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September 20, 2021

What to expect in Washington (September 20)

There are many moving pieces in Washington: trying to advance a massive reconciliation bill with a broad package of tax increase proposals in play, waiting on a House vote on the Senate-passed infrastructure bill that also extends highway funding beyond its September 30 expiration, extending government funding past the same date, and addressing the debt limit. The House returns today after an extended August recess, though plenty has been going on in committees. The Senate is also in, and both chambers haven’t been in session simultaneously since the end of July.

Reconciliation - Senator Joe Manchin (D-WV), who previously called for a strategic pause on the budget reconciliation process, may actually mean that he doesn’t want to vote on anything until 2022, Axios reported, adding that President Biden was unable to convince the Senator to support a $3.5 trillion bill during a White House meeting last week. Manchin previously signaled he’d support a $1.5 trillion ceiling.

That isn’t enough, Senate Budget Committee Chairman Bernie Sanders (I-VT) said on CBS Face the Nation: “All I am telling you is the $3.5 trillion is much too low. A compromise has already been made. An agreement has been made. And the American people, by the way, poll after poll after poll, are telling us that now is the time to stand up to powerful special interests. Now is the time to start representing working families.”

On Fox News Sunday, House Budget Committee Chairman John Yarmuth (D-KY) said House consideration of its budget reconciliation bill probably won’t happen before its self-imposed deadline on the infrastructure bill. Progressives want Senate action on the reconciliation bill before they will agree to support the infrastructure bill. “I would say we’re probably going to slip past the September 27th date, sometime into early October would be my best guess,” on a reconciliation vote, he said. Punchbowl reported that the Budget Committee will not assemble House committees’ portions of the bill this week after all.

Politico reported that Senator Kyrsten Sinema (D-AZ), the other major moderate to watch in the Senate on reconciliation and a major contributor to the development of the bipartisan infrastructure bill, told the President last week that if the House doesn’t vote on the bipartisan infrastructure bill on September 27 as they plan, she won’t back a reconciliation bill. House moderate Kurt Shrader (D-OR) has issued a similar warning. Sinema has also told the White House she doesn’t support any of the prescription drug pricing reforms before Congress.

A September 15 story in the Washington Post suggested that while Senator Sinema hasn’t said much publicly, she “and her staff have been closely involved in the talks, putting detailed questions to several key lawmakers and committee aides to understand the justification for proposed spending and tax increases.”

The parliamentarian issued an opinion against Democratic plans to address immigration in a reconciliation bill, saying the policy change “substantially outweighs the budgetary impact of that change” and therefore runs afoul of reconciliation rules. Other issues where reconciliation rules are in play include labor organizing provisions, drug pricing, a clean electricity program, and worker protections for paid leave.

ICYMI, the EY ITTS Alert on international provisions from the House Ways & Means Committee is available here.

Government funding, debt limit – The focus has been on the budget reconciliation bill pieces reported out of House committees and impending negotiations with the Senate, but Congress is only 10 days away from the expiration of government funding on September 30 and a potential must-act date for the debt limit in October. The House this week is taking up a continuing resolution (CR) to extend government funding between September 30 and December 3 and will also take action on the debt limit.

Senate Republican leader Mitch McConnell (R-KY) said last week that his members won’t cooperate on the debt limit in light of the partisan reconciliation process being employed this year, first for the American Rescue Plan Act and now for the developing Build Back Better Act. “If they want to do all of this on a partisan basis, they have the ability and a responsibility to ensure that the federal government not default,” he said. Senate Majority Leader Chuck Schumer (D-NY) cited Democratic support to renew the debt ceiling three times during the Trump presidency and asked the business community to get involved in highlighting the danger of default to the entire economy. That is happening: financial industry trade groups warned in a September 13 letter that “failure to act would negatively impact the creditworthiness of the United States.” 

House Budget Chairman Yarmuth said the decision about whether to link the two – a CR and the debt limit – hadn’t been made and, of Senator McConnell, he said, “Mitch has been running around Kentucky taking credit for a lot of the spending that is now requiring us to raise the debt limit.” Speaker Pelosi said in a letter to members last night, “The debt limit is a shared responsibility, and I urge Congress to come together, in that spirit, on a bipartisan basis as it has in the past to protect the full faith and credit of the United States.”

Senator Bill Cassidy (R-LA) said on NBC’s Meet the Press, “They’re hoping to increase the debt ceiling to meet their $3.5 trillion package, which the Committee for a Responsible Federal Budget says is actually $5.5 trillion. And so we’re going to disagree on this. They are increasing the debt ceiling to make room for a $5.5 trillion Democratic Party wish list.”

Infrastructure – The House is a week away from its self-imposed deadline for voting on the Senate-passed bipartisan infrastructure bill and there is plenty of speculation about what will unfold. On CNN State of the Union, House Majority Whip Jim Clyburn (D-SC) said, “There’s always a possibility that the vote would get delayed. But the question is, are we going to work to get to our goal for September 27? Yes, we are going to work hard to reach that goal and sometimes you have to kind of stop the clock to get to the goal.”

On Friday, September 24 (12:00 p.m.), is the EY Webcast, “Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments.” Register 


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