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February 28, 2022

What to expect in Washington (February 28)

Congress returns today after a weeklong recess to a changed landscape given the situation in Ukraine, which will be the subject of member briefings and other discussions, including possibly on sanctions beyond those imposed by the Administration. Today, the Senate will hold a procedural vote at 5:30 p.m. related to the Women's Health Protection Act (H.R. 3755). Majority Leader Schumer (D-NY) said he will quickly set a Judiciary hearing on President Biden's Supreme Court nominee, Ketanji Brown Jackson. One-on-one meetings with Senators begin Wednesday with Schumer himself, and Democrats are said to want her confirmation completed by the April 8 spring recess.

On the House agenda, Majority Steny Hoyer (D-MD) said in a February 25 letter to members that, "Over the next three weeks, we will have a difficult task ahead as we prepare to take further actions, in partnership with our allies" related to the situation in Ukraine, and he noted the impact on global markets — the energy and financial sectors, and global supply chains. Rep. Hoyer said that increases the urgency for the House and Senate to come together to enact 'Make It in America' legislation, and "if the Senate amends the bill we passed, the House will move swiftly to reach agreement on a final version of this critical legislation." House-Senate negotiations toward resolving differences between the USICA and COMPETES bills are expected.

Senate Democrats previously announced plans to bring bills to the floor in March intended to cut consumer costs and address inflation, including one to suspend the gas tax through the rest of the year. Mark Kelly (D-AZ), one of the Senators in tough midterm races who introduced the bill, said February 25 that given the situation in Ukraine, "the average price of crude oil could remain above $100 per barrel and push the price of regular unleaded even higher than it is now. Hardworking families cannot continue to bear the economic hardship of high gas prices while paying for more expensive groceries and medicine." He said a gas tax holiday is among "steps that should be taken to drive down gas prices and provide relief to families."

Sanctions — On February 26, the European Commission, France, Germany, Italy, the UK, Canada, and the US said they "commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally."

State of the Union — Ukraine is set to be a major part of President Biden's State of the Union address March 1, in addition to the previously announced focus on inflation. The February 27 Washington Post reported the speech may assert the President's role as a global leader and "move beyond a domestic legislative agenda." The report said White House Chief of Staff Ron Klain, in a February 23 briefing to Hill staff, "only briefly mentioned the Build Back Better agenda." The SOTU was previously viewed by some "as the moment Biden would lay down a new marker for that agenda," with a focus on "chunks" of the BBBA that "could be cobbled together" to satisfy both Senator Joe Manchin (D-WV) and progressives, the story said. "But the last month has seen nothing approaching progress on that front, and Wednesday's call with Klain suggested that the president would mention that effort in passing and instead focus more on steps to fight inflation — now the No. 1 issue for most voters — and touting their accomplishments from last year."

Government funding — The House and Senate are expected to consider an omnibus appropriations bill before the March 11 deadline. There are increasing signs that some other priorities could be considered in conjunction with the effort, and the Administration has asked for $6.4 billion in funding related to Ukraine. The Hill reported "that lawmakers are eyeing attaching a Ukraine assistance package and additional coronavirus relief to the omnibus appropriations bill."

Global tax — A February 23 WSJ editorial, "Yellen's Global-Tax Race to Nowhere," raised the issue of low-income housing or green energy credits in the context of Pillar Two of the BEPS 2.0 project, saying "if those credits pull a company's global effective tax rate below 15%, other countries would have the right to claim that foregone revenue for themselves with a top-up tax. This would blunt the tax incentive Congress tried to create, because the company might have to pay the same amount of tax as if there had been no U.S. credit. Other governments get the U.S. revenue that Congress decided not to collect for policy reasons."

Treasury — Jay Shambaugh was nominated for Under Secretary for International Affairs February 25. Politico reported this morning, "Natasha Sarin, Treasury's deputy assistant secretary for microeconomic policy, will add counselor for tax policy and implementation to her list of titles."

Congress — In addition to discussions over Ukraine and government funding and competitiveness bills, other House business over the next three weeks includes legislation to eliminate forced arbitration clauses in employment, civil rights, and consumer cases; mental health and drug threat legislation; and anti-discrimination bills.

On Tuesday, March 1 (10 a.m.), the Senate Finance Committee holds an executive session to vote on some HHS nominees.

On Wednesday, March 2 (10 a.m.), the House Ways & Means Committee will hold a hearing on "Substance Use, Suicide Risk, and the American Health System."


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Washington Council Ernst & Young
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