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May 17, 2021

What to expect in Washington (May 17)

Republican senators led by Senate Environment & Public Works Ranking Member Shelley Moore Capito (R-WV) are set to again meet with President Biden on Tuesday, May 18, to present an update of their $568 billion infrastructure plan that doesn’t have TCJA rollbacks, and that could prompt some back-and-forth negotiating or signs of whether or not a bipartisan approach to transportation-plus-broadband infrastructure is possible. The White House is signaling a willingness to test the waters of bipartisanship for a few more weeks before potentially opting for a Democrat-only budget reconciliation bill. Republicans have drawn a line in the sand on tax increases, and Biden and House Speaker Nancy Pelosi (R-CA) have suggested increased enforcement to narrow the tax gap could be an area of common ground. If there’s a bipartisan deal on transportation, a second, all-Democratic bill with “human infrastructure” elements of Biden’s agenda and tax increases could be pursued under budget reconciliation later this year.

On Fox Sunday Morning Futures May 16, third-ranking Senate Republican John Barrasso (R-WY) said the May 13 meeting he had with President Biden, Senator Capito, and other GOP senators was “very positive, very productive… And I will tell you why I believe that Joe Biden is actually interested in cutting a deal with Republicans. We knew going in we were going to be plan B. And plan A is still the big infrastructure bill that has very little to do with infrastructure, massive tax increases, massive spending. Joe Biden, I think, and the administration realize they cannot muster the votes that they would need, even using reconciliation, to get such a monstrous piece of legislation done. We were there talking specifically hard infrastructure, physical infrastructure, roads, bridges, ports, waterways, the important things…”

Barrasso said the President knows Republicans “are not touching the Tax Cuts and Jobs Act.” On Tuesday, “we’re going to meet and talk about different ways to pay for this legislation going forward to make sure we have the core infrastructure the American people need.”

A Wall Street Journal profile of Senator Capito cited her as saying “most of her constituents are encouraging her to cut a deal with Democrats that could benefit the state’s deteriorating bridges, rural broadband and other needs. ‘They don’t want to see a slugfest every time they turn to something important in their lives we’re tasked with trying to solve,’ she said. Mrs. Capito, a longtime behind-the-scenes legislator, is seen by her colleagues as well-positioned to kick-start progress in the talks. She is close to her state’s other senator, Joe Manchin, a Democrat who has indicated that he wants Republican support for any infrastructure bill and has held up party priorities in the past.”

There will be an opportunity this week for members of House and Senate tax-writing committees to talk about infrastructure and paying for it during two hearings:

  • On Tuesday, May 18 (10 a.m.), the Senate Finance Committee holds a hearing on “Funding and Financing Options to Bolster American Infrastructure.”
  • On Wednesday, May 19 (10 a.m.), the House Ways & Means Committee holds a hearing on “Leveraging the Tax Code for Infrastructure Investment.”

The only other hearing on tap in the tax-writing committees is a Finance Committee health hearing that is expected to include discussion of telehealth, “COVID-19 Health Care Flexibilities: Perspectives, Experiences, and Lessons Learned,” on Wednesday, May 19 (10 a.m.).

Tax – There has been reporting/opinion on the popularity of tax increases. A Politico article this morning said increasing taxes on the wealthiest Americans and on companies is popular with voters and Democrats “see a dramatic shift in the politics of taxing the rich that they’re ready to use to their benefit.” Still, “Leaning in so sharply isn’t easy, and angst is rising as some Democrats press for a more aggressive message that can cut through GOP attack ads and protect their most vulnerable members next November.” And, “Some Democrats are already urging their colleagues to tweak their tax strategy. Rep. Lloyd Doggett (D-Texas), for instance, recently told his colleagues on a private caucus call that the party should rebrand their tax ideas around ‘reform’ rather than repeating the ‘fairness’ argument.”

Former White House Chief of Staff Rahm Emanuel (Obama) wrote in the WSJ, “not only is Mr. Biden’s proposal to make federal tax policy fairer popular with the public; so are the initiatives the new revenue will fund—infrastructure, community college, universal pre-K, public health. Democrats don’t have to run scared on taxes anymore. Public polling tells the story. Nearly 60% of Americans are bothered ‘a lot’ that corporations and rich people don’t pay their fair share…”

Today is the individual income tax filing deadline. 


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