September 29, 2021
What to expect in Washington (September 29)
House Speaker Nancy Pelosi (D-CA) told members September 27 that she is decoupling the infrastructure bill from the budget reconciliation process and will hold a vote on the Senate-passed measure reflecting the bipartisan infrastructure framework (BIF) on September 30, when the current authorization for highway spending will expire. It remains to be seen whether progressive Democrats will sink the BIF for the time being and how soon, under any circumstances, Democrats can come together on a path forward for reconciliation. Government funding beyond September 30 remains in jeopardy because it, up to now, has been paired with a debt limit suspension, though the issue could get resolved today.
Progressive Rep. Pramila Jayapal (D-WA) said September 27 regarding the bipartisan infrastructure bill: “I don’t believe it’ll come for a vote unless we get the reconciliation bill done, and I think that will be hard because we have got to get everything agreed on. It’s not just a framework.” Rep. Alexandria Ocasio-Cortez (D-NY) said she will be a ‘no’ absent some new information. From the other chamber, Senator Bernie Sanders (I-VT) tweeted September 28, “I strongly urge my House colleagues to vote against the bipartisan infrastructure bill until Congress passes a strong reconciliation bill.”
The major question regarding the budget reconciliation process has long been what size bill moderate Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) will support, and President Biden has been conferring with them privately to set a target. Both senators met separately with the President September 28, with Sinema reportedly making three visits to the White House. Progressive Democrats, however, are growing frustrated with the process. Rep. Mark Pocan (D-WI), said on CNN September 29, “The problem is a few folks in the Senate really are operating very slowly … We need to know what they’re for so we can finalize this process.”
Senator Sinema rarely talks to the press, and Senator Manchin said the talks continued to focus on the country’s needs rather than a topline number, without any commitments made on his part. Sinema “has problems with both the price tag and some of the tax increases devised to pay for it” and is hesitant to engage on specifics until the infrastructure bill is passed, Politico said in a report that noted some House members’ frustration with Sinema because she has revealed less about her intentions and represents a state Biden won.
Committee reports describing provisions of the reconciliation bill assembled by the House Budget Committee over the weekend have been released.
Debt limit, government funding – Treasury Secretary Janet Yellen said September 28 of the debt limit, “We now estimate that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18. At that point, we expect Treasury would be left with very limited resources that would be depleted quickly.”
The House-passed continuing resolution to extend government funding through December 3, 2021, with a debt limit suspension through December 16, 2022, failed to advance in a Senate procedural vote September 27 due to Republican opposition to the debt limit suspension. Senate Majority Leader Chuck Schumer’s (D-NY) September 28 motion to reduce the procedural threshold for the debt limit to 50 votes was objected to by Senate Republican leader Mitch McConnell (R-KY). House Majority Leader Steny Hoyer (D-MD) September 28 mentioned the possibility that Democrats will need to turn to the reconciliation process to suspend the debt limit, but later clarified, “It is certainly not the best option, nor the option we’re pursuing.”
On government funding, the Senate may vote today on a “clean” CR through December 3, which the House may then approve and send to the President while also sending a separate clean debt limit bill to the Senate, Punchbowl reported.
International tax – A letter from three moderate Texas Democrats opposing GILTI changes in reconciliation referenced in a New York Times story over the weekend came from Reps. Vicente Gonzalez, Henry Cuellar, and Filemon Vela, who said “increases to the GILTI tax would inhibit U.S. competitiveness abroad.”
During a Senate Banking Committee hearing with Sec. Yellen and Fed Chairman Powell, Ranking Member Pat Toomey (R-PA) warned about tax negotiations with the OECD and policy decisions here in the US: “these countries have only reluctantly agreed to pillar two in return for pillar one, which is the transfer of U.S. tax revenue from us to them. But implementing pillar one in the U.S. requires a treaty ratified by two-thirds of the United States Senate; I think that’s unlikely to happen.” Secretary Yellen said, “I believe there are a number of ways in which Congress could implement it but certainly ratification of the treaty would be one way in which Congress could authorize. And, certainly, Congress has to authorize the transfer of taxing rights that’s contemplated in Pillar One.”
Energy – The Washington Post September 27 said of a carbon tax making it into a reconciliation bill, “Top Senate Democrats have in recent days studied a tax of $15 per ton on oil and gas producers that they think could raise between $700 billion and $900 billion in new tax revenue … But some centrist and even liberal Senate Democrats have warned their colleagues that this proposal could disproportionately hurt middle America and spark a political backlash. It is also unclear whether the carbon tax proposal can be crafted in a way that does not run afoul of Biden’s pledge to shield Americans earning under $400,000 from new taxes.”
Thursday, September 30 (1:00 p.m.), is the EY Webcast, “Build Back Better legislative developments,” with discussion to include: