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March 24, 2023

What to expect in Washington (March 24)

Press reports cited a Treasury Department official as saying guidance on domestic sourcing requirements for the Inflation Reduction Act's (IRA) Section 30D electric vehicle (EV) tax credit will be released next week, consistent with year-end 2022 FAQs and a White Paper that said proposed guidance on the critical mineral and battery component requirements would likely be released in March 2023. Senator Joe Manchin (D-WV) was a main proponent of the requirements and took issue with the fact that the credit wouldn't be based upon them until release of the regulations.

For the $3,750 critical minerals portion of the EV credit, the vehicle's battery must contain a threshold percentage (40% initially, growing to 80%) of critical minerals extracted or processed in the United States or in a country with which the United States has a free trade agreement (or recycled in North America). To receive the $3,750 battery components portion, the percentage of the battery's components manufactured or assembled in North America would have to meet threshold amounts (50% initially, growing to 100%).

"We can't trade dependence on foreign oil for dependence on foreign batteries and our forthcoming guidance will strengthen our supply chain," Treasury Assistant Secretary for Tax Policy Lily Batchelder said in Politico.

Trade — The Senate Finance Committee's March 23 hearing on "The President's 2023 Trade Policy Agenda" with United States Trade Representative Katherine Tai largely focused on efforts to reach limited free trade agreements focused on battery minerals with the European Union and Japan that the Administration argues won't need approval from Congress. Chairman Ron Wyden (D-OR), repeating concerns he aired before Treasury Secretary Janet Yellen during her March 16 budget hearing, said in an opening statement, "The Executive Branch has begun to embrace a 'go it alone' trade policy. Let me be clear: Congress' role in U.S. trade policy is defined by the Constitution. It's right there in Article I, Section 8. That is black-letter law, and it's unacceptable to suggest otherwise."

During Q&A, Chairman Wyden said news reports have said the US is negotiating critical mineral agreements with Japan and the EU that may be finished soon and asked if the Administration would make them public before they are signed. Ambassador Tai confirmed negotiations with the EU and Japan and said congressional staff have been briefed. Wyden said USTR needs to release detailed negotiating objections before negotiations start and Congress must have a final say on any agreements. Senator Chuck Grassley (R-IA) asserted that Congress' ability to regulate interstate commerce is a constitutional power. The Ways and Means trade hearing is today.

Budget — Bloomberg reported that House Budget Committee Chairman Jodey Arrington (R-TX) said House Republicans are working on a written offer on the debt limit that will likely come out before the budget resolution, which he previously said is expected the second week in May. House Speaker Kevin McCarthy (R-CA) has made the "deal sheet" a priority "so Republicans can make their first offer in the debt-ceiling negotiations, Arrington said," according to the report.

Punchbowl reported: "The standoff is raising concerns among Senate Republicans in particular, who worry about the lack of a contingency plan if there's no agreement soon between Biden and McCarthy. Some GOP senators believe that the longer this drags on, the more likely it becomes that they'll have to accept a clean debt limit hike in order to stave off a catastrophic default on the $31.4 trillion national debt. The closer default looms, the more pressure there is on Congress to act hastily, these senators argue."

Health — On Thursday (March 23), President Biden delivered a speech celebrating the 13th anniversary of the Affordable Care Act's passage and highlighting the ways the Biden administration has built on the ACA's coverage expansions. The White House also released 51 fact sheets providing state-specific data on how Republican proposals to repeal the ACA would impact residents.

Also March 23, the House Ways & Means Health Subcommittee held a hearing entitled "Why Health Care is Unaffordable: The Fallout of Democrats' Inflation on Patients and Small Businesses." The hearing put on display the partisan divide in addressing rising health care costs. During the hearing, Republican members spoke critically of the ACA, the Inflation Reduction Act's provisions to extend enhanced federal subsidies and the impact on inflation and health care costs. Democrats, meanwhile, spent their time defending the ACA and touting the coverage gains seen under the law.


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Washington Council Ernst & Young
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