Tax News Update    Email this document    Print this document  

July 25, 2022

What to expect in Washington (July 25)

Biden cabinet officials were on the Sunday political talk shows:

  • Treasury Secretary Janet Yellen to say that there are no signs of a recession, which she defined as a "broad-based contraction that affects many sectors of the economy," and "we just don't have that;" and
  • Commerce Secretary Gina Raimondo said Congress should pass the Chips Act for America revised competitiveness bill this week as "a matter of national security" and "we need companies to expand in America and other countries around the world are providing incentives."

Asked on NBC's Meet the Press about signs of a contraction in business activity and unemployment uptick, Secretary Yellen said, "we're seeing a slow-down. We're likely to see some slowing of job creation. I don't think that that's a recession." Still, "inflation is way too high" and to contribute to combating that, "hopefully, we will pass a bill that will lower prescription drug costs and maintain current levels of health care costs." Still, she said, "there are threats on the horizon. Growth is slowing globally. And I'm not saying that we will definitely avoid a recession, but I think there is a path that keeps the labor market strong and brings inflation down." The Secretary wasn't asked questions related to the OECD-led global tax agreement.

On CBS's Face the Nation, Secretary Raimondo predicted "a big bipartisan vote in the House and the Senate" on the competitiveness bill and refuted allegations that the bill is a "blank check," saying companies can't use this money to build facilities in other countries and "there's a lot of strings attached around, you know, the quality of jobs that have to be created, working with small contractors and minority-owned contractors. There are labor protections. So, to say it's a blank check is just dead wrong."

The bill is anchored by more than $52 billion in grants and incentives for companies building semiconductor fabrication plants in the U.S., and a multi-year $24 billion 25% investment tax credit for semiconductor plants, plus "science and commerce" provisions drawn from the Senate-passed USICA bill. Upon reconvening at 3 p.m. today, July 25, the Senate will vote at 5:30 p.m. on the motion to invoke cloture on the motion to concur in the House amendment, to the Senate amendment, to H.R. 4346, the legislative vehicle for the CHIPS Act, with further amendment (Senate Amendment 5135, which is the current "CHIPS plus" Senate agreement). There will be a 60-vote threshold to invoke closure and final passage of the bill could come Tuesday or Wednesday. Speaker Nancy Pelosi (D-CA) said she expects the House to also clear the Senate-passed bill this week.

There had been efforts to include a one-year delay of the IRC Section 174 TCJA cliff requiring five-year R&D amortization rather than expensing, but it was not included. Politico reported today that the change looks "to be left behind amid opposition from progressives who didn't want to be seen helping businesses with their tax issues when their slate of family-friendly tax breaks were getting left behind … It's hardly the end of the road though for those concerned about the R&D provisions, which now look to be added to the growing list of tax items people will want Congress to deal with in a post-election lame duck session of Congress."

The competitiveness bill is one of two major packages Congress is trying to clear before the August recess, which is scheduled to begin July 29 for the House and August 5 for the Senate. The other is a reconciliation bill addressing Medicare prescription drug negotiation and the extension of expanded Affordable Care Act (ACA) health insurance premium tax credits. That bill is still before the Senate parliamentarian, who could issue guidance as early as today. Punchbowl reported this morning, "GOP staffers reportedly challenged several provisions, including whether seniors can make monthly payments for prescriptions rather than pay a lump sum, allowing drug companies to raise prices faster than inflation and if the federal government can impose an excise tax on drug companies that don't negotiate with Medicare."

The expectation is the slimmed-down reconciliation bill would be on the floor next week, with the open-ended vote-a-rama process of rapid-fire amendment votes backing up to the beginning of the August recess. The reconciliation process allows the bill to pass the Senate with the votes of 50 Democrats plus the VP, rather than the typical 60 votes. The House could be brought back to vote on the bill after July 29.

Beyond those bills, the Wall Street Journal reported yesterday, "Senate Democratic leaders are facing pressure from some of their own members to hold a vote this week on the ascension of Sweden and Finland to NATO. They are also weighing whether to schedule a vote on a bill protecting same-sex and interracial marriage after some Republican senators expressed support for the bill, indicating it might have a chance of becoming law."

House business this week includes the Wildfire Response and Drought Resiliency Act (H.R. 5118) and the Advancing Telehealth Beyond COVID-19 Act of 2022 (H.R. 4040). A six-bill appropriations minibus was passed in the House last week, but it isn't clear whether additional spending measures will be brought up before September.

The Senate Finance Committee has set a Hearing to Consider the Nomination of Douglas J. McKalip to be Chief Agricultural Negotiator, Office of the United States Trade Representative, with the Rank of Ambassador for July 28 (10:15 a.m.). That is the only hearing currently set in the tax-writing committees.


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