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President Biden, Congress, and the nation have been focused on the school shooting in Texas, and the tragedy overshadowed other business in Washington for now. Senate Majority Leader Chuck Schumer (D-NY) began the process of bypassing committee consideration and placing on the Senate Calendar two House-passed bills on background checks (H.R. 8, H.R. 1446).

Reconciliation — Senator Joe Manchin (D-WV) continued to cite the potential for an energy/climate, tax, and prescription drug bill, saying at the World Economic Forum meeting in Davos, "There's a responsibility and opportunity that we can do something" on issues like allowing Medicare to negotiate drug prices and paying down the national debt. Business Insider reported that Senator Manchin reiterated prior comments about Democrats unanimously opposing the 2017 TCJA, and said, "What we need is a competitive tax code that spins off enough for us in the United States to take care of ourselves, pay down our debt, and live within our means. You can't do that with the existing tax code we have unless you slash everything to the bone."

In Davos, Manchin had an exchange with Senator Roger Wicker (R-MI), who said, "You've just heard it: If Democrats continue in government, they're likely to chip away at the most successful tax cut the United States has ever seen," he said. "The most regressive tax cut," Manchin responded, according to the report.

A report in The Hill newspaper said, "Democrats are once again pushing back the target date for getting a deal with Manchin. They now point to the start of the August recess as the new deadline, arguing that gives them most of August to draft legislation and the month of September to pass it on the floor." That comports with Manchin's recent comments that the only deadline for the bill is the September 30 expiration of reconciliation instructions. Senator Manchin has met twice recently with Senate Majority Leader Schumer on how to address inflation, the President has focused on inflation as a top priority, and other Senate Democrats widely view a deal on reconciliation as one to be cut by Manchin and Schumer.

Politico reported Senator Tammy Duckworth (D-IL) as projecting optimism Monday, saying, "We're going to get reconciliation done. 50/50 that we get it done before Memorial Day, a handshake deal." Her Illinois counterpart, second-ranking Senate Democrat Dick Durbin (D-IL), said in Punchbowl he's still skeptical. "We learned the hard way at the end of last year that one or two senators on the Democratic side can stop it. If they came forward and said 'we see a path' I'll gladly join in that parade. But until they do, I think we ought to focus on what we can do through regular order," he said.

Senator Tim Kaine (D-VA) had also hoped for such a handshake deal by Memorial Day and said Tuesday that if a reconciliation bill isn't passed before the August break, it might not pass at all. "It's not going to happen in September," Kaine said after a Senate Democratic luncheon where the legislation was discussed, Bloomberg Tax reported. "We talked a lot about it and Sen. Schumer, who is the key guy in the negotiation, remains optimistic. So I'm going to remain optimistic."

A separate Politico report said, "There is an outline of a potential budget reconciliation deal floating around that captures the general tenor of the talks happening among Democrats … Democrats could put around $320 billion into clean energy tax credits, a fair bit short of the $550 billion in climate provisions in the House-passed BBB, and extend expiring Obamacare subsidies. On the revenue side, the framework says Democrats will seek around $1 trillion in new taxes and $300 billion from prescription drug reforms, with nothing to suggest that any of that would come from raising tax rates."

For her part, House Speaker Nancy Pelosi (D-CA), whose chamber passed a reconciliation bill, the Build Back Better Act, in November 2021, said on MSNBC May 24, "We always are running on kitchen table issues … How do people pay for food, for rent, for education, for prescription drugs, and all of that. I hope we can talk about that." She asked, "What are the things we are doing to reduce the global inflation and what that means to us?" And said a USICA/COMPETES competitiveness bill agreement is in the works.

Global tax - OECD Secretary General Mathias Cormann said in Davos Tuesday he is "quietly optimistic" about the success of the global tax agreement and, while an ambitious timeline was set to keep pressure on, he suspects it's "most likely we will end up with a practical implementation from 2024 onwards," which is a year later than nations had previously targeted. He said while the hope was to finalize an agreement on all remaining technical aspects of Pillar One by the middle of the year, it is now more likely by the end of 2022.

The Pillar Two minimum tax directive was not brought up for a vote during the European Union Economic and Financial Affairs Council (ECOFIN) meeting on May 24, with Poland still opposed. The next meeting is on June 17. Politico reported that French Economy Minister Bruno Le Maire predicted May 24 that Poland will abandon its opposition and agreement will be reached by the June 17 meeting. "Everyone knows the issues [and] I am convinced that these could be removed on the 17th of June," he said.

Tax Notes reported Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, as saying whether the amount A multilateral convention is signed in July or in the autumn, "it doesn't make a big difference as long as you can see that there is progress in substance."

Trade/Supply chain — The Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness hearing, "Supply Chain Resiliency: Alleviating Backlogs and Strengthening Long-Term Security," is today at 3 p.m. Witnesses represent the Alliance for American Manufacturing, Trinity Logistics, the American Leadership Initiative, and America's Frontier Fund.

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