March 2, 2022
What to expect in Washington (March 2)
President Biden, in his March 1 State of the Union address, called for action on competitiveness legislation and, without mentioning the Build Back Better Act (BBBA) by name, recast the bill’s planks on climate change, health care, and social spending as measures that could cut consumer costs to respond to inflation concerns.
Several press stories noted the inclusion of BBBA components in the speech. Roll Call reported that the President would “use part of his first State of the Union address Tuesday to revamp his pitch to Congress on passing his stalled social safety net and climate package, focusing on how the budget measure can lower costs for families and reduce the deficit. The messaging shift seems designed to appeal to a Democratic senator holding up the budget reconciliation package, West Virginia’s Joe Manchin III, as well as a broader electorate worried about inflation driving up the cost of living.”
President Biden said his plan to fight inflation “will lower your costs and lower the deficit” and that “17 Nobel laureates in economics say my plan will ease long-term inflationary pressures,” which is a point Democrats have frequently made regarding the BBBA. The retooled plan has the following components:
He elsewhere called for paid leave, a $15/hour minimum wage, and extending the Child Tax Credit.
The President emphasized that the plan would lower the deficit and contrasted it with the previous Administration’s tax cut legislation, the TCJA. He continued to call for “corporations and the wealthiest Americans” to start paying their “fair share” and highlighted both the proposal for a 15% minimum tax rate for corporations and the OECD global tax agreement, saying “we got more than 130 countries to agree on a global minimum tax rate so companies can’t get out of paying their taxes at home by shipping jobs and factories overseas.”
Democrats in Congress have also called for action on a retooled economic agenda. On March 1, chairs of the House Congressional Progressive Caucus, New Democrat Coalition, Congressional Asian Pacific American Caucus, Congressional Black Caucus and other member groups displayed unity in jointly calling for “Congressional action on a final negotiated reconciliation bill that secures the support of 50 U.S. Senators and 218 U.S. Representatives” intended to “lower costs for families, tackle the climate crisis, and create opportunities and good-paying jobs.” CBS news reported that Senate Democrats would be rolling out new proposals intended to fight inflation in coming days, and leaders previously announced plans to consider such bills in March, perhaps including a gas tax holiday through the end of the year.
The outlook for a major economic package remains unclear after the customary post-SOTU interviews in the Capitol between lawmakers and reporters, however. The Hill reported: “‘They just can’t help themselves,’ Manchin quipped when asked by reporters after Biden’s State of the Union speech whether he was surprised by the president’s effort to try to use the moment to try to revive his stalled climate and social spending plan. ‘I don’t know where that came from,’ he joked. ‘Nothing’s changed,’ he said. ‘There might be parts they want to talk about. I don’t know. That was a little bit far,’ he added, referring to the list of expensive Build Back Better items that Biden tried to put back on the table Thursday evening.”
On the separate issue of competitiveness, the President said in order “to level the playing field” with other nations, it is important to pass the Bipartisan Innovation Act “that will make record investments in emerging technologies and American manufacturing,” which likely refers to a potential future agreement between the Senate USICA and House COMPETES bills. House Majority Steny Hoyer (D-MD) has said there is renewed urgency for ‘Make It in America’ legislation, referring to a potential USICA/COMPETES agreement.
CBS also reported that the Administration will release a new COVID plan today. The New York Times said it will be “a lengthy document intended to usher the nation into what some are calling a ‘new normal.’”
House Majority Leader Hoyer told Democrats on a private caucus call Tuesday that he plans to hold a vote on March 8 on an omnibus appropriations bill that has yet to be released, Politico reported. House Democrats are holding their rescheduled issues retreat March 10, ahead of the deadline for expiration of government funding on March 11.
An EY Alert, “Updates on BEPS 2.0 project from OECD Tax Talks and G20 Finance Ministers meeting,” is available here.
Friday, March 4 (12:00 p.m.) is the EY Webcast, “Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments.” Register.