PSW Weekly Round-Up - 6/28

Legislative Update

Senate. The Senate is not in session for the next two weeks, returning Monday, July 12.

House. The House will recess after votes on Thursday and will reconvene the week of July 19, with July 12 designated as a committee work week. On the suspension calendar this week are two bills to authorize new investments in R&D by the National Science Foundation and the Department of Energy. The Senate has taken a much broader approach in its U.S. Innovation and Competition Act that was approved June 8. Also on the House agenda are votes on a measure to establish a select committee to investigate the Jan. 6 attack on the Capitol and the INVEST Act infrastructure bill. The INVEST Act will combine four bills and authorize spending for highways, transit, and rail programs as well as water-related infrastructure.

Bipartisan Deal. Many of the provisions in the INVEST Act are expected to be part of the discussion when lawmakers begin to craft legislation to implement last week’s infrastructure deal between the White House and a bipartisan group of Senators.

According to a White House fact sheet, the Bipartisan Infrastructure Framework provides for $579 billion over five years in new spending. When added to $394 billion in baseline spending, the total for five years would be $973 billion. Over eight years, the total is $1.2 trillion, with baseline spending of $630 billion. To offset the new spending, the framework includes $584 billion over five years in revenue proposals. Despite bipartisan support, it remains to be seen whether the deal will garner the votes of 60 Senators.

Getting BTU’d. When lawmakers return from the July 4^th recess, both chambers are planning to vote on yet-to-be drafted FY 2022 budget resolutions with reconciliation instructions for various Administration proposals that were not included in the bipartisan agreement. While Senate Budget Chairman Bernie Sanders (I-Vt.) has floated the idea of a $6 trillion reconciliation proposal, that price tag is too large for some Democrats.

Asked Sunday if he would support a $6 trillion measure, Senator Joe Manchin (D-W.Va.) said, “I want to make sure we pay for it….So if that’s $1 trillion or $1.5 trillion or $2 trillion – whatever that comes out to over a 10-year period – that’s what I would be voting for.” The final revenue number is sure to fall short of Biden’s proposals, with Manchin adding that he thought 25%, not the President’s proposed 28%, would be a “fair and balanced” corporate tax rate and indicating he could support a maximum capital gains rate of 28%, not Biden’s 39.6%.

If Democrats are able to muster simple majorities for identical versions of the budget resolution in both houses (and Senate consideration will include a vote-a-rama on amendments), it will then be up to various authorizing committees to draft reconciliation legislation encompassing spending and revenue provisions.

While Democrats have a slightly easier path to passage in the House, with a 220-211 margin compared to the 50-50 Senate, House leaders have made it clear they will not allow their rank-and-file members “to be BTU’d.” The unusual term entered the political lexicon after Democratic House members in 1993 passed President Clinton’s deficit reduction package that included an energy tax based on a fuel’s heat content as measured in British thermal units (BTUs). Senate Democrats, however, dumped the BTU tax and replaced it with a 4.3-cent-per-gallon increase in the gasoline tax (the last time the federal gas tax was raised).

With Democrats controlling both chambers, President Clinton was successful in seeing his overall package (which was a reconciliation bill) enacted in August 1993. Even though the BTU tax was not part of the final version, Republicans used the issue against House Democrats in the 1994 midterm elections, in which Democrats ended up losing control of the House for the first time since 1954, with a net loss of 54 seats.

Political analysts note that there were other factors that entered into the massive seat loss, but ever since then, House Democrats have been wary of taking a politically risky vote and then being BTU’d due to a lack of support in the Senate. For more details on the 1993 Congressional action and 1994 electoral fallout, see the attached summary.

Appropriations. House appropriations panels are continuing to mark up FY 2022 spending bills. Today the committee released what are known as the 302(b) allocations, which provide the funding levels for each of the 12 bills.

Budget Projections. On Thursday, July 1, at 2 p.m., the Congressional Budget Office will release its latest 10-year budget and economic projections.

Committee Action of Note:

• Monday, June 28:
  • House Appropriations Subcommittee on Interior, Environment, and Related Agencies Subcommittee markup of FY 2022 Appropriations Bill.

• Tuesday, June 29:
  • House Financial Services Committee Hearing: A Biased, Broken System: Examining Proposals to Overhaul Credit Reporting to Achieve Equity.
  • House Energy and Commerce Subcommittee on Energy Hearing: The CLEAN Future Act and Electric Transmission: Delivering Clean Power to the People.
  • House Armed Services Committee Hearing: The Fiscal Year 2022 National Defense Authorization Budget Request for the Department of the Army.
  • House Financial Services Subcommittee on Diversity and Inclusion Hearing: The Legacy of George Floyd: An Examination of Financial Services Industry Commitments to Economic and Racial Justice.

• Wednesday, June 30:
  • House Agriculture Subcommittee on Biotechnology, Horticulture, and Research Hearing: Supply Chain Recovery and Resiliency: Small Producers and Local Agricultural Markets.
  • House Natural Resources Subcommittee on Oversight and Investigations Hearing: Toxic Coal Ash: Adverse Health Effects from the Puerto Rico Plant and Options for Plant Closure.
  • House Financial Services Subcommittee on Oversight and Investigations Hearing: America on “FIRE”: Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?
  • House Appropriations Full Committee Markup of the FY 2022 Ag-FDA and MilCon-VA Appropriations Bills.
  • House Select Committee on the Climate Crisis Hearing: Transportation Investments for Solving the Climate Crisis.
  • House Financial Services Subcommittee on Consumer Protection and Financial Institutions Hearing: Addressing Climate as a Systemic Risk: The Need to Build Resilience within Our Banking and Financial System.