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January 29, 2024

What to expect in Washington (January 29)

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 this week. Guidance from the House Majority Leader late Friday didn't provide any clarity on the chances of a vote or how a bill could come to the floor — i.e., by suspension, which requires a two-thirds majority vote, bypasses the Rules Committee that is stacked with conservatives, and doesn't allow for amendment, or subject to a rule. Speaker Mike Johnson (R-LA) is leaving the fate of the bill in limbo, with observers speculating a vote may occur as early as Tuesday, later than that, or not at all.

The bill reflects a deal between House Ways & Means Committee Chairman Jason Smith (R-MO), whose panel approved the measure 40-3 January 19, 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. One policy dilemma is the insistence of some Republicans in Biden-won, high-tax states for relief from the TCJA $10,000 state and local tax deduction cap, which cannot be added if the bill is considered under suspension. If the bill is to be amended at all — including to provide SALT relief — it will first need to go to the Rules Committee and the now-perilous procedural step of approving the rule will need to occur on the House floor before the bill can be debated.

Axios last night reported on some palace intrigue regarding the tax bill, saying some Republican members are upset over how the negotiations were handled and allege key members weren't consulted. The report included comments from unnamed members criticizing Chairman Smith for negotiating the bill with Democrats and excluding other Republicans, leading some members to learn of the deal on social media. The report said the SALT issue is impactful, as was a Wall Street Journal (WSJ) editorial critical of the bill for multiple reasons.

The House and Senate are both in session this week. The House is in today with suspension votes mostly on naming post offices. Four Judiciary Committee bills could be considered pursuant to a rule this week: H.R. 5585, Agent Raul Gonzalez Officer Safety Act; H.R. 6678, Consequences for Social Security Fraud Act; H.R. 6679, No Immigration Benefits for Hamas Terrorists Act; H.R. 6976, Protect Our Communities from DUIs Act. The Senate will reconvene at 3:00 p.m. on Tuesday, January 30. At 5:30 p.m., there will be a vote on confirmation of a judicial nominee. A bipartisan border package that could be appended to a Ukraine-Israel national security supplemental bill could be unveiled and considered.

The Senate Finance Committee has scheduled a January 31 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. The Committee is to hold an Open Executive session to vote on the Rollinson nomination at 10 a.m. on January 31, prior to the hearing.

Tax — A Washington Post "Fact Checker" column about President Biden's argument that billionaires pay an average of only 8% in tax said regarding the genesis of the repeated claim, "In 2021, two White House economists — Greg Leiserson of the Council of Economic Advisers and Danny Yagan of the Office of Management and Budget — published a blog post that estimated what the tax rate would be for the 400 wealthiest households if unrealized capital gains were considered part of income — a modified version of Haig-Simons. The report estimated that these households had an average federal individual income tax rate of 8.2 percent for the 2010—2018 period." The column concluded that the President could better educate his audience about "how not all income obtained by the wealthy is currently subject to taxation," but Treasury and CBO have estimated that billionaires pay a much higher effective tax rate than 8%.

Banking — The Senate Banking Committee will host a celebrity of sorts this week as Frank Abagnale Jr. testifies at a hearing Thursday (Feb. 1) on "Examining Scams and Fraud in the Banking System and Their Impact on Consumers." Abagnale became famous for posing as an airline pilot and other identities (such as a doctor, a prosecutor and college professor) during the mid-1960s and '70s, while forging paychecks worth a total of more than $2 million from employers he didn't work for. Abagnale's story was dramatized in Steven Spielberg's 2002 film "Catch Me If You Can," where he was portrayed by Leonardo DiCaprio. Abagnale was arrested in 1970 and sentenced to 10 years for his crimes. He escaped from jail four days after his arrest and was caught but ended up being released on parole in 1974 after serving only two years of his sentence. The other witnesses at Thursday's hearing are Carla Sanchez-Adams of the National Consumer Law Center and John Breyault, a vice president at the National Consumers League.

Border — It could be a pivotal week not only for the tax bill but for prospects for a bipartisan border bill that could be appended to a Ukraine-Israel national security supplemental bill. The talks that were more than a month in the making were upended last week by Senate Republican leader Mitch McConnell's (R-KY) suggestion 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 be less stringent than those Trump would pursue. (The initial push for border provisions on the supplemental came from Senate Republicans.) Some lawmakers, including House Speaker Johnson, have since questioned whether they should pursue legislation to provide President Biden more authority or challenge the President to first use the authority he has under current law.

The WSJ reported that Johnson and Sen. Rick Scott (R-FL) "have questioned the need for the legislation. Meanwhile, President Biden has urged Congress to pass the policy, which Senate Republican leaders demanded last year as a condition for approving separate legislation that includes aid for Ukraine and Israel. The pushback from some Republicans has come as former President Donald Trump, the front-runner for the 2024 Republican nomination, has opposed the measure, saying he would 'rather have no bill than a bad bill.' He privately told some GOP senators that he is upset that those in the party would consider voting for a border package because it would give Biden a political win on a top Trump campaign issue … "

Senator Ted Cruz (R-TX) is among those critical of the type of border deal that is taking shape in the Senate talks. Senator James Lankford (R-OK) said on Fox News Sunday, regarding those already critical of the bill, that the "challenge that Senator Cruz has and a bunch of other folks is they're so waiting to be able to read the bill on this and this has been our great challenge of being able to fight through the final words to be able to get the bill text out so people can hear it. Right now, there's Internet rumors." President Biden advocated for the deal, which he said would allow him to shut the southern border if it became overwhelmed.

Appropriations — One issue possibly moving forward is government funding, after top congressional appropriators struck a deal on the totals for the dozen annual spending bills, weeks after leaders reached an agreement on topline numbers. "Senate Appropriations Chair Patty Murray (D-Wash.) and House Appropriations Chair Kay Granger (R-Texas) reached the deal late Friday night," Politico reported. Funding deadlines loom on March 1 and 8.

Health — A WSJ editorial, "Behind the ObamaCare Boom," said regarding the HHS announcement that a record 21.3 million Americans had signed up for ACA coverage: "The March 2021 American Rescue Plan Act sweetened the premium tax credits to make insurance on the exchanges free or nearly free for many middle-class Americans for two years. The Inflation Reduction Act extended the bigger subsidies through 2025, while his Administration rewrote ObamaCare rules to enable more families to qualify. Because the enhanced subsidies make the plans cheaper than employer coverage, many more Americans are signing up on the ObamaCare exchanges." The editorial said subsidies could prove to be more expensive than claimed.

The House Energy & Commerce Subcommittee on Health holds a hearing, "Health Care Spending in the United States: Unsustainable for Patients, Employers, and Taxpayers," on Wednesday, January 31 at 10 a.m.

The Senate Health, Education, Labor & Pensions Committee will hold a hearing, "Authorization for Investigation into the High Costs of Prescription Drugs and Related Subpoenas," on Wednesday, January 31 at 11 a.m.

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Washington Council Ernst & Young