July 10, 2023
What to expect in Washington (July 10)
The House and Senate are back after a two-week recess, for a three-week stretch prior to the August recess. While there are no pressing deadlines before the next break, activity is expected on legislation related to government funding through the annual appropriations process, the farm bill, and aviation taxes ahead of the September 30 deadline for all three issues. Nominations will be before the Senate, the National Defense Authorization Act (NDAA) may be considered in both chambers, and House Republicans hope to move the Ways & Means tax package.
Short-term business — The Senate will convene at 3:00 p.m. today (Monday, July 10), with a vote at 5:30 p.m. on the Motion to Invoke Cloture on Executive Calendar #178 Xochitl Torres Small, a former House member, to be Deputy Secretary of Agriculture. In a July 9 Dear Colleague letter, Majority Leader Chuck Schumer (D-NY) said, on government funding, a main task of the Senate "will be to deliver on the deal that President Biden and Congress agreed to in June to fund our government and protect key investments in infrastructure, U.S. competitiveness, Social Security, Medicare, Medicaid, our veterans and more." Further, "Senate Democrats will also continue our work with our Republican colleagues to advance legislation in a range of policy areas. This includes making progress on bipartisan bills" that:
Senator Schumer also said, "During this work period I also intend to build on my SAFE Innovation Framework for Artificial Intelligence (AI) — an outline for how the Senate can advance American leadership in AI and harness it's potential and protect our society from its potential harms … [and] we must continue working to confirm President Biden's diverse and experienced nominees and to rebalance the federal bench with judges who respect the rule of law." As Senator Schumer noted, on June 23, the Armed Services Committee voted to advance the NDAA.
On Thursday, July 13 (10 a.m.), the Senate Finance Subcommittee on Taxation and IRS Oversight, led by Chairman Michael Bennet (D-CO) and Ranking Member John Thune (R-SD), will hold a hearing, "Assessing 25 Years of the Child Tax Credit (1997—2022)." Witnesses:
The House is back tomorrow (Tuesday, July 11), with bills on the suspension calendar including:
The House Ways and Means Committee will hold a field hearing on "Trade in America: Agriculture and Critical Supply Chains" today (Monday, July 10) at Schiefelbein Farms in Kimball, Minnesota.
The Ways & Means Work & Welfare Subcommittee will hold a hearing on "Where is all the Welfare Money Going? Reclaiming TANF Non-Assistance Dollars to Lift Americans Out of Poverty" on Wednesday, July 12 (at 2 p.m.).
House business prior to the August recess is expected to include consideration of the NDAA, with amendments on divisive issues germane to the annual authorization bill (DoD use of electric vehicles, for example). The Rules Committee meets on Tuesday, July 11 (12:00 p.m.) to debate parameters for consideration. Tax-writers are also aiming for consideration before the August recess of the American Families and Jobs Act, the three-bill package approved by the Ways and Means Committee June 13 addressing numerous issues including the TCJA "pre-cliffs" relating to Section 174 R&D expensing, Section 163(j) interest deduction limitations, and 100% expensing.
Long-term business — September 30 is the deadline for both chambers to address government funding, the farm bill, and Airport & Airway Trust Fund excise taxes, and plans and predictions for those issues are already beginning to take shape. Government funding is expected to be a heavy lift given that House GOP appropriators have said they will mark up appropriations bills at FY2022 levels at the urging of the Freedom Caucus, and Speaker Kevin McCarthy (R-CA) is tending to a rebellion over spending among conservative members in the wake of enactment of the bipartisan debt limit bill. Democrats have declared that approach a violation of the debt limit agreement. The Senate Appropriations Committee is advancing appropriations bills under an allocation that adheres to the statutory limits agreed to in the Fiscal Responsibility Act of 2023: "Specifically, for fiscal year 2024, the Fiscal Responsibility Act sets statutory limits of $886.3 billion in new budget authority for defense, and $703.7 billion in new budget authority for nondefense, for a total of $1.59 trillion in new budget authority."
Today's Wall Street Journal (WSJ) reported, "Top of mind on Capitol Hill as lawmakers return from recess this week are the annual spending bills to keep the government open, which must be enacted by the time the new fiscal year starts on Oct. 1. Other priorities include legislation authorizing military programs, updating agriculture and food-aid policy and keeping the country's airports running, all of which must also be enacted by the new fiscal year, although Congress can also agree to temporarily extend current programs. While must-pass bills often go down to the wire, the tensions this year are higher because of McCarthy's shaky hold on the House GOP conference and some conservatives' resentment over the terms of the recent debt-ceiling deal."
Roll Call reported July 3, "House GOP leaders are discussing the possibility of putting a stopgap spending bill on the floor as soon as this month as a fail-safe option while they try to build support for passing fiscal 2024 appropriations bills that appear on shaky ground. The idea … is to have a stopgap in place to continue government funding past Sept. 30 in the event all the regular appropriations bills are not passed by the end of the fiscal year."
The WSJ said, "Another wrinkle this year is a provision in the debt-ceiling agreement that would impose cuts on military and other spending if lawmakers fail to enact spending bills by Jan. 1. In theory, Congress must enact 12 individual spending bills directing money to various agencies and programs, although those bills are often bundled together. Sarah Binder [of] George Washington University, said that provision likely means lawmakers will be able to postpone a major fight on government spending until the winter. They could even push past the Jan. 1 deadline, since the automatic cuts don't take effect until April."
The farm bill also includes consideration of controversial topics, particularly nutrition assistance. Politico reported June 26: "Sen. Debbie Stabenow (D-Mich.), chair of the Senate Agriculture Committee, said … that it wouldn't surprise her if lawmakers opted to pass a short-term extension of the 2018 farm bill to buy them some more time to come to agreement on a fresh 2023 version."
Tax — Multiple reports have checked in on the two-pillared OECD-led global tax agreement. The Bloomberg Daily Tax Report said July 5, "Officials are hoping for agreement this month on pieces of the 2021 global tax deal that would reallocate the largest multinationals' profits — known as Amount A — and simplify some transfer pricing, known as Amount B. Discussions over Amount A have been slow and difficult, but officials are optimistic that the text of a multilateral convention, the treaty to implement Amount A, is within reach. 'I think everybody realizes that we are in the last chance, if you like, and that we have to now make compromises even more than we have so far to forge a multilateral convention. I'm optimistic that we will do that,' Mike Williams, director of business and international tax at the UK's HM Treasury, said June 30 … This month isn't a hard deadline, but the clock is ticking. If an agreement isn't reached and the timeline isn't extended, countries can impose new digital taxes starting Jan. 1, 2024 … "
A July 5 Washington Post story focused on uncertainty surrounding the process said, "Japan, South Korea, the European Union and other major economies have followed the pledge, adopting or preparing to adopt legislation that raises their tax rates. But in the United States, Congress hasn't made any real moves to adjust tax law to make sure no U.S. company pays less than 15 percent as required by the deal. The U.S. corporate tax rate is 21 percent, well above the 15 percent minimum. But without additional laws, some companies can find ways to reduce their tax burden below what's allowed under the terms of the agreement. Congress's inaction along with the structure of the agreement itself could bring many consequences: The largest American companies might find their already complicated tax returns will become far more complex. Corporate tax revenue paid to the United States might shrink, as American companies pay more to other countries. And in a strange new maneuver, foreign countries might even tax American companies to penalize them for not paying their fair share of taxes to the IRS."