February 10, 2021
What to expect in Washington (February 10)
Today is the day, the kickoff to a potentially three-day long House Ways & Means markup of COVID relief/stimulus provisions that comprise about half of President Biden’s American Rescue Plan, and provide additional direct payments, an advanceable child tax credit expansion that would take the form of direct payments, EITC and Child Care tax credit enhancements, an international tax change, COBRA subsidies and ACA tax credit enhancements, and relief for both multiemployer and single employer pension plans.
The Ways & Means budget reconciliation legislation is split into nine subtitles and the plan is reportedly to consider them consecutively, making each subtitle open to amendment, then closing the subtitle and moving on to the next. The seventh subtitle is on tax and includes a repeal of the election starting in 2021 for US affiliated groups to allocate interest expense on a worldwide basis, maintaining pre-2021 policy regarding the allocation of expenses. The permanent repeal of the worldwide interest allocation rules, which were delayed until December 31, 2020 by the 2010 HIRE Act after being enacted in the 2004 AJCA, would raise $22 billion over 10 years. Tax Notes reported, “Since enactment of the Tax Cuts and Jobs Act 13 years after the enactment of section 864(f), many taxpayers have excess foreign tax credits in their global intangible low-taxed income basket but excess foreign tax credit limitation in their general basket, and interest expense allocation is of great importance to them.”
Punchbowl reported that the markup may not need to last three days and Ways & Means Republicans are expected to offer amendments challenging the partisan approach and pushing for new income thresholds on some of the tax-credit programs proposed under the bill. It remains to be seen whether Committee Democrats will offer amendments addressing items omitted from the legislation, such as those addressing the SALT deduction cap and rolling back CARES Act NOL and excess business loss provisions.
The House Education & Labor Committee, whose jurisdiction includes the minimum wage increase, marked up yesterday, and other committees are following suit this week. After a 13-hour markup session that ended after 4 a.m. this morning (February 10), Education & Labor approved, by a party-line vote of 27-21, the Committee’s $357.9 billion portion of the reconciliation directives. The committee’s provisions, all intended to provide additional economic stimulus and relief in the wake of the coronavirus pandemic, include an increase in the federal minimum wage to $15/hour (phased in over five years); enhanced access to ACA and COBRA subsidies for laid-off workers; $130 billion to aid in the reopening of K-12 schools; $40 billion for higher-education institutions; $39 billion in child care block grants; and many other provisions.
It remains to be seen whether the wage increase provision can survive the budget reconciliation process, which imposes several rules on provisions including requiring that provisions have a revenue impact, don’t increase the deficit beyond the budget window, and can’t affect Social Security. Senate Majority Leader Chuck Schumer (D-NY) said yesterday he was working with the Senate parliamentarian to ensure the provision is included, which progressive Democrats in both the House and Senate have insisted upon.
White House – The New York Times reported on President Biden conducting outreach with the business community on the rescue plan yesterday, including with the U.S. Chamber of Commerce and CEOs of specific companies. “Over the course of about 90 minutes, the group discussed the minimum wage, expanding the use of earned-income tax credits, and other ways to help stimulate the economy…” the report said. White House Press Secretary Jen Psaki said, “I would expect that this is the first of many engagements the president will have directly with leaders from the business community…it’s more of a discussion about the country and the economic downturn that we’ve gone through. The president wants to lay out all of the specifics of his plan, hear feedback from them, as he has with many different groups over the past couple of weeks.”
Senate – Finance Committee Ranking Member Mike Crapo (R-ID) issued an announcement on Committee staff:
A Senate Budget Committee hearing on the nomination of Neera Tanden to be Director of the Office of Management and Budget is today. During a Homeland Security & Governmental Affairs hearing yesterday, Tanden said she regretted social media posts targeting Republicans and Budget Chairman Bernie Sanders (I-VT). (Her association with Hillary Clinton has at times put them on opposite sides.)
The Senate is conducting an impeachment trial this week. As the Senate Periodical Press gallery reported, by a vote of “56-44, the Senate voted affirmative on the question: Is former President Donald John Trump subject to the jurisdiction of a Court of Impeachment for acts committed while President of the United States, notwithstanding the expiration of his term in that office.” Senator Roy Blunt (R-MO), known as a keen observer of what’s going on and where things are going in the Senate, was quoted in Punchbowl as saying the trial would probably wrap “Saturday or Sunday,” saying, ”there will be a lot of interest in getting this done by the time you get to the weekend … I think it will become obvious that stretching this out into next week doesn’t change the outcome.”