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May 24, 2021

What to expect in Washington (May 24)

Infrastructure talks between the White House and Republican senators led by Senate Environment & Public Works Ranking Member Shelley Moore Capito (R-WV) are continuing, though the two sides remain far apart on the size of the plan: the Administration offered a $1.7 trillion counteroffer on Friday in response to a bid from the GOP group that hadn't come up much from a prior version. Senate Republicans have set a $800 billion ceiling, less than half of where the White House is now. The President wants progress soon but with "meaningful negotiations going, taking place in a bipartisan manner, he's willing to let that play out," White House public engagement director Cedric Richmond, a former congressman, said on CNN Sunday.

The Administration has signaled they are willing to test the waters of bipartisanship on infrastructure until around Memorial Day. Fourth-ranking Senate Republican Roy Blunt (R-MO), a longtime legislator and keen observer of congressional dynamics, said on Fox Sunday, "I do think we've got about a week or ten days to decide if we can work together on this or not. I'd like to. I believe the president would like to. The number is too big because the scope of what the White House staff wants to call infrastructure is way too big."

Senator Susan Collins (R-ME), a key moderate in the chamber, said on ABC's This Week, "Republicans tend to define infrastructure in terms of roads, bridges, seaports and airports and broadband. The Democratic definition seems to include social programs that have never been considered part of core infrastructure … So I think we're still pretty far apart, but this is the test. This will determine whether or not we can work together in a bipartisan way on an important issue. And the other important area where we're far apart is still the money."

A bipartisan group of lawmakers separate from the Capito group and led by Senator Mitt Romney (R-UT), "which includes centrist and deal-minded members of both parties," is "assembling a potential compromise around funding," according to a report in the Saturday Washington Post that also punctuated Republican resistance to TCJA changes, which Senator Blunt said was clearly communicated to the White House as a red line in the talks.

Debt limit — While other reporting has observed that Democrats want to notch some victories before the 2022 midterm election season slows legislation, a separate Post article noted the impact of the federal debt limit reinstatement after July 31 (Congress will have some extra time before a must-act date), saying that addressing the debt limit "triggered some of the most bitter fights in the Obama administration between the former president and congressional Republicans, and GOP lawmakers are signaling similar warfare in the coming months."

Democratic views — With progress toward a bipartisan deal slow and uncertain, some Democrats are urging leaders to cut bait and act big solely on a Democratic basis, probably through the budget reconciliation process. On CBS's Face the Nation Sunday, Senate Budget Committee Chairman Bernie Sanders (I-VT) said, "We would like bipartisanship, but I don't think we have a seriousness on the part of the Republican leadership to address the major crises facing this country. And if they're not coming forward, we've got to go forward alone."

Dozens of House Democrats, including members of the Ways & Means Committee (Reps. Panetta, Blumenauer, Doggett, Larson, Moore & Thompson) told House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer (D-NY) in a letter last week, "we believe that robust legislation comprising the American Jobs Plan and American Families Plan must be enacted as rapidly as possible, preferably as a single, ambitious package combining physical and social investments hand in hand. Physical and human infrastructure needs are inextricably linked."

Tax — Regarding the Treasury Department's May 20 announcement of a proposal in the OECD BEPS 2.0 negotiations "that the global minimum tax rate should be at least 15%," a weekend WSJ editorial said, "A 21% rate was never likely to succeed. The new 15% push might not work either. OECD negotiators still will need to overcome resistance from low-tax governments … Any global minimum-tax deal probably will also depend on adopting a separate global rule for digital-services taxes on American tech companies. Ms. Yellen seems willing to sacrifice some U.S. firms — and Washington's future revenues from them — for the sake of a deal on the minimum tax. But for technical reasons she'd then need to push one or more tax treaties for digital taxation through the Senate, while other governments could drag their feet implementing the minimum-tax plan while they wait. That could take years."

On Tuesday, May 25 (9:30 a.m.), the Senate Finance Committee will hold a hearing on nominations including Lily Batchelder for Assistant Treasury Secretary for Tax Policy.

EVs — A Washington Post op-ed is critical of EV tax credit expansions, which congressional Republicans have also criticized as benefiting those with high incomes. "Biden's policy to use less affluent Americans' money to entice more affluent Americans to buy EVs is only one of the contemplated regressive policies by which his administration would transfer wealth upward," it said.

A Tax Notes column "Do We Really Need a $7,500 Electric Vehicle Tax Credit?" also suggested: "The regressivity of the plug-in vehicle credit is easy to understand. First, plug-in vehicles are expensive, so low-income households cannot afford them. Second, the credit is available only for new purchases. Third, for purchases by individuals the credit is fully useful only for individuals with income tax liability at least equal to the credit amount."

Budget — President Biden's FY2022 budget is set for release on May 28, White House Press Secretary Jen Psaki confirmed on Friday. The Treasury "Green Book" will also be released.

Congress — The House won't vote again until the week of June 14, with a Committee Work Week this week, a one-week recess for Memorial Day, then a Committee Work Week starting June 7. The Senate will conduct floor business this week ahead of a one-week recess for Memorial Day. Senate Finance Committee Chairman Ron Wyden (D-OR) could announce a markup of a clean energy package this week. The Senate is back in at 3 p.m. today and will resume consideration of S. 1260, the legislative vehicle for the US Innovation and Competition Act of 2021, which combines Leader Schumer's Endless Frontier Act, other bipartisan competitiveness bills, and $52 billion in emergency supplemental appropriations to implement the semiconductor-related manufacturing and R&D programs. A procedural vote on the nomination of Chiquita Brooks-LaSure to be Administrator of the Centers for Medicare and Medicaid Services will be held at 5:30.


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