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March 1, 2024

What to expect in Washington (March 1)

The Senate February 29 voted 56-41 to confirm Marjorie Rollinson as IRS Chief Counsel. Five Republicans — Senators Cassidy (R-LA), Collins (R-ME), Murkowski (R-AK), Rounds (R-SD), and Tillis (R-NC) — joined Democrats in approving the nomination. Bloomberg: "Rollinson takes over for Acting Chief Counsel William M. Paul, who has led the chief counsel's office since 2021. The chief counsel job has taken on a more important role since passage of the 2022 law known as the Inflation Reduction Act."

Government funding — Congress passed a deal to avert a partial government shutdown, by extending the first tranche of expiring appropriations — Military Construction-VA, Agriculture, Transportation-HUD, and Energy & Water — and two additional bills, on Interior and Financial Services and General Government, through March 8, in recognition that full-year bills on those appropriations categories are within reach. The other half dozen appropriations bills, which lawmakers are making slower progress on, are extended through March 22. These are Commerce, Justice, Science, and Related Agencies; Defense; Homeland Security; Interior, Environment; Labor-HHS; Legislative Branch; and State-Foreign Operations.

The House approved H.R. 7463, the Extension of Continuing Appropriations and Other Matters Act, 2024, 320-99. The Senate voted 77-13 to approve the bill last night after four amendment votes failed. Senate Majority Leader Chuck Schumer (D-NY) said, "This year, the good Lord gave us an extra day in February, so let's make sure we finish the job and don't drag this debate into March."

Also slated for a temporary extension is the Federal Aviation Administration (FAA) authorization and taxes measure, which the House voted 401-19 to extend from March 8 through May 10 to allow a long-term bill to be finalized. "The Senate is expected to clear the extension soon," Politico reported.

Congress — With a partial government shutdown averted, Congress is done for the week. The Senate is in pro forma session today and returns for business at 3 p.m. on Tuesday, March 5 with a vote related to a Defense nomination at approximately 5:30 p.m.

Senate Republican Leader Mitch McConnell (R-KY), who was first elected to the Senate in 1985 and has been the chamber's top Republican since 2007 — through various fiscal crises, a health reform bill that Republicans denounced and a tax reform bill that they embraced — announced he would step down from his leadership position after November: "So, as I've been thinking about when I would deliver some news to the Senate, I always imagined a moment when I had total clarity and peace about the sunset of my work, a moment when I'm certain I have helped preserved the ideals I so strongly believe. That day arrived today."

Tax — On Thursday, March 7 at 2 p.m., the House Ways & Means Tax Subcommittee will hold a hearing on "OECD Pillar 1: Ensuring the Biden Administration Puts Americans First."

Senate Finance Committee Ranking Member Mike Crapo (R-ID), who didn't sign onto the $78 billion Tax Relief for American Families and Workers Act (H.R. 7024) when it was unveiled by Chairman Ron Wyden (D-OR) and House Ways & Means Committee Chairman Jason Smith (R-MO) January 16, detailed concerns with the bill in a February 28 statement that was prefaced by saying efforts to have Senate Republicans "rubber stamp" the package have been counterproductive. "I remain concerned the CTC provisions undermine the work requirement and represent a significant shift — described by some Democrats as a down payment — to transform the CTC from primarily working family tax relief into a government subsidy," Crapo said. "Allowing individuals to receive a refundable credit when they have zero annual earnings — as the prior year's earnings provision allows — is a departure from longstanding policy tying the CTC to work."

According to the Bloomberg Daily Tax Report (DTR), "Crapo said there are 'dozens' of examples of problems members have with the bill. Some want items like technical corrections to the bipartisan retirement law called the SECURE 2.0 Act and traditional tax extenders added to the bill, he said."

Politico reported that Chairman Wyden said it may be too late to entertain the types of changes Senator Crapo is requesting. "This is the first time I've heard about this new set of comments," Wyden said. "We're down to having a few weeks to get this done, and we need policies that add support, not subtract support." Wyden added, "It's not as if there hadn't been considerable discussion on these issues during the seven months of talks."

Senate Finance Committee member Thom Tillis (R-NC), who leveled some of the earliest criticism of the bill as using an illegitimate revenue offset in the crackdown on the Employee Retention Credit (ERC), said in an op-ed in the February 29 Wall Street Journal, "The bill's authors say these changes will save more than $70 billion. They presumably didn't consider that this money should have been left in the Treasury. The employee retention tax credit was never paid for to begin with, as it was passed as part of emergency pandemic relief under the Cares Act. Its hasty implementation resulted in massive fraud and cost overruns. How can any fiscal conservative defend using phony savings to pay for more spending?" He further said, "The fundamental problem with the bill is that Republicans made a major concession to Democrats — allowing the child tax credit to begin to transition into a de facto welfare program — in return for something Democrats already wanted: research-and-development tax breaks for businesses."

On the flip side, Punchbowl News said, in a report on Chairman Smith encouraging Senate Republicans to detail what they need from the bill, "Other Ways and Means Republicans waved off some criticism of the bill as resulting from the Senate disliking deals that don't begin there. They're also hyperaware that there are only weeks left to get this done. Senate Republicans are 'gonna have to square with American businesses, the people who create the very jobs that want to stay here in America,' Rep. Kevin Hern (R-Okla.) said."

Retirement — The February 28 Senate HELP Committee hearing on "What Can We Do to Expand Defined Benefit Pension Plans for Workers?" didn't break much new ground, but Chairman Bernie Sanders (I-VT) did release a new report on the breadth of the savings crisis, saying nearly half of Americans 55 and older have no retirement savings. Witnesses called the retirement system inadequate and some highlighted proposals for letting workers into plans at an earlier age, automatic enrollment, and auto IRAs, while others advocated Social Security investment in personal accounts.

Members touted the benefits of the SECURE 2.0 bill enacted at the end of 2022, and mentioned various introduced bills, including:

  • Senators Cassidy (R-LA) and Kaine (D-VA), Helping Young Americans Save for Retirement Act, to make it easier for younger workers between the ages of 18 and 20 to save for retirement
  • Cassidy and Kaine, Auto Reenroll Act, to assist workers who previously declined to participate or contributed little to their employer's pension plan by allowing businesses to periodically auto-enroll employees back into their plans
  • Senator Casey (D-PA), 401Kids Savings Act, to create children's savings accounts (CSAs), the funds from which could be used for post-secondary education, starting a business, buying a house, or retirement security
  • A forthcoming bill from Senator Hassan (D-NH) "to improve the tax cuts for small businesses to help them fully cover the administrative costs of starting a retirement plan for their employees."

The House Financial Services Committee February 29 held a markup of bills related to the SEC's accounting rule for custody of cryptocurrency funds, money laundering via digital assets, wildfire insurance and transparency on the part of the Department of Housing and Urban Development. The bills marked up were:

  • H.J. Res. 109, providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Securities and Exchange Commission relating to "Staff Accounting Bulletin No. 121" (Rep. Flood, R-NE)
  • HR 6864, the HUD Accountability Act (Rep. Lawler, R-NY)
  • HR 7280, the HUD Transparency Act (Rep. De La Cruz, R-TX)
  • HR 7156, the Combating Money Laundering in Cyber Crime Act (Rep. Fitzgerald, R-WI)
  • HR 7462, the Wildfire Insurance Coverage Study Act (Ranking Member Waters, D-CA)
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Contact Information

For additional information concerning this Alert, please contact:

Washington Council Ernst & Young