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June 30, 2021

What to expect in Washington (June 30)

Still more questions than answers about how and when a bill reflecting the $1 trillion infrastructure deal President Biden proposed with a bipartisan Senate group can move in Congress, and especially whether it can pass without progress toward a follow-on bill covering health care, caregiving, and climate change, paid for in part by tax increases, and assurances from moderates they will support it. Five Senate Republicans support the deal and five more are needed to pass, plus all 50 Democrats. Any House GOP support is less clear.

Outlook — Suggesting infrastructure can't move without the follow-on bill, Rep. Ilhan Omar (D-MN), "the chief vote counter of the Progressive Caucus," said, "It's clear a majority of the Democratic caucus, whether progressive or not, is interested in delivering, and that delivery will only happen if the progressives are on board," the New York Times (NYT) reported. "On this, the last thing you want is progressives saying, 'We're voting no because they've sold out climate, education and child care,'" said Rep. Ro Khanna (D-CA), who, the report said, "predicted a united left flank would bring down an infrastructure-only bill."

Asked by Punchbowl News what she needs to see to feel comfortable voting for the bipartisan infrastructure bill, Rep. Alexandria Ocasio-Cortez (D-NY) said, "I need to see progress on both. And I personally, you know, it's not just about putting faith in leaders. It's like, 'Show me the beef.' And to me, the beef is passing reconciliation in the Senate. And if we can get these folks secured in the Senate, then I'll entertain a bipartisan bill … I believe that keeping the consensus in the House, as we've seen, has been more reliable … ."

Suggesting the bipartisan bill should move soon, Rep. Stephanie Murphy (D-FL), co-chair of the Blue Dogs group of fiscally conservative Democrats, said she wants to vote ASAP on Biden's infrastructure deal — not wait on reconciliation, according to a tweet from NBC's Sahil Kapur: "When you have the votes, you should take the vote." "There is a commitment to move forward with a reconciliation path. And we can do that as well." House Speaker Nancy Pelosi (D-CA) was said to reiterate June 29 that the Senate must vote on the follow-on reconciliation bill before the House takes up the infrastructure legislation. The President has backed away from that position.

Financing/funding — The Washington Post reported that the financing/funding provisions in the deal outlined June 24 aren't all strong revenue generators — "a hodgepodge of measures that are unlikely to create actual revenue that pays for the spending plan" — but even Democratic economists are unbothered by that:

  • "Unemployment insurance program integrity" is intended to cut only fraud and waste, leading some to question whether it can raise $70 billion;
  • $65 billion from the proceeds of selling the spectrum used by telecommunication companies to run 5G reflects a sale that occurred in February;
  • there is $80 billion in coronavirus relief funding "that nobody has yet identified or agreed to;"
  • a "mandatory sequester," or cuts to government programs, has been waived repeatedly by Congress during the past decade; and
  • $100 billion from "public-private partnerships" and other collaborations with industry groups are "questionable because they are actually likely to increase the bill's price tag."

The $40 billion investment in the IRS to help recoup over $100 billion in unpaid taxes has strong revenue potential, but "it is unclear whether Republicans ultimately will sign off on using the extra IRS funding to come down on wealthy tax cheats and big corporations, which is the administration's priority. What some experts regard as the most effective way to bring in additional revenue from tax cheats — imposing additional reporting requirements on financial institutions — has been ruled out of the final agreement."

Surface transportation — Rep. Rick Larsen (D-WA), a top T&I Committee member, said the House surface transportation bill set for passage this week would lay down yet another marker for House and Senate negotiators, and "it includes climate-related funding not in the Senate deal, to replace diesel-powered buses and ferries with zero-emissions versions and pump record sums into mass transit and rail," the NYT said.

Politico reported House T&I Chairman Peter DeFazio (D-OR) noted that while his bill sets new policy, the "numbers in this bill are very close to the bipartisan deal negotiated in the Senate" — a notable statement, if only because he has largely avoided questions about interaction with the broader infrastructure talks. He also said that the bill "would be the single largest contributor to the president's plan to reduce the impacts of climate change, since transportation is the largest single source of carbon pollution in the United States." Larsen and DeFazio's states in the Pacific Northwest are in the midst of a record-breaking heat wave.

DeFazio said Monday, "the INVEST in America Act, which fulfills key pieces of President Biden's American Jobs Plan, provides $715 billion to bring our nation's crumbling infrastructure up to a state of good repair, improve resiliency, address climate change, improve safety, and provide investments in both rural and low-income communities that need it most." Full House consideration of the transportation bill begins today.

Budget — The NYT story also reported Rep. Omar as saying House liberals will meet this week with the House Budget chairman, John Yarmuth (D-KY), as he begins drafting the House budget blueprint, and "had been in constant communication with [Senate Budget Chairman] Sanders." Prior to the $1 trillion infrastructure deal, it was reported that Chairman Sanders and other Democrats were eyeing $6 trillion in Democratic priorities, with $2.5 trillion in planned tax increases under the jurisdiction of the Senate Finance Committee.

Plans had been for the Senate to work on the FY2022 budget resolution to unlock reconciliation and the infrastructure bill prior to the August recess, and for the House to work on the budget. However, Roll Call reported June 29, "House Democrats may not take up their own budget blueprint next month and instead wait to see what the Senate can produce, according to Budget Chairman John Yarmuth." Yarmuth said after a caucus meeting Tuesday "that party leaders hadn't decided yet whether they will have the votes to adopt a separate House budget resolution or if they need to wait to see what can get through the Senate."

Yarmuth had previously eyed the week of July 12 for Committee consideration of the budget. House Majority Leader Hoyer (D-MD) told reporters June 29 he expects the last two weeks of July to be busy in the House, with work on the FY22 budget, infrastructure, and appropriations.

Competitiveness — The House June 28 approved 345-67 the National Science Foundation for the Future Act, which would provide NSF funding and fund a new Directorate for Science and Engineering Solutions, and is an alternative to the Senate-passed competitiveness bill. It is focused on financing research in climate change and cybersecurity, as opposed to the emerging technologies focus of the Senate bill, and doesn't include the Senate-passed $52 billion to fund semiconductor research, design and manufacturing initiatives.

"The contrast reflected concerns among House lawmakers that the Senate bill placed an outsize and overly prescriptive focus on developing nascent technologies and on replicating Beijing's aggressive moves to gain industrial dominance," the NYT reported. "Instead, the lawmakers argued, the United States should pour more resources into its own proven research and development abilities."

House passage is seen as setting up a House-Senate conference with the Senate bill passed June 8. The President released a statement anticipating the negotiations and hopeful for an outcome. Lawmakers are responding to top-down, state-funded technology incentives by other nations, and the vulnerabilities of the US supply chain exposed by the pandemic.

The President said: "I was pleased to see the Senate pass crucially important investments in our domestic strength through the U.S. Innovation and Competition Act with massive bipartisan support, and I'm heartened today to see the House pass similar bipartisan investments in R&D and science tonight … My Administration looks forward to continuing to work with the House and the Senate in producing a final bill I can sign."

IRS - Treasury and the Internal Revenue Service June 29 issued guidance for taxpayers developing renewable energy projects to address delays related to the COVID-19 pandemic. The IRS guidance provides relief on commencement of construction requirements.


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