February 24, 2021
What to expect in Washington (February 24)
Washington continues to operate on a dual track, focused on the $1.9 trillion American Rescue Plan COVID relief package that is set for a House vote on Friday and a Senate Parliamentarian ruling as soon as today on whether a minimum wage increase to $15/hour can stay in; but also with an eye toward a potentially $3 trillion infrastructure-plus Build Back Better plan expected to move once the relief bill is cleared. There are questions regarding that plan's size, scope, and potential for tax increases.
Treasury Secretary Yellen continued to send signals over tax proposals in a New York Times interview. Financial transaction tax? "That's something that one would have to examine closely, what impact it would have on ordinary retail customers who are active in the stock market. It could deter speculation, but it might also have negative impacts, so it's something I think that's worth looking at. What President Biden has indicated is that he is going to be looking at corporate taxation, closing loopholes, trying to probably raise the corporate tax rate — not as high as it was before 2017 — but probably up to 28% to try to get rid of subsidies for fossil fuels and other inefficient forms of taxation."
Wealth tax? "A wealth tax has been discussed but it is not something that President Biden has come out in favor of. I think it's something that has very difficult implementation problems. President Biden has pledged not to raise taxes on households making less than $400,000. For example, their capital gains escape taxation even at death due to step-up in basis. That might be something that's worth reconsidering."
Carried interest? "I think that's something that certainly deserves to be on the list of things to look at."
(Senator Elizabeth Warren (D-MA) pushed for a wealth tax during a Banking Committee hearing yesterday.)
Asked about reports of a $3 trillion price tag for the next bill, Senate Majority Leader Mitch McConnell (R-KY) said following the regular Tuesday policy luncheon, "I think we can anticipate they're going to try to use reconciliation one more time and that'll be to raise taxes. And I noticed the administration's in favor of at least getting the corporate rate from 21 up to 28. My guess is that's not where it'll stop. And, so, we'll have a big robust discussion about the appropriateness of a big tax increase in the wake of our current situation. And my guess is they'll get around to that pretty soon and we'll be dealing with that as well."
Majority Leader Chuck Schumer (D-NY) said, "The Build Back Better plan is something that I think we would turn to very soon after the American Rescue Plan is done it should be - it should have big infrastructure, it should be green, it should include communities that are left out. It should deal with worker training."
Today is the Senate EPW hearing, "Building Back Better: Investing in Transportation while Addressing Climate Change, Improving Equity, and Fostering Economic Growth and Innovation."
Nominations — Adewale "Wally" Adeyemo didn't tread new ground beyond what Yellen has said during his Deputy Treasury Secretary nomination Finance Committee hearing yesterday, but said US companies must be able to compete globally and the US will work internationally through the OECD and G20 tax process to create a more level playing field for US companies with regard to taxation and ensure countries are working with each other to maintain their tax bases rather than engaging in a race to the bottom on tax rates.
During his HELP Committee hearing for the HHS Secretary nomination, Xavier Becerra and Committee Democrats highlighted his long track record in the House working on health care issues such as the creation of the Children's Health Insurance Program (CHIP) and the Affordable Care Act (ACA) as well as his record as California Attorney General fighting for patients and holding the health care industry accountable. Republicans voiced their concern over Becerra's lack of health care-specific experience, proposals they view as government overreach, and support for pro-choice policies. A Finance Committee hearing is today.
The Senate Budget Committee vote on Neera Tanden's nomination for OMB Director has been postponed from today amid opposition announced by several senators.
COVID relief — House Majority Leader Steny Hoyer (D-MD) tweeted last night: "The House will vote on Friday on @POTUS' #AmericanRescuePlan to end this pandemic and deliver urgently needed relief to America's families and small businesses. The American people strongly support this bill, and we are moving swiftly to see it enacted into law." The Rules Committee meets 9:30 a.m. Friday to set parameters for consideration.
The Senate Parliamentarian's minimum wage ruling may come today, according to Politico, which also reported House Budget Committee Chairman John Yarmuth (D-KY) as saying there are discussions over a minimum wage of $11 or $12, which could satisfy restrictions that constrain the projected cost of a reconciliation bill outside of the 10-year budget window. Senator Joe Manchin (D-WV) also wants a minimum wage closer to $11/hour.
The White House is preparing for the package to be changed in the Senate. Press Secretary Jen Psaki said February 23, "[T]here's going to be a process that works its way through the Senate. We don't even know where it's going to end up, outside of when it works its way through the 'Byrd bath' … And we expect that to happen in the next couple days and then we'll see where it goes from there." (She was referring to the process, named for late Senator Byrd, of determining whether provisions violate the rules of reconciliation.)
Bloomberg February 23 reported Senate Budget Committee staff as saying Democrats are also seeking rulings by the Parliamentarian on the multiemployer pension provisions in the House bill, as well as COBRA premium subsidies for laid-off workers.
Moderate Senate Democrats may seek changes. The Washington Post reported February 23: "Several Democratic senators are working on changes to the portion of the bill on state and local aid, including redirecting some of the money to invest in infrastructure to expand the broadband network … the minimum wage has been a flash point, although attention is also focusing on the $350 billion for state and local governments in the legislation. The disputes could complicate plans by Biden and Democratic leaders to get the legislation signed into law ahead of a March 14 deadline … "
A New York Times story on the Senate Parliamentarian noted, "She challenged key provisions in the original 2017 proposal put forward by Senate Republicans to dismantle parts of the Affordable Care Act, and at least one Republican, Senator Ted Cruz of Texas, floated the prospect of overruling her … Democrats have so far declined to say whether they will try to overrule her decision if it goes against them."
Tax — IRS Commissioner Chuck Rettig told a House Appropriations subpanel February 23, on whether the Service will extend the April 15 filing deadline, "we're looking at extending the filing deadline, but understand that there's a lot of confusion for taxpayers when we do extend the filing deadline. Presently, we don't see a need to extend the filing deadline. Individuals can get an extension to October 15th."