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April 26, 2023

What to expect in Washington (April 26)

The House is planning to bring the Limit, Save, and Grow Act (H.R. 2811) debt limit suspension/increase bill to a vote today and, at the Rules Committee overnight, leaders addressed uncertainty about the vote count with changes to the bill addressing energy tax credits, Medicaid work requirements, and other issues. Speaker Kevin McCarthy (R-CA) had previously resisted changes, cognizant of the fact that reopening the bill to address one set of concerns could open the floodgates to member issues, but appeared to have no other choice to win passage of the bill after the Iowa delegation signaled they would oppose it over the repeal of ethanol credits, in addition to other members who declared they were "no" votes.

With a 222-213 majority, Speaker McCarthy can lose only four votes presuming Democratic opposition. CNN reported yesterday that Reps. Tim Burchett (R-TN), Andy Biggs (R-KY), Matt Gaetz (R-FL), and Nancy Mace (R-SC) were opposed to the bill, and the Iowa members were concerned about repeal of ethanol credits. The new status of the vote count is unclear following changes to the bill made after 2:00 a.m.

The amendment adopted under the Rule struck sections 225, 227, and 228 — addressing the credit for carbon oxide sequestration, incentives for biodiesel, renewable diesel, and alternative fuels, and second-generation biofuel incentives — and accelerated the effective date of work requirements to 2024. It also calls for rescinding unobligated balances of Inflation Reduction Act (IRA) provisions dealing with energy efficient building codes (Section 50131), energy infrastructure reinvestment financing (Section 50144), National Park System maintenance (Section 50224), climate pollution reduction grants (Section 60114), and transportation access (Section 60501). Politico reported the amendment would allow some tax credits for those who locked in binding contracts or made concrete investments for sustainable aviation fuel or for producing other "clean" fuel before April 19.

Prior to the revision, the Congressional Budget Office (CBO) released a cost estimate of the bill showing it would reduce the deficit by $4.8 trillion over the 2023—2033 period. Regarding the repeal of IRA energy tax credit provisions, the document said, "The staff of the Joint Committee on Taxation (JCT) has provided preliminary estimates that title III would decrease outlays by $17 billion and increase revenues by $553 billion over the 2023—2033 period." That is much higher than estimated when the IRA was enacted last year.

Reuters reported that the House Majority Whip predicted on Tuesday that Republicans would have the votes needed to adopt the bill. "'This will pass. I'm telling you right now, it will pass the House floor,' Representative Tom Emmer, the No. 3 House Republican, told Reuters in an interview."

Reaction — Speaker McCarthy has said House passage of the bill should bring President Biden and Senate Democrats, who are holding out for a clean debt limit bill, to the negotiating table. Not surprisingly, a White House Statement of Administration Policy (SAP) promised a veto, saying in part: "It would put food assistance at risk for many older Americans and cause millions of people to lose Medicaid coverage — including working people and people with disabilities. And it would increase energy bills for families, while also increasing pollution. According to an analysis by Moody's Analytics, the bill would lead to 780,000 fewer jobs by the end of 2024 and would meaningfully increase the risk of recession."

Senate Republican Leader Mitch McConnell (R-KY), who previously seemed content to let House Republicans take on the President, said April 25, "We should not even come within a mile of flirting with a Democratic debt default … It's time for President Biden to stop the partisan stubbornness."

Still, some Senators were plotting an end-around the McCarthy-Biden impasse to move forward with budget negotiations that House Republicans are pushing off amid debt limit uncertainty. Politico reported, "Senate Appropriations Chair Patty Murray (D-Wash.) and her Republican counterpart, Maine Sen. Susan Collins, are working to nail down government funding totals for the fiscal year that starts in October. If they succeed in the next few weeks, they'd achieve a bipartisan feat unseen in years — allowing the upper chamber to move forward with a dozen annual spending bills."

On another piece of House business, addressing solar import tariffs from Asian nations — H.J. Res 39, Disapproving the Rule Submitted by the Department of Commerce Relating to "Procedures Covering Suspension of Liquidation, Duties and Estimated Duties in Accord with Presidential Proclamation 10414" — the White House issued a strongly worded SAP. "Last spring, the President declared an emergency to ensure that Americans have access to reliable, affordable, and clean electricity. The Commerce rule implements this declaration by creating a temporary, 24- month bridge for the import of certain solar cells or modules," it said. "This rule is necessary to satisfy the demand for reliable and clean energy while ensuring Commerce is able to rigorously enforce U.S. trade laws, hold trading partners accountable, and defend U.S. industries and workers from unfair trade actions. Passage of this joint resolution would undermine these efforts and create deep uncertainty for jobs and investments in the solar supply chain and the solar installation market."

Today's (April 26) hearings include:

  • 10 a.m., the Senate HELP Committee will vote on Julie Su's nomination to be Labor Secretary
  • 10 a.m., the Ways and Means Social Security Subcommittee will hold a hearing on "Social Security Fundamentals: A Fact-Based Foundation."
  • 10:15 a.m., the Senate Budget Committee will hold a hearing on the "Health Costs of Climate Change."
  • 2 p.m., the Ways and Means Oversight Subcommittee will hold a hearing, "Tax-Exempt Hospitals and the Community Benefit Standard."

On Thursday, April 27, the House will meet at 9:00 a.m. for legislative business and recess immediately. The House will reconvene at approximately 11:00 a.m. for the purpose of receiving, in a Joint Meeting, His Excellency Yoon Suk Yeol, President of the Republic of Korea.

The House Ways and Means Committee will hold a "Hearing on Accountability and Transparency at the Internal Revenue Service with IRS Commissioner Werfel" on Thursday, April 27, at 1:00 p.m.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
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