PSW Weekly Update - 11/1

Legislative Update

Senate. The Senate will continue to consider nominations this week and will be in recess next week.

House. The House will vote on two dozen non-controversial bills under suspension of the rules as well as the Age Discrimination in Employment Act. Next week, prior to Veterans’ Day, the House will hold committee hearings but will not be in session for floor votes. House leaders are still holding out the possibility of floor votes this week on the reconciliation bill and the bipartisan infrastructure bill.

Reconciliation. There’s an old children’s game, where the kids yell, “hotter,” when you’re close to accomplishing your objective, and “colder,” when you’re moving away from it. As Democrats try to put together the details of the Build Back Better reconciliation bill, there have been a series of alternating “hotter” and “colder” calls.

In the latest developments, House Speaker Nancy Pelosi indicated on Saturday that everything could be nailed down on the reconciliation bill in time for House votes Tuesday on both reconciliation and the bipartisan infrastructure bill. That timetable didn’t hold for more than 24 hours, but Democrats were still optimistic about votes this week until Monday afternoon, when Senator Joe Manchin (D-W.Va.) tossed cold water on the Speaker’s plans. Manchin said he wanted more time to examine the reconciliation proposal, expressed concerns with the bill’s “shell games and budget gimmicks,” and criticized the House for holding the infrastructure bill “hostage” until reconciliation details are agreed upon.

Despite Manchin’s statement, House Rules Chairman Jim McGovern (D-Mass.) said Monday evening that his committee could meet as soon as Wednesday to clear the reconciliation bill for a floor vote this week. If so, the legislation is likely to closely reflect the provisions that were included in the 1,684 pages of text and the 137-page explanation that were released on Thursday, Oct. 28.

What’s Out: Increases in the corporate, individual, capital gains, and dividends rates; a billionaires’ tax; the Clean Electricity Performance Program; changes to estate and gift tax rules, carried interest, and the Section 199A deduction; subsidies for taxable infrastructure bonds; automatic enrollment in IRAs or 401(k)-type plans and changes intended to curb “mega-IRAs.” The latest version also does not include language to eliminate stepped-up basis or a new requirement for banks to report to the IRS on inflows and outflows from individual bank accounts.

What’s In: A 15% minimum tax on companies with adjusted financial statement (book) income over $1 billion for taxable years beginning after Dec. 31, 2022; changes to the Global Intangible Low-Taxed Income (GILTI) regime, including a 15% GILTI rate imposed on a country-by-country basis, beginning in January 2023; a 1% excise tax on stock buybacks; a 5% surtax on incomes over $10 million plus an additional 3% levy on incomes over $25 million; clean energy tax incentives, including new tax breaks for energy storage, nuclear, and hydrogen; incentives to purchase electric vehicles; a four-year delay, until 2026, in the requirement that companies amortize their R&D expenses over five years instead of deducting them in the year they are incurred; a one-year extension of the enhanced child tax credit; extension and expansion of subsidies for Affordable Care Act health insurance; a new Medicare benefit for hearing services beginning in January 2024.

Still Undecided: Prescription drug pricing; changes to the $10,000 limitation on the deduction for state and local taxes (SALT); paid family and medical leave; immigration.

FY 2022 Appropriations. The “Big 4” appropriators will meet this week to discuss top-line numbers for defense and non-defense discretionary spending, but no agreement is expected at this time. While the meeting is viewed as a positive first step, it’s likely that another continuing resolution will be needed to fund government programs when the current CR expires on Dec. 3. Negotiating on the defense/non-defense numbers will be House and Senate Appropriations Chairs Rosa DeLauro (D-Conn.) and Patrick Leahy (D-Vt.) and Ranking Members Kay Granger (R-Tex.) and Richard Shelby (R-Ala.).

Committee Action of Note:

• Tuesday, November 2:
  • House Financial Services Committee Task Force on Financial Technology Hearing: Buy Now, Pay More Later? Investigating Risks and Benefits of BNPL and Other Emerging Fintech Cash Flow Products.
  • Senate Judiciary Committee Hearing to examine cleaning up online marketplaces, focusing on protecting against stolen, counterfeit, and unsafe goods.
  • Senate Agriculture, Nutrition, and Forestry Subcommittee on Nutrition, Agricultural Research, and Specialty Crops Hearing to examine the state of nutrition in America 2021.
  • Senate Banking, Housing, and Urban Affairs Committee Hearing to examine the Libor transition, focusing on protecting consumers and investors.
  • Senate Energy and Natural Resources Business Meeting to consider various nominations including Willie L. Phillips, Jr. to be a Member of the Federal Energy Regulatory Commission.

• Wednesday, November 3:
  • Senate Banking, Housing, and Urban Affairs Committee Business Meeting to consider the nominations of Judith Pryor to be First Vice President of the Export-Import Bank, Owen E. Herrnstadt to be a Member of the Board of Directors of the Export-Import Bank, and Matthew S. Axelrod to be an Assistant Secretary of Commerce.
  • House Small Business Committee Hearing: Entrepreneurship in the New Economy.
  • House Agriculture Committee Hearing: The Immediate Challenge to our Nation’s Food Supply Chain.
  • House Select Committee on Economic Disparity and Fairness in Growth Hearing: Our Changing Economy: The Economic Effects of Technological Innovation, Automation and the Future of Work.
  • House Financial Services Subcommittee on Consumer Protection and Financial Institutions Hearing: Cyber Threats, Consumer Data, and the Financial System.
  • Senate Environment and Public Works Committee Hearing to examine programs at the Economic Development Administration.
  • Senate Commerce, Science, and Transportation Committee Hearing to examine implementation of aviation safety reform.

• Thursday, November 4:
  • House Transportation and Infrastructure Committee: The Evolving Cybersecurity Landscape: Industry Perspectives on Securing the Nation's Infrastructure.
  • House Small Business Subcommittee on Innovation and Workforce Development Hearing: The Community College Pipeline to Small Business.
  • House Judiciary Committee Hearing: The Texas Abortion Ban and its Devastating Impact on Communities and Families.
  • Senate Health, Education, Labor, and Pensions Committee Hearing to examine the road ahead for the COVID-19 response, focusing on next steps.
  • House Education and Labor Subcommittee on Health, Employment, Labor, and Pensions Hearing: Closing the Courthouse Doors: The Injustice of Forced Arbitration Agreements.