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The May 9 bipartisan "Big Four" debt limit meeting at the White House yielded no "new movement" on the issue according to Speaker Kevin McCarthy (R-CA), though President Biden said it was "productive." The meeting, held roughly 100 days since the Speaker and the President last convened on the issue and as the clock ticks toward default without congressional intervention, will be followed by another meeting on Friday with staff-level talks in the interim. House Republicans maintain they acted through their Limit, Save, Grow Act and are blameless in the event of default, while Democrats won't entertain deficit-reduction discussions until after the debt limit is addressed. There is no clear signal of how the impasse can be broken.

Speaker McCarthy said in Punchbowl that a deal in principle to lift the debt limit would likely be needed by next week given time constraints. The President, meanwhile, said he was "considering" the use of the 14th amendment — under which the public debt can't be questioned, and the government would be required to continue issuing new debt — but he acknowledged a short-term patch would be needed given the litigious nature of that approach. Leaders of both parties haven't embraced the idea of a short-term patch.

President Biden said he's willing to "take a hard look" at rescinding unspent COVID funds, which is one plank of the House bill, "because there's still — we don't need it all, but the question is what obligations were there, commitments made, the money not dispersed, etc. … It's on the table." But overall, the President continues to tout his budget's deficit reduction proposals that include tax increases on corporations and the wealthy, along with spending increases in various areas. "Speaker McCarthy offered a very different way forward. He's proposed deep cuts that I believe are going to hurt American families," he said. The House bill's effect on veterans' benefits was said to have provoked a sharp exchange in the meeting.

Who is to blame in the court of public opinion is a major issue. Bloomberg reported Speaker McCarthy as saying the onus would be on Senate Majority Leader Chuck Schumer (D-NY) and the Democratic-controlled Senate given House passage of the bill to pair a debt limit suspension or increase with spending cuts and repeal of green energy tax incentives. "I don't see how we would own it if we raise the debt limit," he said.

President Biden said he is willing to have a discussion of budget cuts outside of the debt limit context, though he staunchly defended green energy credits. "I've said all along: Let's discuss what we need to cut, what we need to protect, what new revenue we can raise, and how to lower the deficit to put our fiscal house in order. But in the meantime, we need to take the threat of default off the table." That could boil the debate down to timing — whether or not a deficit reduction discussion is tied to the debt limit — and has prompted some observers to suggest both sides can define an agreement as they see fit.

The Washington Post reported: "McCarthy's bill to raise the debt limit … would cut federal spending by $4.8 trillion over 10 years. The White House has rejected that proposal, pushing for spending increases. But theoretically the two parties could agree to somewhere in between their preferred spending targets. 'There is a solution staring lawmakers in the face,' said Brian Riedl, a policy analyst at the Manhattan Institute, a libertarian-leaning think tank. 'Just come up with something in the middle and call it a day.'"

Trade — The May 9 House Ways and Means Committee field hearing, "Trade in America: Securing Supply Chains and Protecting the American Worker" featured a focus on trade enforcement and a restating of priorities from previous committee trade hearings this year, including building on the success of the bipartisan United States-Mexico-Canada Agreement (USMCA) that included strong enforcement provisions.

Against a backdrop of "Trade in America" signs on shipping containers at Global Container Terminals New York in Staten Island, Chairman Jason Smith (R-MO) said, "We need to aggressively enforce the commitments our trading partners made to treat U.S. products fairly. We must build on the progress from USMCA by pushing more trading partners to open their markets … We must use trade enforcement tools to chart a new path forward to put American workers first and to hold accountable bad actors."

Ranking Member Richard Neal (D-MA) said Democrats have led the charge to reauthorize and reform the Trade Adjustment Assistance for Workers program (TAA) and asserted that enforcement of US trade laws protects workers and manufacturers against unfair trade practices. Rep. Vern Buchanan (R-FL) again said members need to find a way to work together on Free Trade Agreements (FTAs) with the USMCA as a blueprint. Rep. Earl Blumenauer (D-OR) said exceptions are required for the $800 de minimis rule that allows items be imported duty- and tax-free, which he said can apply to high-dollar goods like bike batteries.

Members' comments regarding the USMCA come amid a departure from traditional trade agreements. A story in the May 8 Wall Street Journal said, "In just the past year, the Biden administration has opened talks with Japan, the European Union, and more than 20 countries from India to Peru on cross-border economic links. Terms that generally aren't part of these discussions: 'free trade' and 'tariffs.' Welcome to the new world of trade deals. It's no longer about slashing duties, but a host of other issues — from digital copyright to air quality and technology and product standards — often brokered in government-level agreements rather than full-blown treaties. The reshaping of free-trade agreements, or FTAs, has been driven by shifting economic tides and political winds. With the rise of services and online commerce, physical goods now play a proportionally smaller role in world trade."

Tax — The IRS has provided guidance (REG-108054-21) on how to apply the transfer-for-valuable-consideration rules, and associated information-reporting requirements for reportable policy sales of interests in life insurance contracts, to (1) exchanges of life insurance contracts qualifying for nonrecognition of gain or loss and (2) certain acquisitions of interests in life insurance contracts in transactions that qualify as corporate reorganizations.

The staff of the Joint Committee on Taxation has prepared a document that describes legal and economic background on U.S. taxation of U.S. multinational corporations and their cross-border activities, ahead of tomorrow's Senate Finance Committee hearing, "Cross-border Rx: Pharmaceutical Manufacturers and U.S. International Tax Policy."

The TCPI 24th Annual Tax Policy & Practice Symposium, "Fostering Sound & Durable Tax Policy: The Vital Role of Business," will take place May 11-12.

Health — Another WSJ story reported on the potential for a rare bipartisan agreement targeting drug, specifically the practices of pharmacy-benefit managers. "Passage could be difficult, especially given party differences. And some powerful healthcare companies, which own PBMs, are trying to fend off many of the measures," the story said. "Yet analysts expect some sort of legislation will make it, because surveys show voters of all kinds agree that drugs cost too much and lawmakers seeking re-election could benefit by pointing to a new law addressing the popular issue."

The Ways and Means Committee has just noticed a May 16 (at 10 a.m.) hearing to examine how a lack of transparency in America's health care system increases costs and prevents patients from being effective health care shoppers.

Today at 2:00 p.m. is the Ways and Means Health Subcommittee hearing on "Examining Policies that Inhibit Innovation and Patient Access."

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