January 26, 2024
What to expect in Washington (January 26)
The Tax Relief for American Families and Workers Act (H.R. 7024) TCJA pre-cliffs and expanded Child Tax Credit (CTC) bill could get a House floor vote the week of January 29 and, while House Speaker Mike Johnson (R-LA) hasn't opined publicly and the position of conservative Republicans in the House has mostly been under the radar, there are multiple known obstacles to enactment. The bill reflects a deal between House Ways & Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR), who says support is growing and a strong House vote could compel the Senate to act.
The target for completing the bill by the beginning of the tax filing season, on January 29, is certain to slip and lawmakers are said to view enactment sometime in February as viable in terms of limited disruption to the tax system. The Senate is slated to be in recess February 12-23 for the Presidents' Day State Work Period, and while the House is also out for that second week, leaders have given back the recess the week of the first rung of the new CR ladder and will now be in session from Wednesday, February 28 through Friday, March 1. Government funding deadlines loom March 1 and 8 and require appropriators to do the heavy lifting of allocating agreed-to topline spending levels to the dozen annual appropriations bills.
Senate Finance Committee Republicans have insisted on a markup of the bill, though that step in the process, along with putting a tax bill on the floor as a standalone without any guardrails to cut off debate — like, for instance, budget reconciliation parameters that have often dictated consideration of such bills over the years — could result in a lengthy consideration of tax issues in general and potentially loading up the bill with priority issues of members. (There are few examples of a non-reconciliation, standalone tax bill on the floor in the past 20 years since enactment of the very broad American Jobs Creation Act in 2004.)
Tax Notes reported Senator Mark Warner (D-VA), a noted dealmaker, as saying "I've got a couple things I'd love to add to this package," while raising the issues of the time crunch due to the filing season and the potentially limitless nature of a tax bill open to amendment. "But I also get the fact of you want to avoid the Christmas tree analogy — if this is the only tax vehicle moving, and suddenly it gets loaded up with a whole bunch of other items," Warner said. "There is going to be this timing pressure … " Senator Elizabeth Warren (D-MA) rekindled her November 2023 criticism of TCJA pre-cliff expirations — IRC Section 163(j) interest deductibility, IRC Section 174 R&D, expensing — as masking the cost of "Trump tax cuts for giant businesses."
House leaders remain under pressure from some Republicans objecting to the bill's CTC enhancements as well as those representing districts President Biden won in 2020 — many of which are in high-tax states — over the bill's omission of relief from the $10,000 SALT deduction cap. Punchbowl News reported January 25, "Senate Minority Whip John Thune, a member of the panel, said he wanted a markup to try to change some of the child tax credit provisions due to concerns about keeping it tied to earnings and work. Sen. John Cornyn (R-Texas), another member of the powerful panel, said this is why he wants a markup: 'I want to get back to legislating. We can't just have a deal between two people.'" It was also reported that Speaker Johnson was scheduled to speak with SALT relief-insistent Republicans by phone January 25.
A Bloomberg article cited Senate Finance Ranking Member Mike Crapo (R-ID) as saying he's "obviously" concerned about a provision of the CTC that allows some parents without income to claim the break if they earned at least $2,500 the previous year, which some contend may spur workers to quit their jobs in the second year knowing they can still receive the tax credit. Crapo said that if the House passes the bill, he expects Senate Republicans to offer hundreds of amendments.
Finance Committee member Senator Marsha Blackburn (R-TN) released a statement last night, saying: "President Trump unleashed our economy and helped businesses thrive through the Tax Cuts and Jobs Act. Reinstating R&D expensing, bonus depreciation, and the business interest deduction from the TCJA is essential for Tennessee businesses, and I am pleased to see that these provisions are included in the House package. Yet, allowing taxpayers to use their prior-year earnings to qualify for the Child Tax Credit will disincentivize them from working and harms our workforce and economy. I am hopeful Speaker Johnson or the Senate Finance Committee will address this provision prior to a vote before the Senate."
Chairman Smith said on Fox Business January 23, "Three very important provisions of Trump's tax cuts expired, just in the last couple of years. Research and Development Expensing, which is extremely important. This provision would add $70 billion in investment. The Interest Deductibility provision is extremely important where small businesses are being affected with huge interest rates. This will create 867,000 new jobs just by this provision, and it will bring in $58 billion in take home wages."
Congress — Senate Republican leader Mitch McConnell (R-KY) reportedly signaled to GOP colleagues that former President Trump had discouraged them from advancing a bipartisan deal on border security that some say could hand President Biden an election-year victory on policy changes that would likely be less stringent than those Trump would pursue. The development upset talks more than a month in the making, but which had yet to produce a bipartisan bill this week that could be appended to a Ukraine-Israel national security supplemental bill. Majority Leader Chuck Schumer (D-NY) said negotiators would work all weekend on a border deal, and Senator Kyrsten Sinema (I-AZ) expressed confidence that a bill will be out next week.
The New York Times: "It is not clear yet whether Mr. Trump's political agenda will derail other opportunities for bipartisan lawmaking this year on Capitol Hill, the prospects for which were already bleak given the electoral calendar and the dysfunction of the current Congress. Conservatives have already begun agitating against a bipartisan tax bill, whose passage could be construed as a victory for Mr. Biden since it would expand the child tax credit. Mr. Trump has yet to weigh in."
The Senate Finance Committee has scheduled a hearing on the nominations of Corey Anne Tellez to be Assistant Secretary of the Treasury for Legislative Affairs and three nominees to be members of the Social Security Advisory Board. Separately, other nominations held over from the last session of Congress, including Marjorie Rollinson to be Chief Counsel for the Internal Revenue Service, had to be renominated at the start of the current session and will require another Finance Committee vote but not another hearing.
Health — On Wednesday, January 24, the Centers for Medicare & Medicaid Services (CMS) announced that 21.3 million consumers signed up for a 2024 individual market health insurance plan through the Affordable Care Act exchanges during the latest open enrollment period. According to CMS data, about 2.4 million, or 15%, of people who signed up through Healthcare.gov had previously been on Medicaid/CHIP. These figures only capture those who selected a plan, not those who have paid their first month's premium, cementing their enrollment. Special enrollment periods remain in place for those no longer eligible for Medicaid/CHIP, as well as for individuals with household incomes less than 150% of the federal poverty level.
The Washington Post cited a November 2023 social media post from former President Trump calling for the health program to be replaced. The story also said, "Under Biden, health plans in the Affordable Care Act have become more affordable. The American Rescue Plan Act of 2021, or ARPA, contained provisions that expanded the number of people who were eligible for Affordable Care Act health plan subsidies by about 20%, and the Inflation Reduction Act of 2022 extended those subsidies. About 80% of shoppers on the Affordable Care Act's health insurance marketplaces can find coverage for less than $10 per month, Democrats said."