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July 31, 2024
2024-1467

What to expect in Washington (July 31)

The Senate is set to hold a procedural test vote on the House-passed Tax Relief for American Families and Workers Act (H.R. 7024) this week, likely on Thursday (August 1). The bill, crafted by House Ways & Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) and passed by the House on January 31, would expand the Child Tax Credit and the Low-Income Housing Tax Credit (LIHTC); address the TCJA pre-cliffs on IRC Section 174 five-year R&D amortization, 163(j) interest deductibility, and bonus depreciation; and provide disaster relief and tax treaty benefits with Taiwan.

The vote is expected to fail, lacking GOP support to meet the 60-vote filibuster threshold that applies to most legislation, and it is being held right before the August recess when a successful vote would require several more days of consideration. It could, however, put Republicans on record against the bill, including Republican vice-presidential candidate Sen. J.D. Vance (R-OH), who recently stated that Democratic presidential candidate Vice President Kamala Harris is calling for an end to the child tax credit. Some Democratic Senators up for re-election this year, including Sherrod Brown (D-OH), have strongly advocated for the CTC expansion and could cite the vote as a campaign talking point.

In remarks following the regular Tuesday party lunches, Senate Majority Leader Chuck Schumer (D-NY) suggested that the injection of the Child Tax Credit, which the Administration and congressional Democrats have roundly sought to expand, into the presidential race was part of the impetus for holding the vote. "Putting senators on the record is one way progress is made on important issues" … and Democrats want to "put pressure on Republicans to show where they stand on important issues, like the Child Tax Credit, affordable housing, and R&D, particularly on a bill like this which is bipartisan, was drawn up by Democrats and Republicans," Schumer said. "This week, the American people will get a chance to see which senators in reality support tax relief, for parents, for families, for small business, for housing, and then we're going to see who opposes it. Over the past few days, some Republicans have falsely claimed that Democrats somehow oppose the Child Tax Credit. This vote should end that false argument once and for all."

Senate Republican leaders derided the vote as politically motivated, including Finance Committee Ranking Member Mike Crapo (R-ID), whose objections are viewed as causing other Republicans to fall in line against the bill. Others made clear that the top concern is the prospect of cutting a better deal in 2025 if the GOP gains greater control in Congress and, perhaps, the presidency. "If we were lucky enough to run the tables and have the trifecta next year, obviously it's a much better bill," Senate Minority Whip John Thune (R-SD) said in Punchbowl News. "And even if it's not, you can use the things they're asking for now as [a] trade." Some Republicans, including Senators Susan Collins (R-ME), Josh Hawley (R-MO), and Markwayne Mullin (R-OK) have said they may vote for the bill, and Senator Todd Young (R-IN) previously expressed support.

Opportunity Zones — The July 30 Senate Finance Committee held a hearing on Tax Tools for Local Economic Development that focused on Opportunity Zones and the future of development tax credits and bond financing. Chairman Wyden highlighted the New Markets Tax Credit that he said has "helped get thousands of projects off the ground, health care and manufacturing, childcare centers and schools, retail developments and housing, lots of affordable units." The credit expires at the end of 2025 and, "I want to make sure this doesn't get lost, doesn't get lost next year in what is certainly going to be a spirited discussion about the future of the tax code."

Wyden also highlighted the tax exemption for municipal bonds and private activity bonds, saying, "The 2017 Trump tax law diminished the value of these tax-exempt bonds, unfortunately, because it made it harder for state and local governments to reduce their debt." Further, he said, "The fact is, with much of the Trump tax law expiring at the end of next year, there are fresh concerns that Republicans are going to try to go after these key financing tools, again, to pay for the multi-trillion-dollar cost of extending the Trump tax cuts to the very wealthy."

Ranking Member Crapo noted that Senator Tim Scott (R-SC) has introduced legislation to extend and improve the Opportunity Zones program, including by requiring reports so Congress can monitor how investments are working, and that witness Shay Hawkins was a member of Senator Scott's staff in 2017 and "was instrumental in developing the Opportunity Zones program." Senator Crapo said, "Opportunity Zones, the New Markets Tax Credit, the historic tax credit, the tax-exempt bonds, and the low-income housing tax credit all spur local economic development. And we can see tangible results in communities around the country." Hawkins said he wants to "empower the Treasury Department to compare the performance of Opportunity Zones against areas that could have been designated that weren't, and also against the broader economy as a whole across a number of measures."

EVs — Today, July 31 (10 a.m.), the Senate Budget Committee holds a hearing, "Charging Ahead: The Future of Electric Vehicles."

Housing — Senators Elizabeth Warren (D-MA) and Raphael Warnock (D-GA) July 29 reintroduced the American Housing and Economic Mobility Act (S. 4824), a bill referred to the Finance Committee that includes down payment assistance to first-time, first-generation homebuyers, incentives for local governments to eliminate unnecessary land use restrictions that drive up costs, and limits on the role of private equity in the housing market.

Health care — House Ways & Means Committee Ranking Democrat Richard Neal (D-MA) said on social media July 30, "Today we celebrate 59 years of Medicare and Medicaid, two critical lifelines that have provided peace of mind to the millions of Americans who have relied on them. House Democrats will continue to build on our progress and ensure these programs are protected for years to come."

Similarly, Rep. Linda Sánchez (D-CA) said, "59 years ago, President Lyndon B. Johnson signed Medicare and Medicaid into law — transforming health care in America. I will continue working to expand these programs and stand firmly against any attempts by extreme MAGA Republicans to cut these programs."

Presidential race — There have been many press articles on various aspects of the presidential race between former President Trump and Vice President Harris, including speculation on her VP pick and who may populate the cabinet if either candidate wins.

An opinion piece in the July 30 Washington Post, "Why not run a team against Trump?" proposed a cabinet team of "All Stars" that could include:

  • Sen. Mark Kelly of Arizona as Harris' potential defense secretary
  • Gov. Andy Beshear of Kentucky or Gov. Roy Cooper of North Carolina as Attorney General
  • Gov. Josh Shapiro of Pennsylvania as Transportation Secretary
  • Commerce Secretary Gina Raimondo elevated to Secretary of the Treasury
  • Surgeon General Vivek Murthy as Secretary of health and Human Services
  • Transportation Secretary Pete Buttigieg as Secretary of State

A July 30 Axios story, "Behind the Curtain: The battle for Trump power," said a Trump cabinet could include:

  • Sen. Marco Rubio (R-FL), North Dakota Gov. Doug Burgum, or Sen. Bill Hagerty (R-TN) as Secretary of State
  • Sen. Tom Cotton (R-AR), a former Army officer, as Secretary of State or Secretary of Defense
  • Susie Wiles, the campaign's co-manager, or former House Speaker Kevin McCarthy as White House chief of staff
  • Jamie Dimon, JPMorgan Chase CEO, as Treasury Secretary
  • Ric Grenell, former ambassador to Germany and Trump's acting director of national intelligence, as National Security Adviser
  • Linda McMahon, the former WWE executive and head of the Small Business Administration in Trump's first term, as Commerce Secretary, though it "could be a backup spot for Rubio, McCarthy or Sen. Tim Scott of South Carolina"

Data privacy for kids — After more than two years of negotiations on legislation to impose restrictions on social media companies over their risks to children, the Senate on Tuesday (July 30) passed, 91-3, two bipartisan bills (S. 2703) that would boost privacy and safety features for children on such sites. Driven by criticisms that social media companies harm kids, the bills are the most significant congressional action to regulate the tech industry in 25 years. The package combined two separate bills. The Kids Online Safety Act, or KOSA (S. 1409) creates a legal "duty of care" for social media companies to prevent and mitigate harm, and violators would be subject to penalties enforced by the Federal Trade Commission (FTC). The other bill in the package, the Children and Teens' Online Privacy Protection Act (S. 1418) or COPPA 2.0, would update a 1998 law to prohibit online platforms from disseminating kids' personal information without obtaining a verifiable parental consent, effectively ending ads targeted at kids and teens. COPPA would raise the age of children protected to up to 17, up from 12 under current law.

The substitute amendment from Majority Leader Schumer that combined the bills made some changes to the versions approved earlier by the Senate Commerce Committee. The KOSA text on tech companies' duty of care was narrowed to focus on product design features, with the FTC having sole authority to enforce the provisions. The measure also includes a preemption provision that would override state laws on children's online safety. The COPPA text was modified to give the FTC the authority to let educational institutions allow minors and children to access online content without requiring parental consent, and the measure would now permit tech companies to use identifying information solely for internal operations' purposes.

President Biden praised the Senate's action and called on "the House to send this bill to my desk for signature without delay." The House has already departed for the August recess, and it is not certain the chamber will consider the package in September or in a lame-duck session after the election. Advocates for the bills are expected to press House Republicans to take up the package, citing the overwhelming Senate vote, though Bloomberg reported that "both House Republicans and Democrats have expressed skepticism [about the package], saying the measure may stifle free speech, lead to online censorship and inadvertently worsen user privacy protections."

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Washington Council Ernst & Young