New SEC Board Members, Build Back Better BIll, and the Infrastructure Bill
Tax Policy:
November 8: Some Companies Sit Out the Fight Over Democrats’ Tax Increases
Some major U.S. companies are on the sidelines, in part because they support other provisions in the bill to allocate hundreds of billions of dollars to combat climate change. Business lobbyists are pushing to derail about $800 billion in new taxes that come with President Biden’s spending bill, but along with opposition from Democrats, they are facing an added challenge: division within their own ranks.
The largest Washington industry associations including the U.S. Chamber of Commerce oppose Mr. Biden’s roughly $2 trillion tax-and-spend packages. But some major U.S. companies are on the sidelines, in part because they support other provisions in the bill to allocate hundreds of billions of dollars to combat climate change. Companies backing the climate measures include General Motors Co., Cummins Inc. CMI 0.81%, and Carrier Global Corp. along with some Wall Street firms and Silicon Valley companies such as Amazon.com Inc., Google parent Alphabet Inc. GOOG 0.38% and Meta Platforms Inc., as Facebook recently rebranded itself.
In years past, companies typically gave priority to public policy matters that affected their bottom lines, such as opposing tax increases and new regulations. Now, more companies are wading into other issues such as community policing and funding for social services.
Democrats plan to fund some of the new spending by increasing taxes on companies and wealthy individuals.
The opposition to Mr. Biden's package is being led by the Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable, which is composed of more than 200 chief executives representing a range of American companies. Neil Bradley, the chamber's executive vice president and chief policy officer, acknowledged that some U.S. companies are sitting out of this fight.
November 5: Billionaire tax proposal would raise $557B: JCT
A proposal from Sen. Ron Wyden to tax billionaires' investment gains annually would raise $557 billion over 10 years, according to preliminary estimates from the Joint Committee on Taxation released by the Oregon Democrat's office Friday.
Wyden said in a statement that the finding "Makes crystal clear the extent to which the tax code is simply not equipped to tax billionaires fairly, or ensure they pay any taxes at all." Wyden released a proposal late last month to change how the wealthiest taxpayers' investment gains are taxed.
His proposal would apply to about 700 taxpayers who have assets of more than $1 billion or an income of more than $100 million for three consecutive years. Under Wyden's proposal, eligible taxpayers would pay taxes annually on gains of tradable assets such as stock.
JCT estimates that much of the revenue raised under Wyden's proposal would come in the earlier years of the plan, as billionaires transition to the new system. Wyden had offered the proposal as a way to help pay for Democrats' social spending bill, but the idea was not included in the White House's framework.
SEC News:
November 8: SEC Names New Board Members to Audit Watchdog
The Securities and Exchange Commission moved to complete its overhaul of the federal audit watchdog Monday, naming four new members to the Public Company Accounting Oversight Board.
The SEC appointed Erica Y. Williams, an attorney with Kirkland & Ellis LLP, to serve as the PCAOB's chair.
Ms. Williams, Ms. Ho, and Mr. Thompson will be the first people of color to serve on the five-person board since its founding, the SEC said.
SEC Chairman Gary Gensler's overhaul of the PCAOB sparked accusations earlier this year from Republicans that he was moving to politicize the body.
Elizabeth Warren and Bernie Sanders urged the SEC to overhaul the board.
The SEC's two Republican commissioners, Hester Peirce and Elad Roisman said Monday that they "Remain concerned about the commission's actions in June but nevertheless support this new board."
Ms. Stein served as a Democratic SEC commissioner from 2013 to 2019.
Build Back Better Act:
November 8: A revised framework for the Build Back Better bill
Democrats in Congress continue their efforts to find sufficient support among their members to enact the Build Back Better legislation under budget reconciliation. With narrow majorities in both the House and Senate, passage requires the support of every Democratic member of the Senate and almost every Democratic member of the House.
The Build Back Better bill is being referred to as the human infrastructure bill, and the House has only just voted on the Senate-passed physical infrastructure bill (which does include some tax provisions). The negotiations that led to that had further trimmed the price tag of the Build Back Better bill from around $3.5 trillion in the Ways and Means version of the bill to around $1.75 trillion (with another possible $100 billion for immigration) in the most recent proposed framework for the bill. Even with this latest framework, changes continue to be proposed, and some Democrats in both the House and Senate continue to raise concerns about the framework until they can get more assurances about the fiscal effects of some of the provisions.
Individual tax provisions 1040 forms the original proposals to raise the top individual income tax rate and the top capital gain tax rate for incomes in excess of $400,000 have been eliminated.
Estate tax provisions Many of the proposed estate tax changes included in the Ways and Means Committee version have been dropped. Business tax provisions similar to the individual tax rate provisions, proposed changes to the corporate tax rate did not survive into the latest framework. In their place is a proposed corporate minimum tax of 15 percent on corporations' adjusted financial statement income, but only if the average annual adjusted financial statement income was in excess of $1 billion for the three prior tax years.
Some modifications have been made to the deduction for FDII and GILTI, BEAT, the Foreign Tax Credit provisions, the controlled foreign corporation provisions, portfolio interest, and notional principal contract income. These include a variety of new tax provisions to promote green energy as well as extensions and modifications to many of the current green energy provisions in the Tax Code. There continue to be efforts to include a provision with respect to modifying the $10,000 limit on the state and local tax deduction.
Infrastructure Bill:
November 8: Infrastructure bill includes some tax provisions
The bipartisan infrastructure bill that the House passed over the weekend and sent to President Biden's desk includes some tax-related provisions, including an early expiration of the Employee Retention Tax Credit and new rules for reporting on cryptocurrency transactions. The $1.2 trillion bill, formally known as the Infrastructure Investment and Jobs Act, was approved by the Senate in August and includes funding for improvements to the nation's roads, bridges, public transit systems, railways, power grids, airports, railways, broadband internet, and drinking water.
Most of the tax provisions are included in the Democrats' companion bill, the Build Back Better Act, but lawmakers are still negotiating that bill, although the Biden administration hopes to bring the $1.75 trillion bill up for a vote later this week in the House. There are several tax provisions in the bipartisan infrastructure bill, including one that ends the Employee Retention Credit for wages paid after Sept. 30, 2021, rather than the end of the year, as a way to help pay for the cost of the bill.
Another tax provision in the bill would require cryptocurrency "Brokers" to provide information reporting on transactions over $10,000.
"One of the most discussed tax provisions of the IIJA with concerns being raised about the breadth of the transactions and entities that would be covered by these rules on digital assets, including concerns expressed by the Chairman of the Senate Finance Committee as the bill was nearing a Senate vote," Zollars wrote.
Another provision adds a special exclusion from income for qualified contributions to a company's capital for some regulated public water and sewage disposal utilities, including a "Contribution in aid of construction." The bill also extends the interest rate stabilization table for the minimum funding requirements for single-employer defined benefit plans for another five years, until the end of 2030.
November 6: Biden Celebrates Infrastructure Win, Even if Harder Victory Is Ahead
President Biden celebrated the passage of the $1 trillion infrastructure bill on Saturday, declaring - just days after an electoral drubbing for his party - that he had made good on two key promises of his campaign: reviving the economy and getting the nation vaccinated. In his final efforts to assemble votes for the infrastructure bill, he had asked skeptical members of his party on Friday to trust that he had cut quiet deals that would assure passage of some form of the social policy bill the week of Nov. 15.
Asked on Saturday whether he had gotten assurances from moderates in the party that they would also vote for the sprawling social policy bill - with its funding for universal preschool for 3- and 4-year-olds, paid family leave, child-care tax credits, and extensive climate change programs - Mr. Biden refused to give details.
Before the House will take that up moderates are demanding an independent assessment of the bill's true cost. The bill's focus on technology does not give it the same political appeal, for Mr. Biden or members of the House, that rebuilding bridges and roads holds.
November 6: In Infrastructure Votes, 19 Members Broke With Their Party
The Squad has grown from four to six members since 2019, when Ms. Ocasio-Cortez, the highest-profile progressive on Capitol Hill, entered Congress. Its members were among the leading supporters of the strategy to use the infrastructure bill as leverage for passing Mr. Biden's broader agenda: a $1.85 trillion social safety net and climate change bill.
While most progressives then agreed to vote for the bill, members of the Squad did not view the centrists' assurances as good enough and chose to stick with their position of demanding both bills pass at the same time.
Ms. Bush said that passing the infrastructure bill alone "Jeopardized our leverage" on the broader bill - which includes monthly payments to families with children, universal prekindergarten, health care subsidies and a four-week paid family and medical leave program - and endangered progressives' ability to "Improve the livelihood of our health care workers, our children, our caregivers, our seniors, and the future of our environment."
Still, Ms. Pressley cast her vote against the infrastructure bill after it had enough votes to pass.
One of them, Representative Tom Suozzi of New York, equated the opposition of left-leaning fellow New Yorkers like Ms. Ocasio-Cortez and Mr. Bowman with far-right Republicans like Lee Zeldin of New York for voting against a bill that would funnel billions of dollars into the state for subways, sewers and broadband.
Eight Republicans who voted in favor of the infrastructure bill - Don Bacon of Nebraska, Brian Fitzpatrick of Pennsylvania, Andrew Garbarino of New York, Anthony Gonzalez of Ohio, John Katko of New York, Tom Reed of New York, Christopher H. Smith of New Jersey and Fred Upton of Michigan - were part of a bipartisan group of lawmakers who helped negotiate the infrastructure bill this summer, consulting with centrists in the Senate.
Mr. Garbarino, who represents part of Long Island, cited the benefits for New York - including $24.9 billion for highways, bridges, and transit; $15 billion to replace lead service lines for drinking water; and $470 million for New York's Kennedy, La Guardia, MacArthur and Republic airports - among his reasons for embracing the bill.
November 6: This Is Where the States Want Billions in Infrastructure Funding Spent
With nearly $600 billion in new federal aid to improve highways, bridges, dams, public transit, rail, ports, airports, water quality, and broadband over 10 years, the legislation is a once-in-a-generation chance to overhaul the nation's public works system. Another $39 billion will modernize public transit, and $11 billion more will be set aside for transportation safety, including programs to reduce fatalities among pedestrians and cyclists. Some $25 billion would go to airports and $17 billion to ports.
The proposal would see tens of billions of dollars in new federal spending going to roads, bridges, and transportation programs. A new $2 billion grant program is expected to expand transportation projects in rural areas.
In the Northeast, $7.5 billion in funding for zero- and low-emission buses and ferries could help Connecticut and New Jersey to electrify municipal bus fleets. A pot of more than $8 billion for Western water projects includes billions for water recycling systems and groundwater storage, critical to California's conservation efforts.
Spending Bill:
November 9: CBO indicates lawmakers will have to wait for full score on social spending
An official from the Congressional Budget Office signaled Tuesday that lawmakers would have to wait for a full score on House Democrats' social spending bill, noting that the estimates on parts of the legislation may come out piecemeal.
CBO Director Phillip Swagel said that the office will start releasing estimates of portions of the social spending bill this week and that a cost estimate of the full bill will come out "As soon as practicable."
"The analysis of the bill's many provisions is complicated, and CBO will provide a cost estimate for the entire bill as soon as practicable," Swagel said in a blog post on CBO's website. The comments come as a small group of moderate House Democrats has sought information about the cost of the bill from CBO prior to voting on the package, which contains a slew of the party's priorities. Moderates and progressives struck a deal on Friday that allowed the House to take a procedural vote on the spending bill as well as to pass a Senate-approved bipartisan infrastructure bill.
As part of the deal, five House moderates released a statement saying that they are committed to voting for the spending bill "As expeditiously as we receive fiscal information from the Congressional Budget Office - but in no event later than the week of November 15th.". Swagel added that CBO would give advance notice when it determines the date when it will release a cost estimate for the full bill.
November 7: Spending bill faces Senate scramble
President Biden’s climate and social spending bill is facing the threat of changes in the Senate as Democrats navigate a slim majority and tricky budget rules.
"There's going to have to be a lot of work done," said Sen. Jon Tester (D-Mont.), asked about the path on the spending bill in the Senate. Any changes made by the Senate will force the bill to be passed again by the House, even as Congress faces a December legislative pile up.
Sen. Kirsten Gillibrand (D-N.Y.) is vowing to keep negotiating with Manchin up until the Senate takes a final vote on the spending bill.
While the immigration fight has put the spotlight on the Senate referee, the entire bill will need to go through scrubs to make sure it complies with the rules for reconciliation, the arcane budget process Democrats are using to bypass a GOP filibuster in the Senate.
"So, first, there is the scrub. The privilege scrub. You can't do that until the whole bill is ready in the House. They have to pass the whole bill. That takes about a week because it's a 2,000-page bill. While we already have some text of I think seven committees, the vast majority of the legislation is in committees that haven't gotten it ready yet," said Senate Majority Leader.
Durbin, Schumer's No. 2, asked about a Senate timeline for the bill, acknowledged that it was partially dependent on the "Byrd bath," when the bill will be combed through to make sure it complies with the budget rules, "And whether we have to go back and rewrite sections."
November 6: House Passes $1 Trillion Infrastructure Bill, Putting Social Policy Bill on Hold
House Democrats passed a $1 trillion bill to address the nation's aging infrastructure, improve climate resilience and expand high-speed internet access, but put a larger social policy and climate bill on hold. An even larger social safety net and climate change bill was back on hold, with a half-dozen moderate-to-conservative Democrats withholding their votes until a nonpartisan analysis could tally its price tag.
"Tonight, we took a monumental step forward as a nation," Mr. Biden said in a statement after the vote, lauding both the infrastructure and the social policy bills.
Progressive Democrats had revolted anew on Friday, with many insisting that they could not back the measure without a vote on the social welfare bill. The delay in voting on the social policy bill came despite public and private appeals from Mr. Biden.
Republicans, united in opposition to the social policy bill and gleeful over the chaos, forced additional procedural votes to further derail the process.
Eventually, top Democrats pulled back on their plans to march forward on the social policy bill and instead signed onto a plan proposed by leaders of the Congressional Black Caucus to shelve it and move to a vote on the infrastructure plan.
November 4/5: House Democrats modify SALT provision in spending bill
House Democrats late Thursday modified the provision in their social spending package that would raise the cap on the state and local tax deduction.
The new version of the provision would raise the cap from $10,000 to $80,000, and have the limit in place at that level through 2030. The cap would then return to $10,000 for 2031. A previous version of the bill would have set the cap at $72,500 through 2031.
Reps. Josh Gottheimer (D-N.J.), Thomas Suozzi (D-N.Y.), and Mikie Sherrill (D-N.J.), three lawmakers who pushed for SALT deduction cap changes to be included in the spending bill, praised the modified provision.
The $10,000 cap on the SALT deduction was created by Republicans' 2017 tax law and is set to expire after 2025. Democrats from high-tax states such as New York and New Jersey have been pushing to undo the cap, arguing that the limit hurts their states and residents.
The issue is challenging for Democrats because a full repeal of the cap would largely benefit high-income households. Sens. Bernie Sanders (I-Vt.) and Bob Menendez (D-N.J.) have criticized House Democrats' approach on SALT and have proposed an alternative way to make changes to the cap. The two senators are proposing leaving the cap at $10,000 but exempting taxpayers with incomes under a level between $400,000 and $550,000.
Other Congressional News:
November 5: Senators introduce bipartisan bill to limit mergers by tech giants
A bipartisan bill that aims to limit tech giants from making acquisitions that harm competition or reduce consumer choice was introduced in the Senate Friday.
Sens. Amy Klobuchar (D-Minn.) and Tom Cotton’s (R-Ark.)'s proposal is a companion bill to one that advanced out of the House Judiciary Committee with bipartisan support in June and is the latest that Klobuchar, the chair of the Senate Judiciary antitrust subcommittee, has introduced with GOP support that targets the market power of tech giants.
The bill, known as the Platform Competition and Opportunities Act, would give antitrust enforcers stronger authority to stop acquisitions by dominant platforms that primarily serve to kill competitive threats.
The proposal comes as regulatory agencies are taking on the market power of tech giants. The Platform Competition and Opportunities Act is just one of a handful of proposals the House Judiciary advanced. The bill would block tech giants from prioritizing their own products over their rivals. The proposal shares a name with one of the bills the House Judiciary advanced.
For Fun:
November 8: Heinz Makes Ketchup From Tomatoes Grown In Mars-like Conditions
Martian colonists can rest assured - there will be ketchup on the Red Planet. The Heinz Tomato Ketchup Marz Edition, made from tomatoes grown in a harsh Mars-like environment, was unveiled on Monday. "Wherever we end up, Heinz Tomato Ketchup will still be enjoyed for generations to come," Cristina Kenz, chief growth officer for Kraft Heinz International Zone, said in the news release.
To grow these tomatoes, Heinz partnered with a 14-person astrobiology team over nine months at the Aldrin Space Institute at Florida Tech. The harvested tomatoes had the "Exacting qualities" to pass the company's quality and taste standards. "Achieving a crop that is of a quality to become Heinz Tomato Ketchup was the dream result and we achieved it. And working with the Tomato Masters at Heinz has allowed us to see what the possibilities are for long-term food production beyond Earth."
Bottles of Heinz Tomato Ketchup Marz Edition are not available for purchase, but a batch of this ketchup was delivered to Heinz headquarters.