June 25, 2021
What to expect in Washington (June 25)
President Biden and a bipartisan group including Senators Susan Collins (R-ME), Joe Manchin (D-WV), Mitt Romney (R-UT), and Kyrsten Sinema (D-AZ) announced a roughly $1 trillion infrastructure deal June 24 that omits most of the Administration’s tax increase proposals, but does call for investment toward reducing the tax gap and reinstating Superfund fees for chemicals. Upon emerging from the White House, both sides celebrated the agreement as a return to bipartisan deal-making, and Senator Susan Collins (R-ME) said the group agreed on “the price tag, the scope, and how to pay for it,” which “was not easy.”
However, President Biden later said he agreed with House Speaker Nancy Pelosi (D-CA) that the infrastructure bill must move with a Democratic reconciliation bill expected to address issues like health care, caregiving, and climate change. “If this is the only thing that comes to me, I’m not signing it. It’s in tandem,” he said. Linking the two, as has been demanded by progressive Democrats wary of signing on to a modest roads and bridges bill, clouds the outlook and timing. The Speaker said the House would not vote on an infrastructure bill until both that bill and a follow-on budget reconciliation bill are passed by the Senate: “There won’t be an infrastructure bill unless we have a reconciliation bill, plain and simple.”
Movement on a reconciliation bill will require the House and Senate agreeing to the same FY2022 budget resolution with reconciliation instructions. Senate Majority Leader Chuck Schumer (D-NY) said he hoped to hold Senate votes on both the infrastructure bill and the FY2022 budget resolution in July. That could leave the development of the follow-on health/caregiving/climate bill to the August recess, pushing enactment of the two-part legislation until September or later in the fall. Approval of the budget resolution will unlock the reconciliation process that will allow the “human infrastructure” and climate bill to pass the Senate with 51 votes, possibly with the Democratic-only support of 50 members plus the VP. Senator Schumer explained that the budget “sets the big reconciliation numbers” and the “second part of the process … has to be to write all the details, which takes a while. OK, but the first step will be finished in July.”
The White House released high-level details of the $579 billion in new infrastructure spending, as follows:
Politico reported Senate Finance Committee member Mark Warner (D-VA) as saying the tax gap proposal would provide the IRS an additional $40 billion/10 years to produce roughly $100 billion in additional tax revenue from enforcement, and the plan does not include the Biden administration’s proposal to require banks to produce more information about money flowing through their customers’ accounts.
The President’s qualifying support for the infrastructure bill with passage of a follow-on human infrastructure bill drew a rebuke from Senate Republican leader Mitch McConnell (R-KY), who said on the Senate floor, “Less than two hours after publicly commending our colleagues and endorsing the bipartisan agreement, the president took the extraordinary step of threatening to veto it.” The Senate is now out of session for a two-week recess until July 12. The House is in next week before a one-week recess.
It has been widely noted that progressive and moderate Democrats reaching agreement on a follow-on bill will not be easy. “Some Republicans remain hopeful that Mr. Biden will ultimately end up signing only the bipartisan deal into law, and that Democrats will be unable to find consensus on the details of the spending and tax provisions in a partisan bill,” the New York Times reported.
Debt limit – Punchbowl News reported on a meeting yesterday including House Ways & Means Committee Chairman Richard Neal (D-MA), Treasury Secretary Janet Yellen, National Economic Council Director Brian Deese, and Senate Finance Chairman Ron Wyden (D-OR) to discuss pay-fors for infrastructure and the federal debt limit, which is reinstated August 1 after a two-year suspension. Extraordinary measures can extend the must-act date on the debt limit until later in the summer or the fall. Secretary Yellen said during a Senate Appropriations hearing June 23, “It’s possible that we could reach that point while Congress is out in August and I would really urge prompt action on raising the limit or suspending it.”
Democrats had been eyeing the reconciliation process to increase the limit, which would avoid winning the support of Republicans who could, as in the past, seek spending cuts in exchange. How the debt limit can be addressed is as yet unclear given still-uncertain outlook for the infrastructure and human infrastructure bills. Consideration of the bills could also bump up against the September 30 expiration of the highway authorization and government funding, though appropriators have said a continuing resolution will likely be required to fund the government past that date and could leave lawmakers working toward a year-end funding deal, which could have other measures attached.
Tax – The Neal-Yellen-Wyden group also discussed “overhauling the international tax code to end incentives to ship jobs overseas, and instead reward companies that invest in American workers,” Bloomberg reported.
The outlet also reported that following a ProPublica report on Roth IRAs, Chairman Wyden released a statement saying, “IRAs were designed to provide retirement security to middle-class families, not allow mega-millionaires and billionaires to avoid paying taxes … As we continue to look at ways to make the tax code more fair and finance critical investments in the American people, I’ll be revisiting this proposal.”