July 21, 2021
What to expect in Washington (July 21)
Today is the scheduled Senate procedural vote in relation to the as-yet-unreleased bill reflecting a bipartisan Senate group’s infrastructure deal struck with President Biden about four weeks ago. Republicans appear poised to oppose moving forward without a bill in hand and Majority Leader Chuck Schumer (D-NY) signaled some new flexibility about the implications of the vote, saying:
H.R. 3684, the House-passed surface transportation bill, is the Senate’s legislative vehicle for the bipartisan infrastructure bill. Republicans made clear they won’t support proceeding until the bill is written. Fourth-ranking Senate Republican Roy Blunt (R-MO) said following the regular Tuesday policy lunches, “I think it’s not going to turn out to be a hard vote for almost every Republican to decide we’re not going to vote to proceed to a bill that doesn’t exist yet. This is not a very high standard to set. We want to have a bill to go to before we vote to go to a bill. Now I know this is an effort to kill the bipartisan effort or to speed it up…”
It’s unclear exactly how it will play out, but if today’s vote is held and fails, another procedural vote could be held later, probably next week. If Republicans join Democrats in moving to the bill, text agreed to by the bipartisan group would be substituted in later in the process. The bipartisan group met last night and both Senators Jon Tester (D-MT) and Mitt Romney (R-UT) said they believed a new agreement on the pay-fors could be sealed today, with legislative text written by Monday.
The Wall Street Journal reported, “Mr. Romney said that lawmakers were still negotiating over which Covid-19 aid to repurpose toward infrastructure,” and “To try to fill some of the funding shortfall created by dropping the IRS provision, lawmakers are looking at repealing or further delaying a Trump administration proposal to curb rebates that pharmacy-benefit managers pay to drugmakers and plans.”
Tax - Senate Finance Committee Chairman Ron Wyden (D-OR) July 20 introduced the Small Business Tax Fairness Act, to phase out the IRC Section 199A deduction to individuals earning over $400,000, consistent with the Biden administration’s pledge to not increase taxes on those earning under that amount.
Under the bill, the deduction would be limited to 20% of the least of: qualified business income; the $400,000 threshold amount; or taxable income reduced by net capital gain. The deduction would be reduced by the ratio that the excess of the taxpayer’s taxable income over the threshold amount bears to $100,000.
A press release said, “the bill would expand eligibility for middle-income services business owners by removing arbitrary restrictions on which industries qualify and which don’t” and “would establish one threshold for determining whether the taxpayer gets the deduction and one simple definition of qualified business income that applies to all taxpayers.” Despite targeting the deduction during the campaign, President Biden’s FY2022 Budget Treasury Green Book does not include a proposal addressing the 199A deduction.
Climate – Senate Democrats have suggested a $3.5 trillion health/climate/caregiving bill they want to move under the budget reconciliation process will include “polluter import fees,” and Senator Chris Coons (D-DE) has introduced a bill (S. 2378) to establish a border carbon adjustment (BCA) on polluting imports that leaves many of the details to be filled in by Treasury. The BCA would impose a fee on carbon-intensive products when they reach the border, and is intended to “incentivize investments in cleaner technologies and account for the cost of complying with U.S. laws and regulations on greenhouse gas emissions,” according to a press release. The New York Times reported that the bill would raise between $5 billion and $16 billion annually, was drafted with Treasury input, and may be provided for under the as-yet-unreleased FY2022 budget resolution. Coons is a close Biden ally.
Trade – The Finance Committee has noticed a hearing on “Implementation and Enforcement of the United States – Mexico – Canada Agreement: One Year After Entry into Force” for Tuesday, July 27 (9:30 a.m.).