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October 11, 2023

What to expect in Washington (October 11)

There are still many moving pieces as House Republicans take steps to select a candidate for Speaker, possibly as soon as today. It is essentially a two-man race at the moment between Majority Leader Steve Scalise (R-LA) and Judiciary Committee Chairman Jim Jordan (R-OH). Republican Study Committee Chairman Kevin Hern (R-OK) took himself out of the running and, while former Speaker Kevin McCarthy (R-CA) suggested on Monday that he would return to the post if the House Republican Conference made the decision to reinstall him, he later told members not to nominate him. Rep. Patrick McHenry (R-NC), Financial Services Committee Chairman and acting speaker, was quoted as saying, on whether there will be a Speaker by the end of the week, "That's the goal."

Rep. McHenry also said, regarding the prospect of potential assistance for Israel, "If we need to act as a government we will." It has been widely observed that world events lend urgency to the task of electing a Speaker, without which the chamber cannot move legislation. Rep. Mike Lawler (R-NY) said on CNN October 10, "We need to advance legislation to deal with additional funds for Israel." Other members have been adamant that the issue argues for a quick resolution to the Speaker vacancy. Lawler said neither candidate for Speaker has 217 votes for the post. "But we're going to work through this process as expeditiously as possible … There was no justification to remove the speaker, mid-term, and it has created a chaos and a constitutional crisis." (Two current vacancies in the House reduce the number of votes needed for the Speakership to 217.) Lawler is among those who oppose holding a Speaker vote on the floor until a candidate secures that requisite number of votes from within the Republican Conference.

"Republicans leaving [a Tuesday] meeting said the vote remained wide open. Lawmakers said they pressed the candidates on issues including spending cuts, deficits and the looming government funding deadline … " the Wall Street Journal reported, in a story citing other members as saying no candidate has 217 votes. "Republicans have yet to settle some key questions, such as how to ensure that their nominee can get the majority needed to win election in an overall House with 433 currently sitting members and whether they plan to push for new spending cuts after a stopgap spending bill expires in mid-November."

The New York Times said this morning, "House Republicans remain deeply divided over who should lead them before a closed-door meeting on Wednesday morning in which they will attempt to choose a nominee for speaker," meaning a vote later today is "looking increasingly unlikely."

PBS reported that Rep. Scalise told Republicans that an additional continuing resolution (CR) will be needed beyond November 17, an acknowledgment that the appropriations process won't be completed by then. Fox News reported that Rep. Jordan pitched a clean CR until April, past the implementation date of the automatic 1% spending cut that takes hold if all of the regular appropriations bills aren't processed.

Punchbowl News pondered on October 9, over what happens if there aren't the votes for any one candidate, "Would the House formally approve [Rep. McHenry] as speaker pro [tempore] — the post he only nominally holds now — for 30 or 60 days in order to get moving on critical issues? Would a 'caretaker speaker' be tapped? Do Republicans have to figure out their internal rules fights first?" They cited Rep. Nick LaLota (R-NY) as saying, "I'm more familiar with Steve Scalise. He's been in my district three times and supported me in many ways … He understands the importance of SALT and a few of the legislative priorities we as New Yorkers have." (LaLota is among members who have made relief from the TCJA $10,000 SALT deduction cap requisite for moving any tax bill.)

There are questions over whether to reform the current motion to vacate rules that allow a single member to put the Speakership to a vote, which led to McCarthy's removal. In ascending to the post in January, Rep. McCarthy agreed to revert to the single-member threshold for the motion to vacate, rather than the rules in place since 2019 requiring a majority of the conference to support such a motion to bring it to the floor. (Reuters: "Before 2019, the motion to vacate was considered a privileged motion, which any one member could bring to the House floor. But after two Republican speakers were threatened with and ultimately left office over the move, Democratic Speaker Nancy Pelosi pushed a rule change that required a majority of the conference to support a motion to vacate.")

Global tax - The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting this morning released a new multilateral convention (MLC) that "updates the international tax framework to co-ordinate a reallocation of taxing rights to market jurisdictions, improve tax certainty, and remove digital service taxes [DSTs]." OECD said the publication of the convention moves the international community closer to finalization of the Two-Pillar Solution to address the tax challenges arising from the digitalization and globalization of the economy.

The MLC published today will be delivered to G20 Finance Ministers and Central Bank Governors in a new OECD Secretary-General Tax Report ahead of their meeting in Morocco this week, OECD said. The text "reflects the consensus achieved so far among members on the technical architecture of Amount A, with different views on a handful of specific items noted in footnotes by a small number of jurisdictions who are constructively engaging to resolve differences," according to a cover note.

The Bloomberg Daily Tax Report (DTR) cited Manal Corwin, director of the OECD's Center for Tax Policy and Administration, as saying the draft multilateral convention is an "intermediate step" in the process to get countries to sign it. Politico reported, "The goal is to have more than 130 countries sign the treaty by year-end as part of a wider bid to reform international corporate taxation to suit a global and digital economy. For the levy to take effect, at least 30 countries that make up 60 percent of targeted global companies need to sign up. That means all eyes will be on Washington, considering the biggest tech companies in the world … are all based in the U.S."

DSTs - Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) October 10 called on U.S. Trade Representative Katherine Tai to make clear the United States will forcefully defend American employers against the DST proposed by Canada, which is 3% and goes into effect in 2024 but is retroactive to 2022.

Health — The House Ways & Means Committee has scheduled a "Field Hearing on Access to Health Care in America: Challenges in Rural and Underserved Communities" in Greenville, North Carolina for Tuesday, October 17 (at 9:00 a.m.).


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