relief bill, which, if targeted, could come together in "short order." Senate Budget Committee Chairman Bernie Sanders (I-VT) was dismissive of reconciliation criticism, on the grounds that Republicans — when they were in control of the White House, House, and Senate — used it to try for Affordable Care Act (ACA) repeal and to pass the Tax Cuts & Jobs Act (TCJA). "My Republican colleagues used reconciliation to give almost $2 trillion in tax breaks to the rich and large corporations in the midst of massive income inequality … try to throw 32 million people off the health care they had … [and] allow for drilling in the Arctic wilderness," Sanders said in Punchbowl. "You know what? I think we can use reconciliation to protect the needs of working families." Senator Joe Manchin (D-WV), a centrist Democrat who has discouraged the use of reconciliation in favor of a bipartisan approach, was quoted by MarketWatch as saying, when asked if he will support next week's effort regarding the budget resolution, "We're gonna make Joe Biden successful. I'm for my friend Joe Biden being a successful president."

Minimum wage: There may be a tax angle to the question of fitting the minimum wage increase to $15/hour in the Biden stimulus plan within budget reconciliation rules, and Democrats increasingly suggest they will attempt to include the proposal. The Wall Street Journal (WSJ) said the approach may involve "crafting the minimum-wage increase as a tax against companies that don't pay the wage." Additionally, "some lawmakers argue that a minimum-wage increase itself has enough of a budgetary impact to pass muster with the Senate parliamentarian, who adjudicates which policy provisions can be included in the reconciliation process." The New York Times January 27 reported former Senate budget official Bill Hoagland as suggesting Democrats could have a difficult time using reconciliation for the wage increase or for funding the reopening of schools. The Times additionally said, "Vice President Kamala Harris could also overrule the parliamentarian, but that has not been done since 1975." The reconciliation bill is expected to address the federal debt limit, the Wall Street Journal reported Senator Chris Van Hollen (D-MD) as saying. The application of the debt limit was last suspended in 2019, but that suspension is set to expire in July of this year.

Treasury: Secretary Yellen's nomination was approved by the Senate January 25. The vote was 84-15. Secretary Yellen this week spoke with her UK and German counterparts, saying she was "committed to active U.S. participation in the ongoing OECD discussions on international taxation to forge a timely international accord," according to a readout of the call. A Treasury statement released after one of the calls reiterated the message that Secretary Yellen plans to "re-engage actively in the ongoing OECD discussions on international taxation."

Executive actions: President Biden's Executive Order for modernizing regulatory review has gotten additional attention since its signing on Inauguration Day. A WSJ op-ed co-authored by former White House Chief of Staff, OMB Director, and Congressman Mick Mulvaney said, "Congress defers much of the actual work of governing — producing the rules and regulations that implement laws — to the executive branch. For decades the primary protection against an abuse of this power has been a requirement that a regulation's costs must not outweigh its benefits. While each agency does its own cost-benefit analyses based on its own rules, OMB directs the agencies on how to do that and oversees the results." The regulatory review order tells OMB how to do that, the op-ed said. The order calls for OMB to recommend ways to ensure "the review process promotes policies that reflect new developments in scientific and economic understanding, fully accounts for regulatory benefits that are difficult or impossible to quantify, and does not have harmful anti-regulatory or deregulatory effects." The WSJ op-ed said, "that means throw out traditional measures, use anything you can possibly find to promote the benefit side of the cost-benefit analysis, and don't do anything that might impair new regulation or remove old rules."

Below is a timeline for guidance projects released by the IRS related to the TCJA.

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