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November 15, 2021

What to expect in Washington (November 15)

Speaker Nancy Pelosi (D-CA) and progressive Democrats expect a House vote on the Build Back Better Act (H.R. 5376) reconciliation bill this week. Moderate Democrats previously withheld support for the bill pending Congressional Budget Office (CBO) estimates. Speaker Pelosi said Friday that 6 of 13 committees have received CBO estimates of their portions – higher-profile elements from Ways & Means, Energy & Commerce, and Education & Labor have not been released – and three more are expected by today.

The Wall Street Journal (WSJ) reported that Speaker Pelosi “appears to have enough votes now to pass the education, healthcare and climate bill, known as the Build Back Better plan, in coming days.” The report cited moderate Rep. Josh Gottheimer (D-NJ), “one of the original holdouts who asked for the data” from CBO, as saying he believes the legislation will be approved. “I’m optimistic and hopeful based on what I’ve been told that data should match what the White House and Treasury gave us,” he said.

Axios reported, “Some lawmakers anticipate that House vote to come on Friday, or perhaps over the weekend, before they leave for Thanksgiving break.” The report suggested that Senate Majority Leader Chuck Schumer’s (D-NY) announcement of a post-Thanksgiving vote on the bill is “piling more anxiety onto progressives” because, “with inflation angst growing, Biden’s and Democrats’ poll numbers sinking and midterms approaching, time probably isn’t on the side of those championing more massive spending.” Punchbowl reported, “We hear that some of the CBO analysis may not be ready until Thursday or later, which could push a BBB vote to the weekend or even to next week.”

Senate – Senator Schumer said in a letter Sunday that “due to the House pushing back consideration of the BBBA to the week of November 15th, it is likely that the Senate considers the [FY2022 National Defense Authorization Act] this upcoming week as we await House passage of the BBBA.” He said they are working to ensure compliance with the reconciliation rules that allow passage with only Democratic support in the 50-50 Senate. A Privilege Scrub to “ensure the House legislation is in compliance with Senate reconciliation rules and the instructions in the budget resolution, and thereby maintains its status as ‘privileged’ legislation in the Senate” was begun over last week’s recess and should be finished this week.

Also, “the separate process of holding ‘Byrd Bath’ meetings with the Senate Parliamentarian will begin this week,” and timing for Senate consideration “will largely depend on when the House sends us the bill and when CBO finalizes their scores for all of the committees, which are needed to complete the ‘Byrd Bath.’”

Pushing off Senate consideration of the Build Back Better Act means it will bump up against the December 3 expiration of government funding, which will probably be patched. “It is likely that we will need to process a Continuing Resolution before December 3rd to give our Appropriators more time to finish their work,” Senator Schumer said. He also said the Senate will “deal with the potential for Debt Limit legislation pending further information on the X date,” the must-act date for the nation to meet its financial obligations. Treasury hasn’t forecast a date and the latest forecast from the Bipartisan Policy Center is “the X Date will most likely arrive between mid-December and mid-February.”

Inflation – Whether and when Senator Joe Manchin (D-WV) will be willing to support the reconciliation bill has been called into question since he suggested last week’s Labor Department report showing an inflation increase of 6.2% over a year prior validated his inflation concerns and calls to be conservative and deliberate with the bill. “With Republicans hammering the inflation issue at every turn, elevating it to the key reason to oppose the Biden administration’s remaining spending package in Congress, the president and congressional Democrats have started taking pains to acknowledge the harm rising prices create for American families…” the Washington Post reported. “Complicating matters is that the White House has few obvious tools to immediately reverse inflation. Biden has touted the recently passed bipartisan infrastructure package as improving the nation’s supply chain, but funding for ports and waterways will take years to implement.”

Senator Schumer said he may add the text of the United States Innovation and Competition Act of 2021 supply chain bill approved by the Senate earlier this year to the NDAA. “I have had a number of conversations with Senators on both sides of the aisle and there seems to be fairly broad support for doing so, which would enable a USICA negotiation with the House to be completed alongside NDAA before the end of the year,” he said. “One of the core goals of USICA is bolstering U.S. domestic manufacturing and supply chains.”

On CBS This Week, Treasury Secretary Janet Yellen said, “The pandemic has been calling the shots for the economy and for inflation. And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do. I think it’s important to realize that the cause of this inflation is the pandemic. It led to a dramatic increase in demand for products.”

CAMT – A WSJ op-ed from a professor of accounting at Duke University arguing that the proposed 15% corporate alternative minimum tax (CAMT) based on financial-accounting earnings would harm small investors and workers said: “Financial-accounting rules are created by the apolitical FASB to provide information useful to investors. In contrast, tax-accounting rules are largely determined by Congress to achieve such objectives as raising revenue, encouraging or discouraging certain behavior, and redistributing wealth. Two accounting systems are necessary, one for pursuing social objectives through the tax system, the other for giving investors comparable, reliable and timely information.”  

A Tax Notes article by Martin Sullivan said in part:

  • “Capital-intensive industries — like manufacturing and public utilities — are big losers because book income doesn’t provide the benefits of accelerated and bonus depreciation.
  • A portion of the value of some stock options granted to employees doesn’t reduce financial statement income — a grievous shortcoming, according to accounting purists — but these are deductible for tax purposes. So big, established, profitable corporations may be subject to more tax under the proposal because of options granted to employees.”

Tax – The House Ways & Means Oversight Subcommittee will hold a hearing, “The Opportunity Zone Program and Who It Left Behind,” on Tuesday November 16 (2 p.m.).

Infrastructure – President Biden will hold a signing ceremony for the Infrastructure Investment and Jobs Act (H.R. 3684) today. Last evening, the President named former New Orleans Mayor Mitch Landrieu (D) as senior advisor responsible for coordinating for implementation of the bill.

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

Washington Council EY’s “DC Dynamics” podcast series looks at what’s coming up in US tax policy. Host Ray Beeman, leader of WCEY, draws on his experience as a former congressional staffer for the House Ways & Means Committee and the Joint Committee on Taxation to break down and examine current developments in Congress and put them into a political and policy context. DC Dynamics Episode 4: Landing the Plane 


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