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February 22, 2021

What to expect in Washington (February 22)

The White House is keeping the focus on the $1.9 trillion American Rescue Plan COVID relief package set for a House vote this week and want it enacted before President Biden lays out the Build Back Better plan, which currently seems fairly wide open in terms of what priorities it will include, the extent to which it will be paid for, and how. Some reports say it could be mostly deficit financed, some say revenue offsets will cover as much as half, and some consider the possibility of major tax increases like those Biden campaigned on.

A February 21 Bloomberg story said the Build Back Better plan, which could be unveiled next month with an eye towards completing the legislative process by August, will have infrastructure as its centerpiece but progressives are considering pushing for other elements like "an expansion of Obamacare," a public-sector jobs program, and tax measures like an increase in the capital gains tax. "Infrastructure could become ensnared by a push among liberal lawmakers to tack on a raft of other items, from creating a government-run health insurance plan and making unionization easier, to a pathway to citizenship for undocumented immigrants and a carbon tax," the article said. Progressives are set to decide in the coming weeks which elements to advocate for in the package, including whether to push a for a rollback of parts of the TCJA.

The article noted the proposals for ending the lower capital gains rate for those making more than $1 million a year, ending the deferral of capital gains, and changing international tax provisions in the 2017 tax law espoused by Senate Finance Committee Chairman Ron Wyden (D-OR), who is holding a press call at 3 p.m. today to discuss upcoming nomination hearings and provide an update on COVID relief legislation. On future tax increases, Treasury Secretary Janet Yellen said last week Build Back Better would include "probably tax increases to pay for at least part of it that would probably phase in slowly over time."

The Wall Street Journal today reported that Biden and his advisers have been laying the groundwork for the next bill for weeks and members of both parties have concerns about further driving up the deficit. Senate EPW Chairman Tom Carper (D-DE) said there have been discussions over how to pay for infrastructure and he is planning to ask all senators to provide lists of transportation projects for his surface transportation bill, which he hopes to pass in committee by Memorial Day. Senator Ben Cardin (D-MD), who with Carper recently met with Biden, said, "I think [Mr. Biden] would like to go big. I think that was very clear. And that he would like to start now, recognizing that it's going to take time." The article also cited Rep. Kathy Castor (D-FL), who heads a select committee on climate, as saying recent blackouts in Texas due to severe winter storms showed the need for investments in the electric grid.

Democratic intraparty tensions could increasingly be on display with the next major bill, which may also move under budget reconciliation and be the best opportunity to pack party priorities into Biden's first-year legislation. The New York Times reported: "[E]ven though Democrats control Washington, they are hardly united by the same governing goals: The party's ideological blend of moderate and progressive voices helped it win back the White House and the Senate, but elements of that coalition could threaten the most ambitious parts of Mr. Biden's agenda … "

The two sides: "Progressives see issues like a $15 minimum wage, canceling student loan debt and expanding voting rights as a baseline to determining whether Mr. Biden's legacy will be his defeat of Mr. Trump or, as his campaign slogan promised, building the country back better. The moderates, including Mr. Manchin and other Democratic senators like Kyrsten Sinema of Arizona, argue that the path to success in battleground states begins with setting a tone of unity and bipartisanship … "

NominationsHearings this week:

  • Adewale O. Adeyemo to be Treasury Deputy Secretary, Senate Finance Committee, Tuesday, February 23 (10 a.m.)
  • Xavier Becerra to be Health and Human Services Secretary, Senate HELP Committee, Tuesday, February 23 (10 a.m.)
  • Becerra at the Finance Committee, Wednesday, February 24 (2:30 p.m.)
  • Katherine Tai to be USTR, Senate Finance Committee, Thursday, February 25 (10:00 a.m.)

In other nominations news, Neera Tanden's nomination for OMB Director could be in peril after Senator Joe Manchin (D-WV) on Friday said he would oppose her nomination over her social media posts and Senator Susan Collins (R-ME) said this morning she won't support the nomination.

Merrick Garland's Attorney General nomination hearing is in the Senate Judiciary Committee today.

COVID relief — The next step for the $1.9 trillion COVID bill is assembly of the 12 committee-passed elements by the House Budget Committee today at 1 p.m., then on to the Rules Committee before a full House vote Friday or Saturday, after which it will probably be brought straight to the Senate floor. While the bill will bypass committees, the Senate floor presents more opportunities for amendment and provisions like the minimum wage increase to $15/hour will be scrutinized for their adherence to reconciliation rules. The Parliamentarian's minimum wage ruling could come as soon as tomorrow, Politico Playbook reported.

The Washington Post reported: "Aides to Senate Minority Leader Mitch McConnell (R-Ky.) also circulated a memo Friday, indicating they planned to challenge the legislation aggressively once it reaches the Senate floor under the rules of 'budget reconciliation,' which would allow it to pass with a simple majority vote instead of the 60 votes normally required. Under budget reconciliation, provisions without a budgetary impact are prohibited. The McConnell memo highlighted the minimum-wage increase, among other issues. The nonpartisan Congressional Budget Office has said increasing the $7.25 hourly federal minimum wage to $15 would increase earnings for millions of workers and lift people out of poverty but also eliminate 1.4 million jobs — findings Democrats have challenged."

On Thursday, February 25 (10:15 a.m.), the Senate Budget Committee holds a hearing, "Should Taxpayers Subsidize Poverty Wages at Large, Profitable Corporations?"

PPP — New this morning, the White House issued a fact sheet announcing PPP changes to:

  • Institute a 14-day period, starting Wednesday, during which only businesses with fewer than 20 employees can apply for relief
  • Help sole proprietors, independent contractors, and self-employed individuals receive more financial support
  • Eliminate an exclusionary restriction that prevents small business owners with prior non-fraud felony convictions from obtaining relief
  • Eliminate an exclusionary restriction that prevents small business owners who are delinquent on their federal student loans from obtaining relief
  • Ensure access for non-citizen small business owners who are lawful US residents by clarifying that they may use Individual Taxpayer Identification Numbers (ITINs) to apply for relief


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
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