Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
The veto session had been canceled for today. Both the House and Senate will return Tuesday, October 26th for an undoubtedly busier week. Read on for all of today’s roundup highlights including vaccine approvals for children and boosters for others. Talks progress on the hill, maps are challenged, and will masks soon no longer be mandated?
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Federal court throws out Democrats’ initial legislative district remap, will consider revisions
Gov. JB Pritzker and Democrats who control the Illinois General Assembly suffered a legal setback Tuesday when a federal court threw out an initial new state legislative district map passed in May that favored Democrats. A three-judge panel of U.S. District Court judges from the Chicago-based Northern District of Illinois said the map approved in the spring with no Republican votes violated the “equal protection” clause of the 14th Amendment to the U.S. Constitution.
The court ordered those challenging the map — Republican leaders in the General Assembly and the Mexican American Legal Defense and Educational Fund — to submit proposed changes in November. Democrats will be allowed to respond to the proposals before the court weighs in on the legality of an amended map approved by the legislature in August and signed by Pritzker in September. The next court hearing is scheduled Nov. 5. The court said the approved map can’t be used for elections in 2022 and beyond until the dispute is resolved.
Republican leaders Jim Durkin in the House and Dan McConchie in the Senate issued a joint statement that said: “Today’s ruling is a victory for Illinois citizens, advocacy groups and communities of interest. “During this process, the Republican caucuses consistently demanded transparency and fairness in mapmaking, which were rejected by the Democrats and Gov. Pritzker. The court’s ruling validates all the concerns that were raised during the Democrats’ unconstitutional attempt to gerrymander Illinois.”
Senate President Don Harmon, D-Oak Park, released a statement that said the updated boundary map signed into law in September still stands. “I am gratified that the court recognized that the General Assembly, in unique and unprecedented circumstances, did what we could do in May to fulfill our constitutional obligations, and did what we should do in September to ensure our maps are constitutional,” Harmon said. But Republicans say they are confident that the federal court, after Tuesday’s ruling, will end up ordering changes in the September map.
The ruling came a day before committees in the House and Senate were scheduled to hold hearings in Springfield on proposals for new district boundaries for Illinois’ 17 U.S. House districts. Democrats have drawn a new map for congressional district boundaries based on 2020 Census data.
The federal judicial panel criticized Democratic lawmakers’ use of American Community Survey population estimates from the U.S. Census Bureau in drawing the initial map passed in the spring. The fact that Democratic lawmakers later tweaked the map based on 2020 data in August and Pritzker signed that amended map into law the following month didn’t negate the legal issues that led to Tuesday’s ruling, the judges said.
The court said the Census Bureau itself advised state legislatures not to use ACS estimates in redistricting and instead wait for delayed but official 2020 Census population counts released late in the summer. The population totals for the initial map’s legislative districts veered in population too much from the official population counts to pass constitutional muster, the court said.
The judges rejected Democrats’ argument that they faced a June 30 constitutional deadline for approving a new map so they used ACS estimates. Waiting beyond June 30 would have transferred authority to a bipartisan commission, based on a section of the Illinois Constitution. If that commission deadlocked, control over the map-making process would have hinged on an additional Republican or Democrat added to the commission based on a name drawn from a hat.
“Neither the text nor the structure of the Illinois Constitution mandates that the redistricting process be completed by June 30,” the judges ruled. “The constitution contemplates that in some circumstances, the General Assembly will not enact a plan by June 30, and in such cases provides the commission as a back-up.
“Four of the last five Illinois redistricting maps — all but the 2010 map — were drawn by a commission, not by the General Assembly.” the judges said. “The reasons offered by (Democrats) show that they could have waited for the Census data in August 2021 before producing the maps. The absence of such a compelling reason suggests that defendants were motivated by a desire to avoid a commission.”
The ruling continued: “To be sure, political considerations are not unconstitutional and courts are reluctant to wade into, much less to reverse, partisan maps, including those that amount to political gerrymanders. … And we are not so naïve as to imagine that any party in power would decline to exercise levers available to it to maximize its opportunity to retain seats in the General Assembly.
“While there is nothing legally wrong with this approach, it is not a proper rationale for violating constitutionally required mandates, including the drawing of districts of approximately equal population. In other words, the General Assembly may not dilute a large percentage of votes to advance a preferred political outcome.”
If COVID-19 cases keep dropping, Pritzker wants to ‘remove certain mask mandates’ in time for the holidays
Gov. J.B. Pritzker said Tuesday that a continued decline in coronavirus cases and hospitalizations in Illinois could lead him to lift “certain mask mandates” in time for the holiday season. “We want to remove the mitigations as we approach the holidays,” Pritzker said during a COVID-19 briefing at the James R. Thompson Center in the Loop. “That’s an important marker for us.”
“We want to make sure that these numbers keep going down,” he said. Governor Pritzker did not lay out the specific bench marks the state will use to determine when to lift the statewide mandate in place since Aug. 30 that requires people to wear a mask in indoor public places, regardless of their vaccination status.
At the time the mandate was issued, Pritzker pointed to the recommendation from the federal Centers for Disease Control and Prevention that people wear masks indoors in areas of “substantial” or “high” coronavirus transmission. As of Tuesday, all 102 counties in Illinois are classified as substantial- or high-transmission areas, according to the CDC, though the classifications can change from day to day. On Monday, two Downstate counties were classified as areas of “moderate” transmission.
In Chicago, the head of the Public Health Department, Dr. Allison Arwady, said Monday she’s looking for the city’s rate of new average daily COVID-19 cases to get below 200 “and stay there” before Chicago’s mask mandate would be lifted. Arwady did not offer a time frame but also said that other factors she’s watching are case numbers in Upper Midwest states like Wisconsin and Michigan and the impact of the looming flu season.
The city’s daily average of new cases on Tuesday stood at 291, the first time it’s fallen below 300 since July. To avoid running afoul of Pritzker’s executive order, Chicago can lift its mask requirement only after the governor lifts the statewide mandate.
State health officials on Tuesday reported 2,071 new confirmed and probable cases of COVID-19, up from Monday’s 1,327 cases, which was the lowest one-day total since July 26. Day-to-day fluctuations in case numbers are normal, and the count tends to be lower on Mondays. Over the past week, the state has averaged 2,197 new cases per day, in line with a downward trend that began in early September after the latest surge peaked at an average of 4,440 daily cases during the week ending Sept. 4.
The statewide case positivity rate — the percentage of cases as a share of total test — has been hovering near a seven-day average of 2% this month after climbing above 5% during the summer surge. From mid-June through early July, the case positivity rate was below 1%. The number of patients in hospitals across the state with COVID-19 also has been trending downward, though some regions still have relatively few beds available in intensive care units.
In response to questions earlier this month about what the thresholds are for altering the mask mandate, the Pritzker administration did not provide specifics. “We are closely monitoring numerous COVID-19 metrics including new cases, hospitalizations, deaths, vaccination rates, and outbreaks to help inform the need for increased or relaxed mitigations,” the administration said in an emailed statement.
“We are also looking to the CDC for continued guidance, on masking, physical distance (including at least 3 feet in schools), testing for the unvaccinated and symptomatic individuals, and vaccination. At this time, our top priority is protecting the health of the public while ensuring schools, businesses, and other settings can remain open.”
Manchin, Sanders to seek deal on Biden agenda
Sens. Joe Manchin (D-W.Va.) and Bernie Sanders (I-Vt.) are seeking to reach a deal on a path forward for President Biden’s economic agenda by the end of the week. The negotiation between the Senate’s most important centrist and leading progressive was described as a “breakthrough” by one Democratic senator amid stalemated talks over a Senate-passed infrastructure bill and a larger social spending package being crafted in the House and Senate.
“We’ve made breakthroughs,” the Democratic senator said, describing a sense of optimism shared by multiple Senate Democrats after a lunch meeting where Manchin said he would work directly with Sanders. “Universally there was a desire to get this done by the end of this week,” said a Democratic senator who participated in the meeting and noted that Manchin indicted he will try to reach agreement with Sanders on a framework for the reconciliation package by week’s end.
Manchin and Sanders met for the second time this week Tuesday evening just off the Senate floor, a sign that they’re working quickly to get a deal as soon as possible. “I think this thing has dragged on for a very long time and the American people want it to be resolved,” Sanders said after the meeting, adding he and Manchin will meet again this week. “I think there’s a strong feeling within the caucus that we either fish or cut bait to get this thing done or we don’t get it done but that it does not continue to drag on forever,” he said.
Sanders and Manchin over the weekend had seemed to be at each other’s throats, with Sanders writing an op-ed in a West Virginia newspaper decrying Manchin’s position on the economic negotiations. The Sanders op-ed in the Charleston Gazette-Mail argued that giving Medicare the power to negotiate lower prescription drugs and expanding Medicare benefits — something that Manchin has expressed opposition to — would help West Virginians.
“Poll after poll shows overwhelming support for this legislation. Yet, the political problem we face is that in a 50-50 Senate we need every Democratic senator to vote ‘yes.’ We now have only 48. Two Democratic senators remain in opposition, including Sen. Joe Manchin,” Sanders wrote in a jab at his colleague.
That triggered a furious response from Manchin, who is known to dislike interventions by other politicians in his home state. He hit back in a tweet accusing Sanders of wanting “to throw more money on an already overheated economy while 52 other senators have grave concerns about this approach” and dismissed Sanders as an “out-of-stater.” But on Monday, Sanders and Manchin posed for some awkward photos outside the Capitol after they met and spoke to reporters about their efforts to overcome their differences.
Sources said the new talks between the two would also involve Senate Majority Leader Charles Schumer (D-N.Y.). One person familiar with the meeting said the talks will take place between Manchin, Sanders and centrist Sen. Kyrsten Sinema (D-Ariz.), with Schumer acting as an emissary between Sanders and his centrist colleagues.
The source described the negotiation as a “shuttle diplomacy,” with Schumer coordinating the talks. “There’s broad consensus throughout the caucus about getting something by the end of the week,” the source said, adding that Senate Democrats “from left to right” voiced support for agreeing on a framework in the next few days. Schumer later described the discussion at the caucus lunch as “spirited” and “passionate” and confirmed that Manchin is on board with trying to get a deal by week’s end.
“We had a very spirited discussion at our lunch. Passionate, strong and there was universal, universal agreement in that room that we have to come to an agreement and we got to get it done and want to get it done this week,” he said.
President Biden Shares Desired Deadline
President Joe Biden told lawmakers in a pair of meetings Tuesday afternoon that he wants the infrastructure and reconciliation two-part deal before he heads to Europe for climate talks on Oct. 30. The combined four hours of briefings with progressive and moderate Democrats dug into some brass-tacks details, with one lawmaker calling it a “moment of clarity.”
What’s likely in: The child tax credit expansion, but likely just for one year. The expiration date would fall right after the 2022 midterms. Both Obamacare subsidies and Medicaid expansion are also in, but for shorter periods than some Democrats have sought. Biden discussed three years of Obamacare subsidies.
In flux: Provisions on paid family leave and climate aren’t solidified and still under discussion. With Sen. Joe Manchin (D-W.Va.) on the record opposing it, Biden told Democrats that a proposed Clean Electricity Performance Program, which would pay utilities to increase their use of renewables, would likely drop out of the bill.
Also still fluid: The progressive priority of expanding Medicare to cover dental and vision is still being worked out. Democrats say the White House committed to it, but the final version is sure to fall short of what Sen. Bernie Sanders (I-Vt.) envisioned. Vouchers could be in the mix, as Biden floated that as a way to expand some of those benefits, with a possible three-year timeline.
Cutting room floor: Two years of tuition-free community college is likely out. A push to lift the cap on the state and local tax deduction, which has split Dems along unpredictable lines, is likely out. But that’s not final and has left some feeling SALTy. Proponents of SALT insist it isn’t dead and point to statements from Pelosi and Schumer all saying there will be SALT relief in the final bill.
Democrats Try to Salvage IRS Bank-Account Reporting with Scaled-Back Plan
Democrats scaled back a proposal to require banks to send to the IRS more information about customers’ accounts in hopes of salvaging the idea, raising to $10,000 from $600 the key reporting threshold and adding an exemption that would spare many workers and retirees.
The core idea remains—banks would be required to provide information that could help the IRS more easily find tax cheating. But amid opposition from the financial-services industry and many Republicans, Sens. Ron Wyden (D., Ore.) and Elizabeth Warren (D., Mass.) proposed changes on Tuesday that would reduce the number of accounts affected. The plan seeks to generate hundreds of billions of dollars in owed but unpaid taxes that could help pay for new federal programs under consideration in Congress.
Democrats want banks, other financial institutions and peer-to-peer services such as Venmo to report annual totals of account inflows and outflows to the Internal Revenue Service. That would give the tax agency a window into income streams that are more opaque than wages and interest. The IRS already gets information on wages and interest from banks and employers and cross-checks that data against tax returns.
The additional account details wouldn’t provide direct evidence of tax cheating, but they would create a data trove that tax authorities could use to decide who gets audited. It could also be a deterrent to people—particularly business owners—who are considering not reporting all of their income. An annual report would be generated when a bank account’s inflows include more than $10,000 not tied to wages or other exempted benefits.
“We’re adding language to ensure enforcement efforts are focused on the very wealthy,” Mr. Wyden said Tuesday. He added that the $10,000 figure was chosen because it is used in other instances. It is the threshold for when cash transactions must be reported to the government.
Raising the reporting level is insufficient, banking industry executives said. Moreover, exempting certain payments would make it more complicated for financial institutions to determine which accounts should be subject to reporting, industry representatives added.
“Banks aren’t the answer here,” said Greg Carmichael, chief executive of Fifth Third Bancorp. “We would hate to see [the requirement] materialize and be asked to police that space.”
Banks, credit unions, Republican lawmakers, business owners and conservative groups such as Americans for Tax Reform have been building opposition to the plan for months. They warn that the requirement would put taxpayer information at risk if IRS computer systems were breached and they have described the proposal as snooping and surveillance.
“Even with the modifications announced today, this proposal still goes too far by forcing financial institutions to share with the IRS private financial data from millions of customers not suspected of cheating on their taxes,” Rob Nichols, president and CEO of the American Bankers Association, said Tuesday.
House Democrats left the proposal out of their legislative version of President Biden’s agenda. Ways and Means Committee Chairman Rep. Richard Neal (D., Mass.), said Tuesday that he hadn’t seen details and looks forward to reviewing the Senate’s legislative language, which isn’t complete yet.
The administration is still aggressively pursuing the idea to help pay for a variety of policies such as the extension of the expanded child tax credit. Democrats don’t need Republican votes to include the changes in their broader social-policy and climate legislation, but they will need to keep their own party together because of the 50-50 split in the Senate and slim House margins. So far, key centrist Democrats haven’t broken with the administration on this idea, as they did on other tax proposals.
“Let’s be clear what this is about: It’s about big banks deciding to protect wealthiest Americans that get away with not paying the taxes they owe by fighting this common-sense solution,” White House press secretary Jen Psaki said on Monday.
The Biden administration included the idea in its proposed budget for the 2022 fiscal year with the intention to implement it for 2023 tax year with the first reports due in early 2024. Often, tax-compliance measures are easier to sell politically than direct tax increases, but this one has proven to be the opposite.
Critics argue the proposal would burden financial institutions with new costs, including those related to determining which accounts are covered by the proposal. The measure would also place banks in the undesirable position of divulging more client data to the government, on top of existing reports on interest and dividend income.
The current proposal doesn’t require banks to share transaction-level data. But the IRS could use the account information to request information about specific withdrawals and deposits, said Richard Hunt, CEO of the Consumer Bankers Association, a trade group for retail banks. “[The IRS] can’t deduce who is avoiding paying their taxes without peering through every financial transaction,” Mr. Hunt said. “Bankers cannot become agents of the IRS.”
Some bank customers are wary as well, in part because of a robust lobbying effort from industry trade groups to inform customers of the risks they believe the reporting proposal introduces. The requirement would erode consumers’ trust in their banks to safeguard information, critics say.
“The biggest and most powerful banks in the world want Americans to believe they’re still relying on legal pads and some kind of abacus to perform basic functions,” Mr. Wyden said. “The idea that adding two boxes to a form they already send to the IRS is just going to be bedlam just does not hold up.”
Some criticisms from Republican lawmakers about the proposal are untrue, namely the claim that the IRS would get data about individual transactions. Final details aren’t set, but the emerging plan would require reporting of two numbers for each account—gross inflows and gross outflows. The IRS could, as it does now, get more detailed transaction data during an audit.
Rep. Drew Ferguson (R., Ga.), a member of the House Ways and Means Committee, said the revised proposal still raised privacy concerns. “It does not matter if the amount is $1, $600 or $10,000, Americans don’t want the IRS snooping into their bank accounts,” Mr. Ferguson said on Fox News on Tuesday.
The proposal is part of the administration’s broader efforts to close the tax gap, the difference between taxes owed and taxes collected. The gap neared $600 billion in 2020, according to estimates by former IRS Commissioner Charles Rossotti, who has advocated for a version of the plan.
Administration officials say the proposal builds on what works already. When the IRS has independent information about income, people are more likely to pay what they owe. Few people underreport their wages, because they know the IRS has their employer’s report on Form W-2.
For many business owners who get paid by cash, check or peer-to-peer payment services, however, there is no such independent information. The mere existence of annual reports could spur them to report more of their income.
Still, it is an open question just how effectively the IRS could use any new information from the proposal. The IRS has been shrinking for years, but Democrats are also trying to double its size over the next decade so it can do more enforcement.
Unlike existing reports on wages, dividends and interest, bank inflows and outflows aren’t necessarily income, so the new data also wouldn’t be as easy to use. Nontaxable deposits could include gifts, inheritances and transfers between accounts. Instead, the tax agency would have to design algorithms based on the new data to help it decide who should get audited.
The administration argues that is less invasive because people would face fewer unnecessary audits. And administration officials say that overall, audit rates won’t increase on taxpayers making less than $400,000 a year.
For the plan to work, potential tax cheats must be convinced that the IRS can use the information to find them, said Janet Holtzblatt, a former Treasury Department and Congressional Budget Office official. “Will the IRS be able to use that information? Will taxpayers recognize that that information is being used? And how long will it take?” said Ms. Holtzblatt, now a senior fellow at the Tax Policy Center in Washington.
Unlike interest, wage or dividend income, account flows information wouldn’t correspond to a line on the tax return. “This is an attempt to go out and find more information about those people for whom we know over half of their income is not reported accurately to the IRS,” she said. “So the motives are good [but] I don’t think the administration has done a good job of explaining exactly how this would work.”
White House details vaccine plan for kids 5-11
The White House outlined its Covid-19 plan to vaccinate younger children which would focus on smaller doses administered with smaller needles if the shots are authorized by regulators. “We will be ready to get shots in arms,” President Joe Biden’s Covid-19 response coordinator, Jeff Zients, said Wednesday during a White House briefing on the plan, which includes supporting vaccination by primary care doctors and in pharmacies and schools.
The U.S. has ordered enough supply to vaccinate all kids 5 to 11, the White House said in a statement Wednesday. The vaccination campaign for kids would differ from the one targeting adults and children 12 and older in that it will enlist pediatricians to work with parents, rather than utilizing mass inoculation sites. The vials and needles used to administer doses also will be smaller, the White House said.
The shots will be available at more than 25,000 doctors’ offices and primary care sites, as well as children’s hospitals and pharmacies. “The administration will work with states and local partners to make vaccination sites available at schools and other trusted community-based sites across the country,” according to the White House statement.
The doses, which are one-third the strength of the regular dose given to those 12 and up, will be shipped in smaller configurations more easily stored at a typical pediatrician’s office, the White House said. It will be possible to store them for up to 10 weeks at standard refrigeration temperatures and 6 months at ultra-cold temperatures. The Department of Health and Human Services will also launch an education campaign about the kids’ vaccine.
Pfizer Inc. and BioNTech SE have submitted data to the Food and Drug Administration ahead of an advisory panel meeting set for Oct. 26 that could help pave the way for kids ages 5 to 11 could get a Covid-19 vaccine as soon as the first week in November.
Vaccinating kids could provide a boost both to Biden’s political fortunes and public-health goals. Reaching children younger than age 12 would be a crucial step toward ending the pandemic, insulating them from the worst risks of Covid and further shrinking the pool of Americans vulnerable to spreading the virus.
Public approval of Biden’s handling of the pandemic, and other issues including Afghanistan and his economic agenda, has been falling. Many parents, including the suburban voters Democrats need to keep control of Congress in the 2022 midterm elections, are eagerly anticipating a vaccine for children. It could also help working parents return to their offices and boost the travel sector with more families finally able to be fully inoculated.
FDA authorizes Moderna, J&J Covid-19 boosters, allows mix-and-match shots
The Food and Drug Administration has authorized Covid-19 boosters from Moderna and Johnson & Johnson, and it will allow people to receive a different brand of vaccine as a booster than they did for their initial shots. The announcement on Wednesday clears the way for a major expansion of the country’s booster campaign heading into the fall and winter.
People who originally received the Moderna vaccine may now receive a booster — half the size of each initial dose — if they’re 65 and older, or if they’re 18-64 and at high risk of severe Covid-19 or live or work in a setting where they may be frequently exposed to the virus. Those are the same groups eligible for the Pfizer-BioNTech booster. But all J&J recipients who are at least two months past their shot may get a booster, a recognition of that vaccine’s lower efficacy compared to the other two available shots. The one-dose J&J vaccine is authorized for people 18 and older.
The Biden administration has argued for broad booster use among adults to help minimize the spread of the virus as cold weather sets in and people head indoors, and while hospitals in many parts of the country are overburdened by Covid and staff shortages.
“Today’s actions demonstrate our commitment to public health in proactively fighting against the COVID-19 pandemic,” acting FDA Commissioner Janet Woodcock said in a statement. “As the pandemic continues to impact the country, science has shown that vaccination continues to be the safest and most effective way to prevent COVID-19, including the most serious consequences of the disease, such as hospitalization and death.”
Woodcock and Peter Marks, FDA’s top vaccine regulator, said the agency isn’t recommending specific booster combinations due to the lack of clinical data, particularly on long-term immune responses. Researchers have yet to establish the threshold at which a person’s antibody levels and immune memory cells create the optimal protective shield against the virus; manufacturers have relied upon the short-term responses of neutralizing antibodies to gauge the vaccines’ effectiveness. “We have to be noncommittal about what is the best, and we have to simply say any one of these combinations is reasonable,” Marks said.
The two FDA officials acknowledged that communicating booster eligibility to the public may be difficult. “It is not simple, but also it’s not utterly, hopelessly complex,” Marks said. “And so hopefully with some clear illustrations, it’ll be somewhat more accessible what’s going on here.”
An FDA advisory committee last week unanimously recommended the Moderna booster for adults 65 and older and young adults at high risk. The same panel endorsed a booster dose of Johnson & Johnson’s vaccine for all 15 million adults who have received a first dose of the company’s shot.
Moderna’s half-dose booster did not produce the four-fold increase in Covid-fighting antibodies that FDA set as a bar for authorizing boosters. The company argued that was because participants in its booster studies had high antibody levels to begin with. Moderna pushed for a lower booster dose to help stretch global vaccine supply and to minimize side effects.
Marks said FDA relied upon “multiple lines of evidence” to authorize the half-dose as a booster in all scenarios. Data reviewed by the agency showed the antibody response to that dosage is about 75 percent of the one induced by a full 100-microgram dose.
The FDA’s vaccine advisory committee raised concerns last week about the quality of the data J&J submitted to support its booster application, arguing that the J&J data set was small and had a short follow-up period. The company argued that Americans at highest risk, including the elderly, should get a booster dose two months after their initial shot, but most adults should wait until six months after that first shot.
In the end, the agency panel recommended a booster shot after two months, saying the data, however sparse, showed an increase in antibodies that may be helpful for those recipients for whom protection is believed to have waned drastically. They also acknowledged that the J&J vaccine provided weaker protection compared to the Moderna and Pfizer shots.
FDA said Wednesday that vaccine providers can choose to give a booster of a different brand than a person’s initial vaccine doses, finding that the benefits of that approach outweigh the risks. It said that further guidance for public and health care workers would come from the Centers for Disease Control and Prevention’s vaccine advisory committee, which will meet Thursday to set guidelines for use of the Moderna and J&J boosters and to address the FDA’s decision to permit “mix-and-match” boosters.
CDC Director Rochelle Walensky will then issue a formal recommendation, which usually draws on the advisory panel’s recommendations. That will allow pharmacies and other vaccine providers to begin doling out doses.
Stay well,
Mike Paone
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
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