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May 15, 2023

What to expect in Washington (May 15)

The clock keeps ticking toward a potential debt limit default, with the deadline expected to hit either in early June or late July. "The Congressional Budget Office projects that if the debt limit remains unchanged, there is a significant risk that at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations," CBO said in a Friday report. "If the Treasury's cash and extraordinary measures are sufficient to finance the government until June 15, expected quarterly tax receipts and additional extraordinary measures will probably allow the government to continue financing operations through at least the end of July."

The Wall Street Journal reported: "Typically, when economic activity and wages rise, so does federal revenue. When activity goes down, so does revenue. Now, though, the economy is growing but the federal tax take is shrinking without any significant change in tax laws. That is the reverse of a year ago, when soaring income-tax revenue decoupled from modest economic growth … Analysts attribute the latest boom and bust largely to capital gains, which don't get deducted from each paycheck but typically show up in government coffers through quarterly estimated taxes or April payments with tax returns."

Another bipartisan "Big Four" congressional leadership meeting with President Biden at the White House has been on hold pending staff deliberations said to focus on potentially palatable proposals like permitting reform, spending caps, and rescinding unspent Covid funds, with President Biden having expressed an openness to at least consider the last item. NBC News reported that Tuesday is being eyed for that meeting.

On CNN's State of the Union, Deputy Treasury Secretary Wally Adeyemo said, "The conversations are constructive between all of the parties. I know the president looks forward to getting together with the leaders to talk about how we continue to make progress." Asked whether a deal needs to come together this week, as House Speaker Kevin McCarthy (R-CA) has suggested, Adeyemo said, "The president believes we should raise the debt limit as soon as possible, because it's not only financial markets, but … . consumers are now worried about the debt limit. It's affecting the way that they're spending money. I spend a lot of time on the phones with CEOs of small-, medium- and large-sized businesses. And all of them mention to me the debt limit is affecting the way they're thinking about business going forward. And it's meaning that they're not investing in their companies, not investing in the economy, not creating jobs … "

Congress - The Senate is in at 3:00 p.m. today. At 5:30 p.m., the Senate will vote on confirmation of Executive Calendar #4 Bradley Garcia to be US Circuit Judge for the District of Columbia Circuit.

The House is also in this week and will begin votes at 6:30 p.m. today. House business this week focuses on several items pertaining to law enforcement, given that it is National Police Week.

Hearings — Congressional hearings this week include:

Tuesday, May 16

  • 10 a.m., Senate Finance Committee, "House Republican Supplemental IRS Funding Cuts: Analyzing the Impact on Federal Law Enforcement and the Federal Deficit"
  • 10 a.m., House Ways & Means Committee, "Health Care Price Transparency: A Patient's Right to Know"
  • 2 p.m., House Ways & Means Health Subcommittee, "Why Health Care is Unaffordable: Anticompetitive and Consolidated Markets"
  • 3 p.m., Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness, "Economic Cooperation for a Stronger and More Resilient Western Hemisphere"

Wednesday, May 17

  • 10 a.m., Senate Budget Committee, "The Rich Get Richer, Deficits Get Bigger: How Tax Cuts for the Wealthy and Corporations Drive the National Debt"
  • 2:30 p.m., Senate Finance Subcommittee on Health Care, "Improving Health Care Access in Rural Communities: Obstacles and Opportunities"

Thursday, May 18

  • 10:15 a.m., Senate Finance Committee, "Tax Incentives in the Inflation Reduction Act: Jobs and Investment in Energy Communities"

The G7 Hiroshima Summit will be held from May 19 to 21. President Biden currently is expected to attend, though his travel plans could change depending on the debt limit negotiations.

Friday, May 19 at 12:00 p.m. is the EY Webcast, "Tax in a time of transition: Legislative, economic, regulatory and IRS developments." Register.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Ray Beeman (
   • Heather Meade (
   • Kurt Ritterpusch (
   • Adam Francis (