The House was out last week for the Independence Day recess and the Senate has been gone for the past two weeks. Now, both are back for the busy pre-August stretch of legislating amid President Biden's more emphatic statements of his political positions since the first presidential debate — and reassessment of the race from some Democrats in Congress - and significant policy uncertainty wrought by the Supreme Court's overturning of the 40-year Chevron case precedent that generally required federal courts to defer to agency interpretations of ambiguous statutory provisions.

There are only three workweeks for Congress prior to the August recess, with both chambers out the week of July 15 for the Republican National Convention in Milwaukee, WI. The Senate is back at 3 p.m. today (Monday, July 8) with a vote at 5:30 p.m. on a judicial nomination. The House is also back in session today, with suspension votes on bills under the jurisdiction of the Natural Resources Committee. On Tuesday there are planned votes on bills addressing regulatory standards for consumer appliances. On Wednesday there is a planned vote on the Legislative Branch Appropriations Act. The NATO summit is happening in Washington, DC this week.

Hearings — On Tuesday, July 9 (10 a.m.):

• Treasury Secretary Janet Yellen is set to appear before the House Financial Services Committee for The Annual Testimony on the State of the International Financial System
• the Senate Finance Committee is holding a hearing on Examining the State of Childcare: How Federal Policy Solutions Can Support Families, Close Existing Gaps, and Strengthen Economic Growth
• the Senate Budget Committee is holding a hearing on Examining CBO's Updated 2024—2034 Budget and Economic Outlook with CBO Director Phillip Swagel
• the Senate Banking Committee is holding a hearing on The Semiannual Monetary Policy Report to the Congress with Federal Reserve Chair Jerome Powell

On Wednesday, July 10, the Finance Committee is holding a hearing to consider the nominations of Jeffrey Samuel Arbeit (currently Legislation Counsel with the staff of the Joint Committee on Taxation), Benjamin A. Guider III, and Cathy Fung to be judges of the United States Tax Court. This is the second tranche of three Tax Court nominations, with the first group of nominations reported out favorably by the Finance Committee June 13 but not yet brought to votes in the Senate.

Chairman Powell is before the House Financial Services Committee on Wednesday, July 10 (10 a.m.).

On Friday, July 12, the Ways & Means Committee is holding a Field Hearing on Access to Health Care in America: Unleashing Medical Innovation and Economic Prosperity in Salt Lake City, UT.

Tax — The House Ways & Means Committee has scheduled a July 9 markup to consider legislation related to campus protests (H.R. 8913, H.R. 8914), 529 education plans (H.R. 8915), and Rep. Carol Miller's (R-WV) May 16 Congressional Review Act (CRA) Resolution (H. J. Res. 148) that disapproves of Treasury's May 3 Clean Vehicle Credit rulemaking (TD 9995).

The Committee has dedicated a Webpage to the Republican Tax Teams announced in April, which are expected to hold public-facing meetings across the country and deliver recommendations.

Press reports have suggested a Senate vote is possible during the pre-August work period on the House-passed Tax Relief for American Families and Workers Act (H.R. 7024) that would expand the Child Tax Credit and the Low-Income Housing Tax Credit (LIHTC); address the TCJA pre-cliffs on Section 174 5-year R&D amortization, 163(j) interest deductibility, and bonus depreciation; and provide tax treaty benefits with Taiwan. Punchbowl News reported July 5, on the tax bill and an also-pending rail safety bill, "The expectation is that both would fail," but give Democrats up for re-election this year like Senator Sherrod Brown (D-OH) campaign material. "While the tax bill passed the House earlier this year with broad GOP support, nearly every Senate Republican opposes it, as do a handful of Democrats," the report said.

Government funding — Meanwhile, the Senate Appropriations Committee plans to begin consideration of FY2025 spending bills this week. On Thursday, July 11, the Committee will hold a markup of the MilCon-VA, Agriculture-FDA, and Legislative Branch Appropriations Acts, and Fiscal Year 2025 Subcommittee Allocations

Politico reported of the Senate effort July 3, "Like last year, Senate Democrats and Republicans have not reached an agreement on overall funding levels for 12 appropriations bills, and the numbers will likely pass the committee along party lines. The spending bills that flow from those totals, however, are expected to pass the committee with bipartisan support." Last year, the Senate Appropriations Committee, under Chairman Patty Murray (D-WA) and Ranking Member Susan Collins (R-ME), approved the entire slate of spending bills for the first time in five years.

The Republican-authored appropriations bills in the House include spending cuts and policy riders that set up a clash with the Democratic-controlled Senate, and a compromise agreement will be necessary. In addition to the Legislative Branch vote this week, of the dozen annual appropriations bills the House has passed Military Construction, Veterans Affairs, and Related Agencies; Defense; Homeland Security; and State, Foreign Operations, and Related Programs. A government funding deadline looms on September 30, but current funding may be extended via a continuing resolution until after the elections.

A June 27 Washington Post story cited House Appropriations Committee Chairman Tom Cole (R-OK) as saying he hoped a final government funding package could come together between November and the start of the new year. The legislation draws a line that Republicans hope to hold in larger spending negotiations, the story said. "These aren't the final products," Cole said. "These are negotiating positions."

SCOTUS — The Supreme Court's June 28 6-3 ruling overturning the 40-year Chevron case precedent, in Loper Bright Enterprises v. Raimondo, held that federal courts must "exercise their independent judgment in deciding whether an agency has acted within its statutory authority … "

"In abandoning the doctrine called Chevron deference, the justices have given parties unhappy with agency decisions — typically businesses and property owners — more opportunities to overturn regulations by persuading federal judges that officials exceeded their authority … " said a report in the June 29 Wall Street Journal. "Although neutral on its face, as a practical matter the decision offers another tool to business interests looking for conservative-leaning federal courts to block environmental, consumer or workplace safety regulations they consider too costly."

A June 28 Politico story that focused on the tax implications said the ruling "promises to curb the IRS's regulatory authority and spur increased litigation of controversial tax rules crafted by the agency. At the same time, taxpayers shouldn't expect an upheaval of decades of IRS guidance … " The story explained: "Under the Chevron doctrine, taxpayers can challenge regulations by arguing, first, that a statute is written clearly in the taxpayer's favor. If the statute is ambiguous, a taxpayer can then try to argue that the IRS's interpretation is not reasonable, but rather 'arbitrary and capricious,' and should not receive Chevron deference. But now that that deference is out the door, there's some disagreement about what exactly will replace it."

A July 1 Bloomberg Daily Tax Report (DTR) said, "The ruling is expected to prompt a stream of litigation in areas — ranging from syndicated conservation easements to health insurance subsidies — where the IRS and Treasury Department stretched their regulatory authority and already are facing court challenges. Other contentious issues such as President Joe Biden's tax-and-climate law or the agency's own electronic filing system also could be exposed to new litigation … "

A story in the July 5 Washington Post that focused on health agency implications of the ruling said litigation is expected addressing issues like the regulation of drugs and the administration of government health insurance programs. "Companies and opponents of controversial drugs may also target the FDA's decisions on whether to approve new drugs, challenging actions that rely on interpreting ambiguous federal law … " the report said. "The Supreme Court's Chevron ruling could also invite more challenges to Medicare and Medicaid programs. Officials often use novel interpretations of the law to set new, at times divisive, policy, such as defining terms for Medicare drug negotiations or crafting changes to the Medicaid drug rebate program … "

Global tax — While an end-of-June target for a Multilateral Convention (MLC) on Pillar One slipped, "key officials say progress is still being made," according to a July 3 Morning Tax report. "Still, it remains highly unlikely that the U.S. would ratify Pillar One changes anytime soon, even if there is a breakthrough — given, among other things, deep opposition to the proposal from congressional Republicans."

A July 2 Bloomberg DTR story cited Manal Corwin, Director, OECD Centre for Tax Policy and Administration (CTPA), as saying "Countries are still at the table, precisely because we are making progress. As each of these milestones arrives, whether we successfully conclude by a given date or not, we get closer to the finish line." She further said, "Notwithstanding that challenge, consensus indeed has been achieved on the vast majority of critical issues."

An EY Alert on the USCIB conference, "OECD and country officials discuss BEPS 2.0 Pillars One and Two and other tax work," is available here.