March 6, 2023
What to expect in Washington (March 6)
It's budget week, this week and into next. President Biden will release his FY2024 Budget on Thursday, March 9, with a speech in Philadelphia that outlines his proposals "to invest in America, continue to lower costs for families, protect and strengthen Social Security and Medicare, reduce the deficit, and more." Treasury Secretary Janet Yellen will appear for the customary post-Budget hearings at the House Ways and Means Committee on Friday, March 10 and Senate Finance Committee the following Thursday, March 16.
The President plans to call for $2 trillion in deficit reduction, including tax increases on corporations and wealthy individuals. He has already outlined a quadrupling of the Inflation Reduction Act (IRA) stock buyback excise tax from 1% to 4% and a previously proposed billionaire's tax. Last year's Budget intentionally excluded proposals that were part of the negotiations that eventually led to the IRA. It remains to be seen which of those could resurface. The President is expected to propose a means of extending the solvency of the Medicare Trust Fund. The Budget generally is intended to strike a contrast with spending cuts called for by House Republicans, which may not be detailed until their budget resolution is released in April. President Biden and other officials have insinuated that Republicans want cuts to health programs.
"Will they cut Social Security and Medicare? The Affordable Care Act? We don't know until we see a plan. They owe that to the American people," OMB Director Shalanda Young said last week, echoing similar comments by the President.
The Wall Street Journal reported of the President's health plans, "The White House hasn't yet detailed Mr. Biden's plan to extend the solvency of the Medicare Trust Fund by at least two decades. The administration has previously backed expanding certain Medicare taxes to active business income and is also considering shifting some general-fund revenue to the trust fund, according to people familiar with the matter."
On taxes, the report said, "Even without staking out new ground, the administration has several trillion dollars' worth of tax increases it could propose to help narrow budget deficits or pay for new programs, drawing from ideas that were blocked in the last Congress by Mr. Manchin or Sen. Kyrsten Sinema (I., Ariz.). Those include raising top tax rates on individuals, increasing the corporate tax rate to 28% from 21% and implementing the U.S. portion of the global agreement to set a 15% minimum corporate tax rate."
Energy — A story in the Saturday Washington Post focused on the IRA's Section 45V credit for clean hydrogen described "an intense lobbying effort by some of the world's biggest energy firms to make those lucrative tax credits from the Inflation Reduction Act available even to companies that are using fossil fuels to produce the hydrogen, releasing what some scholars warn could be an enormous amount of greenhouse gas in the process." It said, "At the core of the dispute is the question of whether the lucrative hydrogen subsidies should be conditioned on the fuel being produced entirely with renewable power … " The story also said, "Tensions are also emerging around subsidies for capturing and storing carbon, as well as those for next-generation nuclear power plants and development of sustainable aviation fuels."
Congress — A New York Times analysis of Republicans' use last week of resolutions of disapproval, regarding ESG investment requirements and D.C. crime, said the beauty of the maneuver "is that it has special status in the Senate. It can't be kept off the floor by the majority leader and is not subject to the filibuster, providing a blunt political instrument for lawmakers if they can assemble a simple majority. That is because of the Congressional Review Act, enacted in 1996 after Republicans took power on Capitol Hill, which created the process that allows Congress to upend federal rules. With little power to set the Senate agenda, Republicans regard the tactic as a handy way to score legislative victories and force Democrats to debate subjects they would rather avoid."
The Senate is back with a procedural vote on a judicial nomination at 5:30 p.m. today, March 6.
The Senate Finance Committee has scheduled a hearing on "Tax Policy's Role in Increasing Affordable Housing Supply for Working Families" for Tuesday, March 7. Witnesses:
A Joint Committee on Taxation report previewing issues for the hearing was released on Friday.
The House isn't back in session until Tuesday, and the schedule includes consideration of veterans' affairs bills. The House will be in until Friday, when it will consider H.J. Res. 27, a congressional disapproval resolution relating to Revised Definition of "Waters of the United States;" and S. 619, to require the Director of National Intelligence to declassify information relating to the origin of COVID-19.
The Ways and Means Committee will hold its second field hearing "on the State of the American Economy: The Heartland," March 7 at 9 a.m. It will take place at Express Clydesdales in Yukon, Oklahoma. Witnesses:
The Federal Bar Association 2023 Tax Law Conference continues today with virtual sessions including "Current Developments in International Tax" and "The OECD Pillars: Buckle Up!"