Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
After a marathon speech session over night, the Build Back Better spending plan was finally passed in the house. It now moves onto the Senate after the Thanksgiving recess. A number of items are covered as well below in today’s roundup.
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House passes giant social-policy and climate measure
House Democrats on Friday passed their mammoth social spending and climate plan in a 220-213 vote, securing a major victory for the party ahead of the Thanksgiving break and providing a boost to President Biden at a tumultuous moment for his administration.
The vote came a half-day later than scheduled, a delay caused by House Minority Leader Kevin McCarthy (R-Calif.), who had commandeered the floor Thursday night for more than eight hours with an angry, rambling speech protesting legislation he warned would send the country into an economic tailspin.
With McCarthy refusing to cede the floor, Democratic leaders scrapped their plan to vote Thursday night, reconvened the chamber Friday morning, and passed the roughly $2 trillion bill on a near party-line vote. Rep. Jared Golden, a Democratic centrist from Maine, was the only lawmaker to cross the aisle, joining every Republican in opposing the package.
To advance the bill required most of Golden’s centrist colleagues, wary of the country’s growing debt, to provide their support despite a last-minute cost analysis revealing the package would add roughly $160 billion to the deficit over the next decade.
That Congressional Budget Office (CBO) assessment, released Thursday evening, flew in the face of Biden’s promise that the legislation would be fully paid for. It has sparked some debate — and plenty of confusion — over how much the bill will cost overall.
The CBO found that, in total, the package allocates $1.64 trillion in new federal spending over ten years. But unlike the White House, the budget office does not include the tax credits as part of that top-line number. If those credits are added to the CBO’s spending tally, the figure would jump into the $2.4 trillion range — well above Biden’s initial $1.75 trillion framework.
The White House quickly disputed the CBO’s figures, saying the scoring agency had underestimated new revenues that would flow from increased IRS enforcement. The administration also scrambled top aides — including Brian Deese, Biden’s chief economic adviser — to meet with the moderate holdouts to win their support.
Friday’s vote caps months of messy infighting between liberal and moderate House Democrats who have jousted over the size, scope and strategy surrounding the multi-trillion-dollar package, a cornerstone of Biden’s economic agenda.
The House vote, which sends the spending package to the Senate, comes just days after Biden signed into law a $1.2 trillion bipartisan infrastructure bill — back-to-back victories Democrats hope will demonstrate their governing chops and give them something to tout back home.
The social-spending bill includes a host of policies that Democrats have sought for years, or even decades. The list includes childcare subsidies, universal preschool, paid family leave, renewable energy tax incentives and extensions of both the expanded child tax credit and enhanced ObamaCare subsidies.
It also features efforts to slash prescription drug prices for seniors — a provision Speaker Nancy Pelosi (D-Calif.) has tried to pass, unsuccessfully, since her first stint with the gavel in 2007.
All told, Pelosi said, the package “is a spectacular agenda for the future, with transformational action on health care, family care and climate that will make a significant difference in the lives of millions of Americans.”
To help offset the cost of the new spending and tax cuts, the legislation includes a series of tax increases for high-income households and corporations, such as a surtax for multimillionaires and a 15 percent minimum tax for large corporations.
The costs of the bill are also partially neutralized through increased funding for IRS enforcement — empowering the agency to go after tax cheats — and the savings generated by reducing the cost of prescription drugs under Medicare.
It was the IRS provision that led to the disagreement between the White House and the CBO over whether the package was fully paid for. The CBO’s revenue number was much lower than the administration’s, producing the $160 billion deficit figure. But the discrepancy was well known among moderate Democrats ahead of time, which freed most of them to support the package. “That seems to be a matter of opinion,” said Rep. Kurt Schrader (D-Ore.).
Debate over the bill now shifts to the Senate, which is expected to consider it after the Thanksgiving break. Senators plan to make a number of changes to the legislation, including potentially removing the family leave benefit, which has drawn concerns from Sen. Joe Manchin (D-W.Va.), a prominent moderate whose vote is crucial to the success of the package.
In addition, Senate Democrats have indicated that they want to take a different approach to rolling back the $10,000 cap on the state and local tax deduction, known as SALT, which was created by the Republicans’ 2017 tax law. Some Senate Democrats think the House approach is too beneficial for high-income taxpayers — a dynamic highlighted relentlessly by Republicans, who are accusing Democrats of showering undue tax cuts on the wealthy.
“Democrats are rewarding their wealthy friends while sending the bill to the working families who are already paying more to put food on their tables, gas in their cars, and clothes on their backs,” said Rep. Jason Smith (Mo.), senior Republican on the House Budget Committee.
Changes in the Senate would send the legislation back to the House for a final vote before it can reach Biden’s desk. Democrats are hoping to wrap up the entire process by the end of the year.
Democrats’ $2 Trillion Bill Will Add to Deficit, CBO Estimates
The Congressional Budget Office found that the bill would contribute $367 billion to the deficit over 10 years; Democrats have argued that revenue not captured in the CBO score shows that the bill is more than fully paid for.
For technical reasons, the CBO’s bottom line doesn’t include $207 billion in revenue that the scorekeeper estimates would result from pouring roughly $80 billion into tax-enforcement efforts at the Internal Revenue Service. Adding that revenue to the CBO’s other estimates would make the bill’s 10-year deficit about $160 billion. The Biden administration says its IRS spending would generate $480 billion, not $207 billion; in its view, which would tip the bill over to reducing the deficit, and many Democrats appear willing to accept that perspective.
Treasury Secretary Janet Yellen said the various analyses “make it clear that Build Back Better is fully paid for,” using Democrats’ name for the legislation. Republicans charged that the CBO’s score undercut Democrats’ claims.
“This analysis from the Congressional Budget Office is a clear indictment of the Democrats’ tax and spending agenda and the false promises that have gone along with it,” said Rep. Jason Smith of Missouri, the top Republican on the House Budget Committee. The bill will next face an additional gantlet in the Senate, where Democrats control the 50-50 chamber with Vice President Kamala Harris providing a tiebreaking vote.
While it may still take weeks for Democrats to iron out those final changes in the Senate, the provisions in the House bill appear broadly on track to eventually become law. Some of its marquee measures, like expanded subsidies for healthcare premiums, are an extension of policies Democrats put into place in a $1.9 trillion coronavirus relief law earlier this year.
Others, like the universal prekindergarten for 3- and 4-year-olds and the roughly $555 billion in spending on climate measures, are longtime party goals that Democrats have hustled to enact before next year’s midterms, when they could lose control of Congress. Many of the bill’s measures are funded only temporarily, though, a step Democrats took to keep down the package’s sticker price. For example, the expanded child tax credit would last only through 2022, neither indefinitely, as some had sought, nor for four more years, as Mr. Biden proposed.
Shortening the duration of the child tax credit was one of many compromises the party made to accommodate concerns from centrist Democrats about its scope and cost. The party had originally outlined a $3.5 trillion bill, later dropping measures like free community-college and a program aimed at pushing utilities to use more clean energy from the effort. “We can’t help anyone unless we get policy passed through the House, through the Senate, to the president’s desk,” said Rep. Suzan DelBene (D., Wash.), one of the child credit’s leading supporters.
The looming expiration of many of the bill’s features means much of the Democratic Party’s work in Congress over the next decade is set to focus on reauthorizing its programs. Both Democratic and Republican critics have argued that the hope to keep funding the bill’s programs in later pieces of legislation only disguises its cost, with Mr. Manchin attacking what he called budget gimmicks.
The bill would impose a new 15% minimum tax on large U.S.-based corporations, create a 1% tax on stock buybacks and increase taxes on U.S. companies’ foreign profits, fulfilling part of the U.S. commitment to a global minimum tax agreement. The bill would leave the corporate tax rate at 21% after pressure from Sen. Kyrsten Sinema (D., Ariz.) scuttled many of Democrats’ plans for raising revenue.
For individuals, the basic tax rates would stay unchanged for all but top earners. Those with adjusted gross income over $10 million would pay a 5% surtax and those with income over $25 million would pay an additional 3%. Cast aside during the negotiations were Biden administration proposals to tax unrealized capital gains at death and require banks to report annual account flows to the IRS.
Democrats are using a special legislative process called reconciliation that requires just a simple majority in the Senate, allowing them to skirt the 60-vote threshold for most legislation in the Senate and advance the bill over Republican opposition. Reconciliation comes with limits on what lawmakers can pass through the process, and Democrats are bracing for some of the bill’s measures, including its immigration provisions, to run afoul of reconciliation’s strictures and be removed from the legislation.
Schumer, McConnell take softer approach on debt limit fight
Chuck Schumer and Mitch McConnell clobbered each other incessantly during October’s debt ceiling standoff. Now, as a new December deadline approaches, they’re taking a slightly more conciliatory approach. “The best way to characterize it is we’re going to be discussing the way forward,” McConnell said in a brief interview Thursday, ahead of a meeting in Schumer’s office. The talks between the majority and minority leaders come as the Treasury Department projects the U.S. government can stave off a debt default until Dec. 15. While some independent estimates suggest the so-called X-date could be sometime between mid-December and early February, the discussions highlight a new sense of urgency to avoid an economic crisis.
OSHA suspends enforcement of COVID-19 vaccine mandate for businesses
The Occupational Safety and Health Administration (OSHA) is suspending enforcement of the Biden administration’s COVID-19 vaccine mandate for large private businesses after a federal appeals court upheld a stay on it last week.
OSHA said in a statement published on its website Friday night that while it is confident in its power to protect workers amid the pandemic, it is suspending activities related to the mandate, citing the pending litigation.
“The court ordered that OSHA ‘take no steps to implement or enforce’ the ETS [Emergency Temporary Standard] ‘until further court order.’ While OSHA remains confident in its authority to protect workers in emergencies, OSHA has suspended activities related to the implementation and enforcement of the ETS pending future developments in the litigation,” OSHA said.
President Biden announced in September that the administration was rolling out a new rule that would require all private employers with 100 or more employees to mandate vaccines or weekly testing for all personnel, a guideline that has the potential to impact nearly 80 million workers. Earlier this month the administration set Jan. 4 as the deadline for qualifying private employers to start mandating the vaccine or requiring weekly testing. The rule was developed by OSHA.
In a 22-page ruling last week, the 5th U.S. Circuit Court of Appeals wrote that the administration’s COVID-19 vaccine and testing mandate was “fatally flawed” and ordered that OSHA not enforce the requirement “pending adequate judicial review” of a motion for a permanent injunction. The court said OSHA should “take no steps to implement or enforce the mandate until further court order.”
The case originated when Texas Attorney General Ken Paxton (R), along with the states of Louisiana, Mississippi, Utah and South Carolina, filed a lawsuit against the Biden administration over the vaccine mandate in October, requesting a preliminary and permanent injunctive relief to stop the mandate from being enforced. The lawsuit also asked that the mandate be declared unlawful.
Earlier this month, the federal appeals court ordered a temporary halt on the mandate, but the Department of Justice then requested that the halt be lifted, contending that the administration has the legal authority to require COVID-19 vaccines or testing for larger companies and that the states that are challenging the mandate have not shown that their claims outweigh the harm of stopping of rule. The court, however, upheld the stay, which prompted OSHA’s announcement that it is suspending enforcement of the rule.
More than two dozen state attorneys general and other groups are also challenging the mandate in court. Despite the court’s ruling, however, the White House urged businesses to continue implementing the guidance for COVID-19 vaccines and testing.
“We think people should not wait. We say: Do not wait to take actions that will keep your workplace safe. It is important and critical to do and waiting to get more people vaccinated will lead to more outbreaks and sickness,” White House deputy press secretary Karine Jean-Pierre told reporters last week following the ruling.
“We’re trying to get past this pandemic, and we know the way to do that is to get people vaccinated,” she added.
Conflicts mount on easing COVID-19 restrictions amid autumn case spikes
An uptick in COVID-19 cases as winter approaches is setting off a debate about if a new era of living with the virus has arrived or whether heightened restrictions and caution are still needed.
Cases in the U.S. have risen to more than 80,000 per day as the weather in much of the country gets colder. There are about 1,000 people dying every day from the virus, according to Centers for Disease Control and Prevention (CDC) figures, largely among the unvaccinated. At the same time, the widespread availability of vaccines and booster shots has made the individual risk for many people far lower.
The result is a sometimes-confusing picture where individuals and localities are trying to figure out what level of risk to accept. Washington, D.C., for example, on Tuesday announced it is lifting its mask mandate.
“We are learning to live with COVID,” said LaQuandra Nesbitt, director of D.C.’s health department. She said the virus is becoming “endemic,” meaning it is fading into a fact of life in the background. “It’s really my way of trying to stress to people that we’ve moved away from this goal of getting to zero cases,” she said.
Other experts, though, worried the move was premature heading into the winter and with cases and deaths still at a high level. “The way I view it is this is the last part of the crisis phase,” said Walid Gellad, professor of medicine at the University of Pittsburgh. He said it would make sense to wait a few more weeks to allow more children under 12 to be vaccinated and to give time for powerful new antiviral treatments from Pfizer and Merck to be authorized. D.C.’s move, he said, could be like taking “your foot off the gas right before you’re over the finish line.”
Many experts, though, said it is warranted to at least somewhat change thinking about the virus given the strong protection from vaccines, especially once people get their booster shots, and the fact that the virus is not going to be completely eliminated anytime soon.
“I am now approaching it as if now is a reasonable version of what the future is likely to look like,” said Bob Wachter, chair of the department of medicine at the University of California, San Francisco. He said if someone is unwilling to do a certain activity now because of COVID-19, one is “making a statement you’re not going to do it next year or the year after.”
“It’s no longer a short-term sprint,” he said, while noting it still could be prudent to wear masks in crowded public areas where it is unclear whether everyone is vaccinated. Ashish Jha, dean of the Brown University School of Public Health, said it is “reasonable to start thinking about lifting mask mandates.” But, he said, “if you can hold off on lifting these restrictions until early January, I think that’s better.” That would give time to get through any holiday spike and for more children to get vaccinated. Jha said a similar timeline could work for school mask mandates, which have been a major source of controversy.
CDC Director Rochelle Walensky told reporters Wednesday her agency still recommends that localities be in low levels of COVID-19 transmission for several weeks “before releasing mask requirements.” She noted that over 85 percent of counties in the U.S. are still in “substantial” or “high” transmission, meaning the CDC recommends masking indoors in public.
Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, likewise said cases and deaths are not yet low enough to accept the virus as “endemic” and a fact of life. “We want control, and I think the confusion is at what level of control are you going to accept it in its endemicity,” he told reporters. “And as far as we’re concerned, we don’t know really what that number is, but we will know it when we get there; it certainly is far, far lower than 80,000 new infections per day and it’s far, far lower than 1,000 deaths per day, and tens of thousands of hospitalizations.”
Chamber Scores Wins Against the Federal Tax Mandate
This week, states scored important wins in federal courts against the “Tax Mandate”–part of the American Rescue Plan–which prevents states from offering net tax relief to their citizens for several years. This unconstitutional intrusion hurts states’ economies when tax reductions and credits can help businesses recover from the pandemic.
This week, a district court in Alabama sided with 13 states, and the Chamber had filed an amicus brief supporting them. In September, another federal court held the Tax Mandate violated the Constitution and cited another Chamber amicus brief.
As a result of these wins, the federal government is prevented from enforcing the mandate in 16 states, but many of the cases are now up on appeal and will likely end up at the Supreme Court.
Retail Sales Keep Climbing
Retail sales rose strongly in October, another sign that consumers are spending despite the Delta wave, inflation, and supply chain woes. According to the Census Bureau, retail sales (spending at retail stores–including online–and bars and restaurants) rose 1.7% in October. They have risen three straight months since a dip in July.
There was widespread strength. Sales rose for motor vehicles and parts (+1.8%), furniture stores (+0.4%), electronics and appliance stores (+3.8%), building material and garden stores (+2.8%), food and beverage stores (+0.9%), gas stations (+3.9%), sporting goods, hobby, musical, and bookstores (+1.5%), general merchandise stores (+0.8%), and online sellers (+4%). Food and drinking places were unchanged (+0%).
Sales declined only at health and personal care stores (-0.6%) and clothing and accessory stores (-0.7%). Clothing had surged in September (+2.1%). While the vast majority–more than 85%–of sales still occur in physical stores, almost two years into the pandemic it’s now undeniable there has been a structural shift to more online shopping.
Route 66 Designation Advances
The House Natural Resources Committee unanimously passed H.R. 3600, Route 66 National Historic Trail Designation Act. The legislation would designate Route 66 as a National Historic Trail, “which will expand economic and historic development opportunities across all communities and states Route 66 runs through.
Will County Budget Passes
Will County Executive Jennifer Bertino-Tarrant joined County Board leadership in highlighting accomplishments in the Fiscal Year 2022 annual budget, which, they said, invests in key priorities while maintaining balanced spending. The $793 million package, which was passed unanimously today by the County Board, increases funding for public safety agencies, the Children’s Advocacy Center, and the Will-Ride transportation program.
“I applaud the County Board for acting on a budget that increases critical services for our residents, while holding the line on taxes,” said County Executive Bertino-Tarrant. “This balanced budget represents months of hard work to ensure funding for agencies and services that will be key for county-wide economic growth.”
The budget provides $350,000 in funding for the United Way to develop Will County’s first unified 2-1-1 system. The system will provide a centralized call center to support residents seeking mental health support, joining a regional and statewide network of affiliates.
The total budget, a combination of $251.2 million in the corporate fund and $541.8 million in special funds, is balanced and continues the five-year trend of reducing the county’s property tax levy for residents. The sound budgeting principles allow the county to meet debt obligations and maintain an AA+ bond rating, with rating agencies commending the county for a diverse tax base, stable financial performance, and strong reserves and liquidity.
“The Finance Committee worked hard to provide sufficient funding to maintain existing staffing and programmatic levels, along with expanding our support for our shared top priorities,” said County Board Finance Chair Kenneth Harris. “The county has maximized its continued growth to make the most impact with a balanced budget and to reduce the tax burden on our residents.”
With increased demands on the county’s public safety agencies, the FY2022 budget allocates additional personnel funds to support operations within both the State’s Attorney’s and Public Defender’s offices. The Sheriff’s Office is also receiving more funding to hire additional deputies to support security at the Will County Courthouse.
Keeping an eye towards county-wide growth and expansion, the county continues to invest in infrastructure improvements. This includes a five-year capital plan that funds on-going and future projects, including the construction of the county’s Renewable Gas Facility and a new County Morgue.
“Continuing to prioritize our infrastructure network puts us on a path towards economic strength, while reducing congestion and increasing roadway safety,” said Bertino-Tarrant. “We are also working to ensure that infrastructure funding includes public transportation, providing funds for our Will-Ride program that coincides with a $200,000 grant from Pace Suburban Bus that will go towards a study identifying opportunities to expand the paratransit system.”
The budget will go into effect on December 1, 2021, the beginning of the county’s fiscal year.
Stay well,
Mike Paone
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
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