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Work on a continuing resolution (CR) to extend government funding beyond September 30 and into December is expected to continue until later this month to allow time for negotiations for potential add-ons, including an energy permitting reform measure, promised to Senator Joe Manchin (D-WV) in exchange for his support of the Inflation Reduction Act (IRA), and an FDA User Fee bill. Holding off to allow the permitting issue to play out lessens the prospects of Democrats opposed to that measure withholding their votes on the CR when the party is, before the midterms, trying to project unity around the policies in the IRA.

Politico reported September 13, "The Senate is planning to move a short-term government funding bill with the permitting reform tacked on just before the Sept. 30 deadline, essentially daring progressives, led by House Natural Resources Committee Chair Raúl Grijalva (D-Ariz.), to risk the shutdown fight. Instead of tanking the permitting deal, several lawmakers and aides said on Monday that progressives want to drive Manchin into negotiations to make changes to the proposal — but what those changes might be and what it will take to get agreement remains to be seen." Rep. Grijalva and more than 70 House Democrats expressed their opposition to permitting reform last week.

Asked on Fox News September 13 about the continued opposition from some progressives amid Senate Majority Leader Chuck Schumer (D-NY) reiterating that he intends to attach the permitting measure to the CR, Senator Manchin said, "You cannot get the energy of the future, you cannot get the transmission lines, unless you get permitting reform."

The Administration seems content to let negotiations on the Hill unfold, just as they did with the IRA, which was the subject of a celebration with supporters on the South Lawn yesterday. White House Press Secretary Karine Jean-Pierre said September 12, "The president is committed to the deal, and we recognize that an element of that is an agreement between Senator Schumer and Senator Manchin to pass a permitting reform bill. We support that deal and that vote and we will work with Congress to determine the best pathway forward."

Senator Manchin's proposal hasn't been formally unveiled, and there is a permitting reform plan authored by Sen. Shelley Moore Capito (R-WV) that could yield a compromise or leave the two sides at an impasse at a time when Republican support will be required for a CR, at least in the Senate. Punchbowl reported, "Capito told us today she's not spoken to Manchin about permitting reform since she released her own permitting reform plan Monday. Capito indicated no serious negotiations are underway between herself and Manchin. 'I've been frustrated and he knows this. We haven't seen [his permitting reform] language. These are our ideas. If we're being asked to vote for something, and supposedly lobbied to participate but we haven't, No. 1, been asked to participate and No. 2, we have no idea what's in there.'"

Roll Call reported September 12, "Though the text is not yet public, Manchin's bill, which has drawn significant blowback from House Democrats, would also approve the pipeline, now under construction, to carry natural gas from West Virginia to Virginia. With a potential government shutdown looming at the end of the month, Manchin's permitting proposal has emerged as a potential stumbling block if it is included in any end-of-fiscal-year spending bills or other must-pass legislation."

FDA User Fees — Politico reported this morning, "Key Senate Republicans signaled on Tuesday that they'd be open to attaching a narrowly tailored FDA user fees package to the stopgap spending bill later this month. Senate HELP ranking member Richard Burr (R-N.C.) is talking to leadership."

Inflation — The BLS Consumer Price Index for August 2022 released September 13 showed an 8.3% year-over-year inflation increase and prompted a stock sell-off that was widely reported as the largest drop in two years. Also widely reported was the juxtaposition of the CPI report with the White House celebration of the IRA. "Past the poor optics, the new storm clouds underscored the tenuous nature of signs of slowed inflation that have contributed to a late summer spurt of political momentum for Democrats ahead of elections in which they're trying to hold into their narrow House and Senate majorities," CNN said.

Elections — Last night was essentially the end of the 2022 midterm primary season, with contests in Rhode Island, Delaware, and New Hampshire, where the focus was on the Republican primary to choose an opponent to Senator Maggie Hassan (D-NH). Fox News reported this morning, "New Hampshire Senate President Chuck Morse appeared to concede the Republican U.S. Senate primary to retired Army Gen. Don Bolduc," who is "running as a populist and outsider" and has participated in questioning the validity of the 2020 election. The Cook Political report has rated the race as leaning in favor of Senator Hassan, who narrowly won over former Senator Kelly Ayotte (R-NH) in 2016.

Of course, at stake in the elections is the potential for Republicans to gain control of the House and/or the Senate beginning next year. A story in the September 13 Washington Post said of the potential for GOP control of the Senate, "Republicans would sit atop all Senate committees, setting the agenda and issuing subpoenas. They have made clear their intention to investigate Biden's handling of the U.S. pullout from Afghanistan, the coronavirus pandemic, the economy … Sen. Rand Paul (R-Ky.) would chair the [HELP Committee], and he has pledged to subpoena and investigate Anthony S. Fauci, a longtime target, for his actions as Biden's chief medical adviser on the pandemic. The impact of a GOP takeover could be felt even before the new Congress was seated in January. A bipartisan group of senators is crafting bills to reform the process of counting electoral college votes, codify same-sex and interracial marriage rights, and pass a budget. If Republicans prevail on Nov. 8, those efforts could fall by the wayside."

Energy — The Wall Street Journal reported this morning, "A brand-new market for green tax credits is taking shape as bankers and advisers figure out how to funnel tax breaks from energy companies that generate them to profitable corporations eager for smaller tax bills. The market is forming because Congress last month expanded renewable-energy tax credits and made them transferable in the" IRA.

The White House has announced a Website to assist taxpayers with eligibility requirements for energy tax credits under the Inflation Reduction Act, at cleanenergy.gov.

A September 12 executive order intended to aid the implementation of IRA energy provisions provided for a National Climate Task Force comprised of cabinet Secretaries and the heads of other departments, agencies, and offices.

Congress — The annual Congressional Women's Softball Game, lawmakers v. press, is being held tonight.

Friday, September 16 at 12:00 p.m. ET is the EY Webcast, "Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments." Register.

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