July 23, 2021
What to expect in Washington (July 23)
After a Senate procedural vote on an as-yet-unreleased infrastructure bill failed, the bipartisan Senate group that struck a high-level deal with President Biden a month ago is now aiming for Monday to have the bill text finalized, amid lingering issues. “I think we’ll get it done over the weekend, and then I hope that we get another cloture vote next week, and that will succeed,” Senator Mitt Romney (R-UT) said, Politico reported.
Senator Joe Manchin (D-WV) said pay-fors for the plan “are pretty much lined up,” Bloomberg reported in a story that said a delay of the previous administration’s Medicare rebate rule has been added to the package. Other issues remain unresolved, including transit funding, which Senator Rob Portman (R-OH) said could be omitted from the plan in light of what he said were unreasonable demands from Democrats, prompting some Democrats to say they will oppose the bill if the funding is left out. The Hill reported Banking Committee Chairman Sherrod Brown (D-OH), who is leading the effort for transit funding that falls under his committee’s jurisdiction, as saying Republicans are slow-walking the infrastructure effort. Other Democrats complained that some settled issues were relitigated, which is what happened with IRS tax gap funding.
Reconciliation – Budget Committee Chairman Bernie Sanders (I-VT) said July 21 he did not yet have the support of all 50 Senate Democrats to move forward with an FY2022 budget resolution that could provide for a $3.5 trillion health/climate/caregiving bill to move with Democrat-only support under reconciliation. Sanders said that he hoped the budget proposal could be ready for a floor vote “by early August,” Bloomberg reported, adding there are “50 different members and 50 different sets of priorities.”
While the infrastructure procedural vote failed to expedite the process and budget negotiations among Democrats continue, Senate Majority Leader Chuck Schumer (D-NY) reiterated on the Senate floor July 22, “I have every intention of passing both major infrastructure packages – the bipartisan infrastructure framework and a budget resolution with reconciliation instructions – before we leave for the August recess.” The plan had been for the infrastructure bill to be considered the week of July 26 and the budget resolution the week of August 2. Punchbowl News reported second-ranking Senate Republican John Thune (R-SD) as saying an infrastructure measure could take 10 days to process, after which the Senate would presumably move to the budget resolution. That could leave the August 9 recess week in jeopardy.
House Majority Leader Steny Hoyer (D-MD) said this week he expects the House recess to begin July 30 as planned, but that members could be brought back to vote on what the Senate passes. As a broader matter, House Speaker Nancy Pelosi (D-CA) reiterated July 22, “We will not take up the infrastructure bill until the Senate passes reconciliation,” meaning the $3.5 trillion bill, not the budget resolution with instructions for it. That could keep the two-track agenda in Congress going for months longer.
Debt limit – The CBO this week gave lawmakers some breathing room on addressing the federal debt limit and Republican senators said they are not willing to easily agree to an increase or suspension. The Wall Street Journal quoted Senator Thune as saying, “I don’t think there’s a single Republican senator who views increasing the debt limit so that Democrats can expand government and spend massive amounts as something they in the end would want to support.” Senate Finance Committee Chairman Ron Wyden (D-OR) challenged that view, saying, “We have Covid debt, we have Trump debt, we’ve got a double standard, and we want to make it clear nobody is going to hold the American economy hostage, period, full stop.”
CBO July 21 said, “Treasury would probably run out of cash and be unable to make its usual payments starting sometime in the first quarter of the next fiscal year, most likely in October or November.” The debt limit could be addressed in the $3.5 trillion reconciliation bill Democrats want to provide for in the budget resolution, but there is no guarantee that will come together in time. Some analysts have suggested the debt limit could be addressed as its own reconciliation bill. As CRS notes, “as many as three measures could qualify for consideration under expedited reconciliation procedures in the Senate—but no more than one each for spending, revenue, and the debt limit.”
Tax – A July 21 Washington Post editorial, “The smartest way to make the rich pay is not a wealth tax,” said the best approach is “one endorsed in 2018 by economists at the Organization for Economic Cooperation and Development (OECD): significant, broad-based taxes on capital gains, coupled with similarly efficient levies on transfers of wealth through gifts and inheritance.” It said, “The higher capital gains rate should be applied to a broader base of investment income” and the “big money” is in eliminating stepped-up basis.
Retirement – On Wednesday, July 28 (10 a.m.), the Senate Finance Committee will hold a hearing, “Building on Bipartisan Retirement Legislation: How Can Congress Help?”
Climate - Senate Democrats have suggested the $3.5 trillion bill they want to move under the budget reconciliation process will include “polluter import fees.” Special Presidential Envoy for Climate John Kerry said July 21 the Biden administration hasn’t decided whether to impose a tariff on carbon-intensive imports from China and other countries to fight climate change and is still evaluating such a proposal, Bloomberg reported. “We want to genuinely understand the implications taken by one group of countries or one country and how does that affect the overall dynamics of what we’re trying to do on climate as well as how does that affect already very tricky trade waters,” Kerry said.
Global tax – EY America’s International Tax and Transaction Tax Services Leader Craig Hillier will join Bloomberg TV at 12:30 p.m. today to discuss progress on a global minimum tax.