July 28, 2021
What to expect in Washington (July 28)
A bipartisan Senate group continues to work towards releasing infrastructure bill text, and Senate Majority Leader Schumer said Tuesday, “I think we’re close.” He said, “We’re making good progress on both tracks, the bipartisan infrastructure bill and the budget resolution with reconciliation instructions,” and he still intends for the Senate to approve both before the August recess. “If an agreement can be reached – and I’m very optimistic and hopeful it will be – senators should prepare to work through the weekend in order to finish the bipartisan infrastructure bill,” Leader Schumer said. Senator Rob Portman (R-OH) and White House counselor Steve Ricchetti were said to be meeting last night to try to hammer out a deal.
Transit funding remains an infrastructure sticking point, and the issue is partisan. An editorial in the July 27 Wall Street Journal (WSJ) said, “Republicans have bowed to most Democratic demands. But now Democrats are also insisting that they acquiesce to spending ever more to rescue broken rail and bus systems in big liberal cities.” It said, “most mass transit systems face a larger structural budget problem that pre-dated the pandemic: Ballooning operating costs from generous labor contracts and pension payments … So Democrats want Republicans to bail out those cities and their public unions.”
Senator Susan Collins (R-ME) said Tuesday that in addition to transit funding, “There are still some other broad issues as well and there are minor issues throughout,” the New York Times reported.
Budget – Politico reported that President Biden met yesterday with Senator Kyrsten Sinema (D-AZ), who has yet to sign on to plans by other Democrats for a $3.5 trillion health/climate/care bill to be provided for under the FY2022 budget resolution’s reconciliation instructions. The support of Senators Sinema and Joe Manchin (D-WV) for the budget resolution is essential in the 50-50 Senate. “But Sinema and Manchin have focused their attention on finalizing the bipartisan agreement,” the report said. “Manchin suggested Monday that Democrats’ social spending package would not come to fruition without a bipartisan deal.”
“If the bipartisan deal falls apart, then I think everything falls apart,” Senator Manchin said Tuesday.
Senate Budget Committee Chairman Bernie Sanders (I-VT) is still saying he hopes to have an FY2022 budget resolution on the floor in early August, Politico reported. “Sanders acknowledged that Democrats are still debating what instructions to include in the budget resolution that will unlock the reconciliation process,” the report said.
Previous Budget Committee Chairman Mike Enzi, former Republican senator from Wyoming, passed away following a bicycle accident. An accountant, Enzi was also a former member of the Finance Committee.
Energy – Senate Finance Ranking Member Mike Crapo (R-ID) and Senator Sheldon Whitehouse (D-RI) introduced the Energy Sector Innovation Credit (ESIC) Act that would allow up to a 40% ITC or 60% PTC for low market penetration technologies across a range of energy sources and “provide flexibility for unforeseen clean energy technologies to be eligible for ESIC by including an expedited-consideration provision for Congress to take up new technology recommendations from DOE.” Reps. Tom Reed (R-NY) and Jimmy Panetta (D-CA) introduced identical legislation in the House.
Global tax – Sparing US tech companies from Digital Services Taxes (DSTs) was a major impetus behind the BEPS 2.0 project for a global tax agreement, but another sector, the pharmaceutical industry, is pushing back against the plan, the WSJ reported. “The effort comes at the same time the industry is fighting U.S. proposals to cut drug prices. Lawyers and company officials estimate the tax overhaul, if adopted, could cost some of the biggest pharmaceutical companies hundreds of millions of dollars more each year. That has set up a fight in Congress and in Europe. In private industry meetings and discussions with congressional staffers, drug company executives and lobbyists are seeking to use the industry’s pandemic role as leverage.”
Retirement - The Senate Finance Committee today (10 a.m.) holds a hearing, “Building on Bipartisan Retirement Legislation: How Can Congress Help?” JCT released a background document.
Health - On Tuesday (July 27), the Centers for Disease Control and Prevention (CDC) changed its guidance regarding indoor masking, representing a third change in indoor mask guidance in the last three months. The updated guidance recommends “universal indoor masking for all teachers, staff, students, and visitors to schools, regardless of vaccination status” and calls for “fully vaccinated people to wear a mask in public indoor settings in areas of substantial or high transmission.”
On Friday, July 30 (12:00 p.m.), is the EY Webcast, “Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments.” Register.