February 8, 2023
What to expect in Washington (February 8)
In the State of the Union Address on February 7, President Biden called for quadrupling the stock repurchase excise tax included in the Inflation Reduction Act (IRA), possibly from 1% to 4%; and for a "billionaire's tax" that was quickly dismissed in the legislative process that led to the IRA after being floated by some Senate Democrats and then picked up in the Administration's FY2023 budget. Those proposals have faint hopes at best of being enacted in the divided Congress but were likely included to draw contrasts with Republicans' resistance to tax increases in favor of spending cuts to reduce the deficit/debt.
Regarding health issues, President Biden highlighted the IRA's provisions controlling prescription drug costs, and called for the cost of insulin to be capped at $35 a month for those with private insurance (for reconciliation procedural reasons, the IRA only capped insulin costs for Medicare beneficiaries). The President also promoted a series of "Unity Agenda" health initiatives related to cancer, opioids and mental health.
In both cases — on additional tax increases like the billionaire's tax and capping insulin costs for those not on Medicare — the President implored Congress to, "Let's finish the job," which was a thematic rallying cry during the speech. He also cited Republican proposals to repeal the IRA and said that would raise the cost of prescription drugs. On climate policy, which was robustly addressed in the IRA, President Biden said, "there's so much more to do. We will finish the job. And we pay for these investments in our future by finally making the wealthiest and the biggest corporations begin to pay their fair share."
On the debt limit, President Biden said, "Let us commit here tonight that the full faith and credit of the United States of America will never, ever be questioned. Some of my Republican friends want to take the economy hostage unless I agree to their economic plans" — some want Medicare and Social Security to sunset every five years and others say "'if we don't cut Social Security and Medicare,' they'll let America default on its debt for the first time in our history." The President said he would not let that happen.
President Biden said, "Next month when I offer my fiscal plan, I ask my Republican friends to offer their plan. We can sit down together and discuss both plans together. My plan will lower the deficit by $2 trillion. I won't cut a single Social Security or Medicare benefit." Rather, he said he "will pay for the ideas I've talked about tonight by making the wealthy and big corporations begin to pay their fair share."
In remarks at the Capitol February 6, House Speaker Kevin McCarthy (R-CA) said leaders must continue to sit down and negotiate on the debt limit and enumerated some previously suggested principles for debt limit discussions, including:
Both McCarthy and Senate Republican Leader Mitch McConnell (R-KY) have been pointing to President Biden's involvement in the 2011 debt limit debate, which led to Budget Control Act spending limits. While an approach to addressing the debt limit hit on January 19 appears to be no closer, the President and Speaker suggested they are willing to return to the table with different menus for how to raise/save revenue.
Ways & Means — The House Ways and Means Committee "Field Hearing on the State of the American Economy: Appalachia" February 6 in West Virginia — the Committee's first full hearing this Congress — featured witnesses airing concerns of area business owners and operators, including food and energy costs and supply chain and workforce issues, and members relitigating the benefits of the Tax Cuts & Jobs Act (TCJA) and IRA. Rep. Don Beyer (D-VA) represented Democrats at the hearing and touted the IRA's tax credits and rebates for replacing older appliances, increasing home efficiency, and lowering energy costs.
Chairman Jason Smith (R-MO) continued to call for refocusing the Committee's work toward individuals and small businesses, and away from corporations. "[O]ver the last few years, this committee's work — and that of Congress — has drifted from the needs of these good people," he said. "We must course correct. We must prioritize the voices in rooms like this one, and not those of the Washington political class." He said more field hearings are likely. Committee Vice Chairman Vern Buchanan (R-FL) discussed his bill to increase the deduction for start-up expenses and said lawmakers would hopefully change the scheduled phase-out of bonus depreciation under the TCJA, both of which witnesses supported.
A Wall Street Journal profile of Chairman Smith said it isn't clear how much his "emphasis on working Americans will lead to changes in Republican tax policy, which has been defined for three decades by opposition to tax increases." Divided government, and the resulting tough legislative landscape, for the next two years gives him "time to flesh out his agenda before significant pieces of the tax code expire at the end of 2025. Mr. Smith said he opposes Democrats' approach to helping low-income households, which calls for expanding tax credits to families, including those who don't earn income. And he says lower taxes encourage job growth, linking corporate taxes and workers. 'We're not changing our values on anything,' Mr. Smith said. 'We're changing our priorities.'" The article said he routinely criticizes "woke corporations," which were targeted by Rep. Mike Kelly (R-PA) during the field hearing.
Congress — Bills of interest from February 6: