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The Senate will hold a pro forma session only today, and will next convene for business tomorrow, May 24, with two votes related to nominations at 2:30 p.m. The House is in a Committee Work Week, meaning no floor activity. Both chambers are out next week for Memorial Day, and negotiators are looking to close out major policy disputes in the Senate USICA/House COMPETES competitiveness bill conference committee this week with hopes of completing the conference and passing the bill through both chambers before the Fourth of July.

The Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness will hold a hearing, “Supply Chain Resiliency: Alleviating Backlogs and Strengthening Long-Term Security,” on Wednesday, May 25 (at 3 p.m.). Witnesses represent the Alliance for American Manufacturing, Trinity Logistics, the American Leadership Initiative, and America’s Frontier Fund.

Reconciliation – The August recess is usually a soft deadline for most pre-election legislative activity to get done in an election year, with the post-election lame-duck session available to consider remaining business, though Senator Joe Manchin (D-WV) has said only the September 30 expiration of budget reconciliation instructions is a deadline for the right reconciliation bill addressing inflation and energy.

A Washington Post analysis from the weekend said with midterm election forecasts favoring Republicans, “Democrats have a closing window to enact their agenda or guide the priorities of either chamber… It’s probable that there are only a few weeks left for Democrats to use their majorities to do so.” The analysis suggested August and October of election years do not involve much voting – only the Senate is scheduled to be in session in August, and only for one week – meaning June, July and September are left for action on Democratic priorities, and Congress will likely need to tackle an extension of regular government funding in September in advance of the end of the fiscal year on September 30 to prevent a government shutdown.

The Administration continues to tie priorities that could be in a reconciliation bill to addressing inflation, a priority for Democrats and Senator Manchin in particular. NEC Director Brian Deese said on Fox News Sunday, “the president has made very clear that combating inflation is his top economic priority… we need to reduce costs and make things more affordable for families during this period. So, steps that we can take to reduce the cost of the Internet bills that families pay, or the prescription drug prices that they pay are really important right now. And, third, we need to bring down the federal deficit. Because of the president’s policies, we’ve made a lot of progress on that front, the deficit down $1.5 trillion already this year. But we need to make more progress on that as well.”

Budget – The Congressional Budget Office will publish The Budget and Economic Outlook: 2022 to 2032 on May 25. Deese’s comment about $1.5 trillion in deficit reduction likely refers to CBO recently reporting the deficit at $360 billion in the first seven months of FY2022, through April, compared to a $1.9 trillion shortfall during the same period in 2021. A tweet from President Biden last night made the same point: “Under my predecessor, the deficit increased every single year he was president. Last year, the deficit was reduced by $350B. And this year, we’re on track to cut the federal deficit by $1.5T—the biggest decline in debt ever in American history.”

Energy - Another Washington Post story discussed the challenges Senator Manchin faces in supporting clean energy legislation in West Virginia, where there is a prominent coal industry and “renewable energy has just begun to gain a foothold, accounting for 6 percent of the state’s electricity in 2020 compared with coal plants’ 88 percent.” The story said, “Since negotiations over the spending bill collapsed, Manchin has been meeting with a small group of Republicans to discuss the possibility of a bipartisan energy package that could attract 10 GOP votes in the Senate… But his efforts to bridge the partisan divide have their limits, even in West Virginia,” where Manchin could face a Republican challenge in running for re-election in 2024.

Global tax – There is a European Union Economic and Financial Affairs Council (ECOFIN) meeting on May 24. The Pillar Two minimum tax directive is on the agenda, though a vote may not be held; it could be held over to the next meeting, on June 17. Poland has expressed concerns, including that the minimum tax could enter into force separately from Pillar One, and has thus far declined to back the directive even after recent meetings with Treasury Secretary Janet Yellen. Politico Morning Tax reported, “If there’s no breakthrough this week, there would still be another month left in France’s six months with the rotating EU presidency, offering a bit more time to try and bring Poland aboard.”

As Secretary Yellen “joined Group of Seven finance ministers for meetings in Germany, she found herself insisting that prospects for moving ahead with the landmark tax plan were merely ‘not hopeless,’” the AP reported. “The plan is running up against new resistance abroad and old divisions at home as fresh global concerns take center stage.”

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