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February 1, 2023

What to expect in Washington (February 1)

The White House will release the President's FY2024 Budget Proposal on March 9, Punchbowl reported. This year's release is expected to play a significant role in the fiscal debate between the Administration and House Republicans, who are calling for spending cuts — including as a condition of voting to address the debt limit — and placing an emphasis on adhering to the formal budget process.

Democrats at both ends of Pennsylvania Avenue have challenged Republicans to detail their proposed spending cuts. Following on similar comments from the Senate and House Democratic leaders last week, CNN reported that on January 30, ahead of today's meeting on the debt limit with House Speaker Kevin McCarthy (R-CA), President Biden said his message to McCarthy would be "show me your budget and I'll show you mine." Republicans thus far haven't detailed their preferred spending cuts, though McCarthy has suggested taking Medicare and Social Security benefit cuts off the table.

ABC News reported that a memo by the White House NEC and OMB directors said the president is expected to ask McCarthy if he will "commit to the bedrock principle that the United States will never default on its financial obligations" and whether he agrees with "former presidents, including Presidents Trump and Reagan, that it is critical to avoid debt limit brinksmanship." Speaker McCarthy responded on Twitter, "Mr. President: I received your staff's memo. I'm not interested in political games. I'm coming to negotiate for the American people."

Like Republican spending cuts, it is also unclear what the President's budget will look like and the degree to which it may be influenced by pressure from House Republicans. The FY2022 Biden budget from 2021 was an expansive policy blueprint on tax, health, housing, caregiving, and many other issues that was whittled down to the still-massive Build Back Better Act (BBBA) in the House. The FY2023 Biden budget from 2022 presumed enactment of the BBBA, left those proposals out as negotiations continued, and presented new ones; then, a relatively narrow slice of the agenda was enacted as the Inflation Reduction Act (IRA).

Senator Joe Manchin (D-WV), who played a key role in the IRA negotiations, is encouraging his party to seek a deal with Republicans on the debt limit, which most Democrats have declared non-negotiable. "We're going to have to bring a group of Democrats together that is willing to work and meet him halfway," Manchin said of McCarthy in the New York Times, adding that he has been in conversations with centrists in the House. "I think we all know that we're going to vote for the debt ceiling. It just depends how much how much punishment goes on as we go down that road, and how much blame can be laid upon somebody. I'm trying to avoid an embarrassment that makes the United States look like the kind of country we don't want to be."

The Hill newspaper said, "Manchin now envisions himself as a shuttle diplomat working to bridge the partisan divide between Senate Majority Leader Charles Schumer (D-N.Y.) and Speaker [McCarthy], whom Manchin describes as a friend. 'I've always had a good, friendly relationship with Kevin, and he's in a position now where if we try to work together we can do a lot of good for our country,' Manchin said."

Senator Manchin is one of 23 Democrats and Independents who are up for re-election in 2024, compared to 11 Republicans; and one of three Democrats, along with Senator Sherrod Brown (D-OH) and Jon Tester (D-MT), to be running in states won by President Trump in 2020. Manchin, who has been targeted by National Republican Senatorial Committee advertising tying him to affluence that is out of touch with his voters, and Tester have not announced plans to run for re-election. "I haven't made a decision what I'm going to do in 2024. I've got two years ahead of me now to do the best I can for the state and for my country," Manchin said on Meet the Press recently. "Everything's on the table."

Congress — The House Ways and Means Committee held an organizational meeting on January 31. The Committee has noticed a "Field Hearing on the State of the American Economy: Appalachia" for Monday, February 6 at 11 a.m. that is reportedly planned for Allegheny Wood Products in Petersburg, WV.

Health - Late Monday (January 30), the Biden administration announced via a Statement of Administration Policy that they plan to end the COVID-19 national emergency and the COVID-19 public health emergency (PHE) on May 11. The national emergency declaration and the PHE are currently set to expire on March 1 and April 11, respectively. This wind-down would align with the Administration's previous commitments to give at least 60 days' notice prior to termination of the PHE to give states and health care industry stakeholders time to prepare for the end of COVID-related flexibilities.

A Washington Post story titled, "Official End of Covid Emergency Injects Uncertainty Into Telehealth," said, "A federal emergency declaration in January 2020 waived the requirement for health-care providers to meet patients in person before prescribing tightly regulated drugs known as controlled substances, ranging from opioids to benzodiazepines … Once the emergency declaration expires May 11, that practice could be in legal limbo. … A Drug Enforcement Administration official said Tuesday that the agency would soon unveil new proposals related to telemedicine."

The Wall Street Journal reported, "The House passed two pandemic-related bills Tuesday, as Republicans pushed to roll back Covid-19 emergency powers invoked by the federal government over the past three years. The Pandemic Is Over Act, which would terminate the public-health emergency declared for the Covid-19 pandemic in January 2020, passed 220-210, along party lines. The Freedom for Health Care Workers Act, which would end the federal mandate requiring healthcare workers to be vaccinated against Covid-19, passed 227-203, with seven Democrats joining Republicans in support of the measure. The votes come a day after President Biden said he would end a national emergency and public-health emergency declaration for Covid-19 on May 11, getting ahead of planned GOP votes."

Tax — Tax Notes published, "What Multinational Companies Can Do to Prepare for BEPS Pillar 2," a Q&A with Jason Yen, a Principal in the International Tax and Transaction Services practice of Ernst & Young LLP's National Tax Department.


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