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May 8, 2023

What to expect in Washington (May 8)

All eyes are on the May 9 bipartisan "Big Four" meeting of congressional leaders including Speaker Kevin McCarthy (R-CA) and President Biden for any next developments on plans to address the debt limit. Both sides have claimed to represent the public will — House Republicans with their debt limit bill to also cut spending and green energy tax incentives, and Democrats insisting on a clean debt limit bill — and a Washington Post poll said the public is split over who is to blame if the parties can't agree. It found "39 percent of Americans say they would blame Republicans in Congress if the government goes into default, and 36 percent say they would blame President Biden and 16 percent volunteer that they would blame both equally. (That dynamic is similar to the 2011 debt limit showdown, when 42 percent said they would blame congressional Republicans and 36 percent said they would blame President Obama. Lawmakers averted a default that year.)"

On ABC's This Week, Treasury Secretary Janet Yellen said:

  • "Early June is when we project that we will run out of cash. And there is a chance it could be as early as June 1st."
  • "It's appropriate to have negotiations about the budget, about spending priorities. President Biden has presented a detailed budget that does cut deficits by $3 trillion over 10 years while investing in the strength of the American economy. But we do need to raise the debt ceiling to avoid economic calamity."
  • "It's Congress's job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making and there is no action that President Biden and the U.S. Treasury can take to prevent that catastrophe."

On NBC's Meet the Press, House Democratic Leader Hakeem Jeffries (D-NY) said, about the May 9 meeting, "We need to do two things. One, we have to make sure that America pays its bills to avoid a dangerous default on our debt in a manner that will blow up the United States economy … That has to be avoided … At the same time … President Biden has continued to make clear that we can have a discussion about the right balance of spending, investments and revenues to make life better for everyday Americans … " He refuted the premise that Democrats are not going to get a clean debt limit bill.

On CBS's Face the Nation, Senator Kyrsten Sinema (I-AZ) said a clean bill is not happening. She said the House-passed bill "is not going to be the solution. The votes do not exist in the United States Senate to pass that. But what the president is offering is not a realistic solution either. There's not going to be just a simple, clean debt limit. The votes don't exist for that." She continued, "So, the sooner these two guys get in the room and listen to what the other one needs, the more likely they are to solve this challenge and protect the full faith and credit of the United States of America. We're on really shaky ground right now."

On the same program, House Financial Services Committee Chairman Patrick McHenry (R-NC) said of the House bill, "We've sent this over to the Senate. The president said, 'Show us your plan.' We've not only shown up with a plan; we've passed a plan. The Senate can't do it now with 43 senators saying we're not going to go along with the Schumer plan for a clean debt ceiling increase, the Biden plan, and now President Biden has to come to a table for a negotiated solution." On Fox News Sunday, House Budget Committee Chairman Jodey Arrington (R-TX) said, "We're not going to give any politicians, including the president, a blank check to continue to bankrupt the country."

Chairman McHenry was referring to a letter from 43 senators saying, "we will not be voting for cloture on any bill that raises the debt ceiling without substantive spending and budget reforms."

Energy — At the American Bar Association May Tax Meeting on Friday May 5, on a panel on "Clean Energy Credits & Incentives in the Inflation Reduction Act-Updates and Recent Guidance," a Joint Committee on Taxation (JCT) staff member said regarding the green energy hearing pamphlet for the Ways & Means hearing last month, intended to describe changes in the IRA in the green energy space, that many of the changes had been mapped out for purposes of the forthcoming Blue Book. There were certain places where things were nailed down like possible technical corrections, and JCT included those footnotes, though there were other places where it hadn't been nailed down to include a footnote or the wording and those were stripped out.

A Treasury panelist said guidance on domestic content requirements, a second notice for IRC Section 48C (advanced energy project credit), another project on prevailing wage and apprenticeship, and IRC Section 48(e) guidance are on the horizon. It was similarly noted by other panelists that some Treasury officials have said direct pay and transferability regulations would be out in the spring and that forthcoming guidance is expected on domestic content guidance, monetization, 48C, and prevailing wage and apprenticeship guidance.

The Senate Budget Committee has scheduled a hearing, "Lessons Learned: Leadership Perspectives and Experience on the National Costs of Climate Change," for Wednesday, May 10 at 10:30 a.m.

Tax — On Thursday, May 11 at 10 a.m., the Senate Finance Committee will hold a hearing, "Cross-border Rx: Pharmaceutical Manufacturers and U.S. International Tax Policy." The hearing, which is expected to have a dual focus on pharmaceutical companies specifically and international tax more broadly (including the OECD BEPS Pillar 2 agreement), features a panel of witnesses from the Council on Foreign Relations, academia, accounting, and the Tax Foundation.

Health — On Friday (May 5), Rochelle Walensky, the director of the Centers for Disease Control and Prevention, announced she will step down from her position in June.

The House Ways and Means Health Subcommittee has set a hearing on "Examining Policies that Inhibit Innovation and Patient Access" for Wednesday, May 10 at 2:00 p.m.

Congress - The House is back on Tuesday, May 9 with votes postponed until 6:30 p.m. Bills set for consideration include the Secure the Border Act of 2023 (H.R. 2) and the Protecting Taxpayers and Victims of Unemployment Fraud Act (H.R. 1163).

The Senate also convenes on Tuesday at 3 p.m. with a procedural vote at 5:30 p.m. on the nomination of L. Felice Gorordo to be US Alternate ED of the International Bank for Reconstruction and Development.

The House Ways and Means Committee will hold a field hearing titled "Trade in America: Securing Supply Chains and Protecting the American Worker-Staten Island" on Tuesday, May 9, at 10 a.m., at Global Container Terminals New York in Staten Island, New York.


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Washington Council Ernst & Young
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