October 13, 2023
What to expect in Washington (October 13)
The House is on the cusp of ending another work week without a Speaker, as Majority Leader Steve Scalise (R-LA), who won a Republican-only vote for the post Wednesday over Judiciary Committee Chairman Jim Jordan (R-OH), withdrew from the race last night after being unable to secure the 217 votes necessary in the full House. The focus now turns to Rep. Jordan, Financial Services Committee Chairman and acting speaker Rep. Patrick McHenry (R-NC), and perhaps other members, though the 217 threshold is considered a high hurdle given that Republicans hold only 221 seats in the House (there are two vacancies, one from each party). Republicans are meeting again this morning and the chamber is said to likely be in session on Saturday.
"It wasn't immediately clear what the next steps would be for a chamber that has been effectively frozen for more than a week. More Republicans had been openly discussing Thursday the possibility of giving Speaker Pro Tempore Rep. [McHenry] more power to bring legislation to the House floor, a move that would likely require a vote by the full House," the Wall Street Journal reported after Rep. Scalise exited the race. "With the House speakership vacant for a ninth day, lawmakers began to openly wonder how long the fight could last. Rep. Byron Donalds (R., Fla.) said he thought it could only stretch through the weekend, because 'then it gets problematic' once the Senate returns next week."
Roll Call cited Rep. David Joyce (R-OH) as saying members have discussed granting Rep. McHenry additional powers as acting speaker. "From my understanding, going back and forth and parliamentarian and Rules … the possibility exists to give somebody … full duties … for a limited period of time," he said. The report said, "Among the questions being asked is whether a speaker pro tempore could be granted new authorities for a period of 45 or 60 days, which could be enough time to process spending bills, including anticipated emergency aid to Israel." The Washington Post said, "such a move is unprecedented and would require changing the House rules — and might need Democratic support to do so. Current rules state that the temporary position exists only to facilitate and oversee the election of a speaker." Rep. Matt Gaetz (R-FL), whose motion to oust Speaker McCarthy put the House in its current situation and left some members still bruised and calling for his reinstatement, derided the expansion of acting speaker's powers as a "terrible idea."
The Senate has been out this week and returns at 3 p.m. on October 16, with the next vote on a judicial nomination that day at 5:30 p.m. The Foreign Relations Committee is holding a nomination hearing for former Treasury Secretary Jack Lew to be Ambassador to Israel on Wednesday, October 18 (at 10:30 a.m.) and Reuters reported that the full Senate may vote on the nomination next week given the urgency of the matter.
Looking ahead — The outcome of the Speakership contest could have major implications for budget issues involving government funding and money for Ukraine. Both Rep. Scalise and Rep. Jordan told fellow 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. Jordan reportedly pitched a clean CR until April, past the implementation date of the automatic 1% spending cut that takes hold if all the regular appropriations bills aren't processed. Some conservative Republicans balked at the last continuing resolution — which ultimately extended government funding through November 17 — in favor of pursuing full-year appropriations bills, and some of the "never CR" group of members voted in favor of the motion to vacate that removed Rep. McCarthy from the Speakership. Another funding patch will be controversial.
Ukraine funding was left off the last CR due to objections from some conservative members, with the intention for the House and Senate to vote on a measure separately. The Senate version of the last CR included about $6 billion for Ukraine, though it faced some opposition in that chamber and the issue fell off as the focus shifted to the mostly "clean" House CR. Several news outlets reported this week that the White House is considering linking Ukraine funding with an aid package for Israel, which has broader support in Congress.
Global tax — Following the October 11 OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting release of a new multilateral convention (MLC) for Pillar One, which reflects the current consensus among countries but leaves some items undecided, Treasury requested public input on the current draft text of the Pillar One MLC, the Explanatory Statement to the Pillar One MLC, and the Understanding on the Application of Amount A Certainty (describing certain administration and dispute resolution parameters).
"Treasury stands behind the negotiations, which have resulted in many difficult compromises by all sides with respect to both the design of the partial reallocation of taxing rights and the elimination of discriminatory digital services taxes and similar measures," said Assistant Secretary for Tax Policy Lily Batchelder. "However, as the cover note in the documents states, Pillar One represents a uniquely significant reform to the international tax system. Because of the breadth and complexity of the changes proposed, we view public input as critical to our process — to ensure transparency, to facilitate the resolution of several remaining open issues, and to hear whether the proposed framework would be workable for U.S. taxpayers and other stakeholders." Written comments are due by Monday, December 11.
Senate Finance Committee Ranking Member Mike Crapo (R-ID) issued a statement repeating calls for Treasury to provide Congress additional information about BEPS 2.0: "While I oppose discriminatory digital services taxes (DSTs) targeting US companies, I also want to ensure that the OECD cure is not worse than the DST disease for U.S. businesses and workers. Unfortunately — despite repeated requests — Treasury has been unwilling to provide information to determine Pillar One's impact on U.S. companies and revenue. I urge Treasury to immediately provide that information to Congress. I also look forward to receiving feedback from our impacted companies on this 800+ page proposal."