Tax News Update    Email this document    Print this document  

June 6, 2022

What to expect in Washington (June 6)

As Congress returns to Washington after a week-long recess, there is a continued focus on talks between Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) over a slimmed-down reconciliation bill and the interplay with bipartisan talks Manchin has been conducting on energy policy.

A June 3 report in The Hill newspaper said, "Schumer is privately trying to negotiate with Manchin on a budget bill that addresses climate change and lowers prescription drug prices all while anti-tax activists are running ads in West Virginia pressing him to reject proposed fiscal increases to fund such Democratic priorities. A group of 26 House Democrats piled more pressure on Manchin and Schumer to strike a deal by penning a letter last month warning that constituents will see a spike in health insurance premiums unless Congress extends premium tax credit enhancements."

Axios reported June 2 that bipartisan Senate energy talks led by Senator Manchin "are essentially over, with Republican senators convinced that Manchin is close to a reconciliation deal with" Leader Schumer. The story observed that the apparent demise of the bipartisan approach may allow Manchin and Schumer to focus on a potential deal that includes green energy tax credits and the tax increases to pay for them.

Senator Manchin said at a May 31 AARP meeting that allowing Medicare to negotiate prescription drug prices is a baseline proposal among Democrats and the minimum he thinks they will act on this year. "The drug pricing is something we all agree on," he said. "But if we do nothing more this year, that's the one thing that must be done."

Roll Call reported this morning that "even if legislation is written to accommodate Manchin, Arizona Democrat Kyrsten Sinema remains a crucial question mark … Sinema and Manchin were holdouts to earlier versions of the reconciliation measure. She came to generally support the Senate framework, but only after her objections trimmed the bill from $3.5 trillion to $2 trillion and tax rate increases were replaced with other revenue raisers. Sinema aides declined to comment. But sources speaking on condition of anonymity said the passage of time may not have increased Sinema's fondness for the bill, and that she may have lingering concerns with some of the specific language."

A June 5 Washington Post report recounted the long backstory of the dealbreaker moment for the House-passed Build Back Better Act in December, when Senator Manchin took offense at the White House naming him in a statement on protracted negotiations. That incident aside, the report considers whether the House-passed BBBA was too broad: "Some Democratic lawmakers believe the party tried to do too much at once, rather than narrowing their priorities … [and] the sheer breadth of the ambitions they tried cramming into one bill hurt the party overall … 'The way the negotiation unfolded, the American people had no idea what was in the bill and no idea what the Democratic Party was fighting for. We did not project the coherence the American people needed us to project to get this across the finish line,'" Sen. Michael Bennet (D-CO) said.

The report also said, "Manchin also asked analysts at the Wharton School of the University of Pennsylvania to model an approximately $1 trillion spending package devoted primarily to spurring domestic energy production and reducing the federal deficit."

A June 5 Wall Street Journal editorial cited, in the context of reconciliation negotiations, the June 2 annual Social Security and Medicare Trustees report that projected the Medicare Hospital Insurance (HI) Trust Fund, which funds Medicare Part A benefits, will be unable to pay full benefits in 2028, two years later than the last year's projection that insolvency would occur in 2026. The editorial noted that "trustees still forecast that the hospital fund will run deficits of $530 billion over the next decade as spending exceeds tax receipts" and, on Social Security, "the program is expected to exhaust its reserves by 2035, at which point all retirees will face an automatic 20% benefit cut." It concluded, "Democrats are trying to sell Mr. Manchin on raising taxes to fund green energy corporate welfare and sweetened Affordable Care Act subsidies. The point for Congress is that you don't buy a Ferrari when you can't afford to fix your leaky roof."

Congress — The House and Senate are back in session through June 24. Following this three-week work period, the Senate is scheduled to be out for two weeks for the Independence Day recess, while the House is scheduled to spend the first of those weeks in a Committee Work Week. In a June 3 Dear Colleague letter, House Majority Leader Steny Hoyer (D-MD) said in addition to gun-safety legislation, the House will consider a reauthorization (H.R. 7776) of the Water Resources Development Act (WRDA) and a bill (H.R. 7667) to reauthorize the FDA's user-fee programs to improve review of drugs, biologics, and medical devices. Next week, the House will take up a bill to address food prices; the Ocean Shipping Reform Act; a Financial Services Committee bill to promote racial equity and fairer access to economic opportunity; and the Recovering America's Wildlife Act.

Tax — Customary post-Budget release tax hearings that allow members to ask questions of the Treasury Secretary about Budget proposals, which would traditionally have been held soon after the release of the FY2023 Budget March 28, are on tap this week. The Senate Finance Committee hearing with Treasury Secretary Janet Yellen is Tuesday, June 7, and the Ways & Means hearing is Wednesday, June 8, both beginning at 10 a.m. They are the only hearings scheduled in the tax-writing committees this week.

Competitiveness — The conference committee that is working to hammer out an agreement on the China competition bill, which includes $52 billion in subsidies to boost U.S. semiconductor manufacturing, is expected to resume when members return this week. On the sidelines, some major players have pushed for the conference to get the bill finished expeditiously.

President Biden cited the Bipartisan Innovation Act — the current title of the USICA/COMPETES legislation — in a June 2 statement responding to the May manufacturing report by the Institute for Supply Management (ISM): "I have long said that making more in the United States is key to any serious strategy to prevent the kinds of supply disruptions that have led to price spikes for American families this year. When we make more here at home, we make our supply chains more resilient and help avoid the kinds of disruptions that have driven up prices in the wake of the pandemic … Congress should take the next step by swiftly passing the Bipartisan Innovation Act, which is going to help lower prices, and make sure that the next generation of innovation and advanced manufacturing happens right here in America, with American workers."

On May 31, the Semiconductor Industry Association (SIA) convened a roundtable discussion between Senator Mark Warner (D-VA), a key negotiator on the USICA/COMPETES conference, and more than a dozen senior executives from SIA member companies. SIA said the group discussed "the importance of enacting CHIPS Act funding and a FABS Act investment tax credit for semiconductor manufacturing and design as part of the final bill," noting that Warner is a sponsor of both bills, as well the ongoing global chip shortage, STEM workforce development, and other issues related to strengthening the U.S. chips industry. In the SIA statement, Warner said semiconductors "underpin America's economy, national security, and leadership in the technologies that will determine our future, including autonomous vehicles, supercomputing, virtual and augmented reality, [Internet of Things (IoT)] devices, and more."


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Ray Beeman (
   • Heather Meade (
   • Kurt Ritterpusch (
   • Adam Francis (