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July 19, 2021

What to expect in Washington (July 19)

The bipartisan Senate group who reached an infrastructure deal with President Biden about four weeks ago was working over the weekend to nail down details of pay-fors for the plan that, with routine transportation spending, is expected to near $1 trillion in investment over five years, with about $579 billion in new spending. Majority Leader Chuck Schumer (D-NY) wants a procedural vote related to the measure Wednesday, July 21, also the day by which the entire Senate Democratic caucus must agree on how to move forward on the FY2022 Budget Resolution. Senator Schumer set the deadlines to speed up efforts to pass the infrastructure bill and budget resolution in the three weeks before the scheduled start of the August recess. The House returns to session in Washington today after a Committee Work Week last week.

Infrastructure – On Sunday, both Senators Rob Portman (R-OH) and Bill Cassidy (R-LA), members of the bipartisan group, dismissed the Wednesday deadline as arbitrary given that there isn’t yet a bill to vote on. Still, Senator Portman said the group was negotiating over the weekend and, “It's important to get it done, because it's an urgent matter.” He said the increased IRS enforcement funding toward narrowing the tax gap is out of the proposal because of pushback from other Republicans and “we found out that the Democrats were going to put a proposal into the reconciliation package which was not just similar to the one we had, but with a lot more IRS enforcement … So, that created quite a problem, because the general agreement is that this is the bipartisan negotiated infrastructure package … And President Biden, to his credit, said that we will not be renegotiating these items in the reconciliation package.”

Regarding substitute pay-fors, Portman said, “There’s legislation, one called the Medicare rebate rule, that provides significant revenue.”

On Fox News Sunday, Senator Cassidy said a bill could be ready by Wednesday but “we need cooperation from the White House and Schumer on our pay-fors. We’ve offered pay-fors, Republicans have. Good faith pay-fors that both sides agree are good. And we offer them, and the White House takes them and says, no, we want them. We want them for our $3.5 trillion,” perhaps referring to the IRS tax gap funding. He was dismissive of the idea that Republicans are being taken advantage of by Democrats who want to clear infrastructure items on a bipartisan basis, then immediately follow with a Democrat-only bill. “The $3.5 trillion, if they want to go there on a strict party line vote, fueling inflation, making people more dependent upon the government, they can address that. I’m just trying to take care of the infrastructure that our country needs, that my state needs,” he said.

Reconciliation bill – No text or formal summaries have been released regarding the $3.5 trillion health/climate/caregiving bill Senate Budget Committee Democrats and Senator Schumer want to be provided for under the FY2022 budget resolution, with reconciliation instructions to allow congressional approval with only Democratic support. A Wall Street Journal story suggested Senator Mark Warner (D-VA), the only member of the bipartisan group who also contributed to the Budget Committee’s plans for the FY2022 budget resolution, was in touch with other moderates about the plan for a $3.5 trillion bill of Democratic priorities. “’And you know just because I got to a certain number doesn’t mean they will,’ Mr. Warner said of the other centrist Democrats. ‘But I think they’ll give me a chance to make my case why I think this is the moment, this is the need, and these are the initiatives.’”

As Punchbowl News reported this morning regarding interactions between the two-track effort being pursued in the Senate, “Schumer has to be careful here that he doesn’t alienate Democratic moderates like Sens. Joe Manchin (W.Va.), Jon Tester (Mont.), Maggie Hassan (N.H.) and Kyrsten Sinema (Ariz.) -- especially Sinema -- that he desperately needs on the budget resolution by playing hardball on the bipartisan infrastructure package.”

Informal summaries of the planned reconciliation bill have generated interest in “polluter import fees” as a designated pay-for, despite the lack of any additional detail. A story in the Saturday Washington Post said of the Democratic approach to climate change, “A central element in the plan would allow the United States to impose a tax on nations lagging in reducing their own pollution, as well as a fee on emissions of methane, a greenhouse gas more potent than carbon dioxide in the short term.” The story suggested the proposal is consistent with Biden’s campaign posture of seeking to curb China’s emissions; could face a WTO challenge; and is similar to an emissions-based tariff proposed by the EU.

Health – An editorial in the Saturday WSJ, “Three Cheers for Employer Health Insurance,” by a former chief economist at the White House Council of Economic Advisers said, “As the economy and the country begin to reopen fully, employer-based health coverage is surging back, providing benefits to millions of American families… employer-sponsored insurance has tremendous value for Americans, taxpayers and the health system.”

The WSJ reported on Saturday of the health care component of the planned reconciliation bill, “The package, backed by President Biden, is likely to add new benefits and lower drug prices for many of the 60 million people in the health program, as well as for people with commercial health insurance plans, by granting the federal government broad new authorities in healthcare.”

On Tuesday, July 20 (at 10:00 a.m.), the Senate HELP Committee holds a hearing on “The Path Forward: A Federal Perspective on the COVID-19 Response.” Witnesses: Rochelle Walensky, MD, MPH, Director, United States Centers for Disease Control and Prevention; Anthony Fauci, MD, Director, National Institute of Allergy and Infectious Diseases, National Institutes of Health; Janet Woodcock, MD, Acting Commissioner, United States Food and Drug Administration; Dawn O'Connell, Assistant Secretary for Preparedness and Response, United States Department of Health and Human Services.


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Washington Council Ernst & Young
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