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Spotlight

House Democratic leaders late on 30 September postponed a floor vote on the Senate-passed infrastructure bill, acknowledging they did not have the votes to pass the legislation. Congressional Democrats and the White House this week had sought to reach agreement on a framework for a budget reconciliation bill that would convince progressive House Democrats to vote for the infrastructure bill, but no deal came to fruition. The stalemate comes as progressive Democrats are trying to push forward on a $3.5 trillion "human infrastructure" reconciliation bill but are stymied by Congressional Democratic moderates who are seeking a smaller bill.

The negotiation over a budget reconciliation framework was further complicated when leading moderate Senator Joe Manchin on 30 September announced that he would support a $1.5 trillion budget reconciliation package, considerably smaller than the $3.5 trillion bill favored by progressives and included in the August budget resolution passed by both the House and Senate. In justifying his position, Sen. Manchin said he did not want "to change our whole society to an entitlement mentality."

It was also disclosed that the Senator signed a memorandum of understanding with Senate Majority Leader Chuck Schumer at the end of July that included his $1.5 trillion spending limit, and that was a precondition for his support of the August budget resolution. Senator Manchin announced his top line number as progressive Democrats said they could not move forward on budget reconciliation without knowing what he and fellow Democratic moderate Senator Kyrsten Sinema would support. Senator Manchin, who had earlier suggested that a final reconciliation package should be delayed until 2022, also said that he could envision a budget reconciliation package being passed by the Congress this year.

The size and scope of the reconciliation bill ultimately will dictate the amount of pay-fors, including tax increases.

Speaker Nancy Pelosi said the House would vote on the infrastructure bill on 1 October, the third attempt this week.

G-7 Finance Ministers this week reportedly reached agreement on some of the outstanding issues surrounding the Base Erosion and Profit Shifting (BEPS) 2.0 Pillar One and Pillar Two reform proposals. The Inclusive Framework on BEPS is scheduled to meet on 8 October with the aim of reaching final agreement on the BEPS Pillars. Assuming agreement is reached and an implementation plan is finalized, G-20 Finance Ministers will be in a position to approve the plan at their 12-13 October meeting in Washington. A G-20 Finance Ministers summit is also scheduled for 30-31 October in Rome.

The Treasury also confirmed that progress had been made on BEPS 2.0 at the G-7 meeting. According to the Treasury September 29 readout, "A common understanding was reached on some of the important open issues, to support reaching final political agreement within the OECD Inclusive Framework in October."

With regard to Pillar One, Treasury Secretary Janet Yellen told a Senate Banking, Housing, and Urban Affairs Committee hearing on 28 September that she thought that US implementation of Pillar One may not require a treaty and ensuing Senate assent and ratification. "I believe there are a number of ways in which Congress could implement it … Ratification of a treaty would be one way," the Treasury Secretary said. Secretary Yellen earlier had said the Biden Administration may look to begin implementing Pillar One in spring 2022.

The Internal Revenue Service this week issued Revenue Procedure 2021-32, listing those jurisdictions with which the US has an information exchange agreement for purposes of reporting certain deposit interest paid to those jurisdictions. The reporting requirement is found in Reg. Sections 1.6049-4(b)(5) and 1.6049-8(a). The revenue procedure also lists those jurisdictions with which there would be automatic exchange of the deposit interest information collected.