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August 3, 2022
Punchbowl News Presents
Introducing Tech – our newest policy vertical. From high-profile interviews with industry influencers & policymakers to key lobbying updates, Punchbowl News Tech will be your go-to for timely technology insights.
PRESENTED BY
THE TOP
Happy Wednesday morning.
Last night, the Senate finally adopted the PACT Act, a massive $280 billion package designed to help the millions of veterans exposed to toxic burn pits and other harmful substances during their military service. The vote was 86-11, ending a week of GOP-induced drama.
Tuesday’s action cleared the way for the Senate to pass a resolution today supporting Sweden and Finland’s accession into NATO. That resolution will sail through with a huge bipartisan majority, and it marks a big moment for the Western military alliance. The two Nordic countries had long been neutral, but Russia’s brutal invasion of Ukraine in February radically altered their position on joining NATO. Senate Majority Leader Chuck Schumer invited the ambassadors from Sweden and Finland to watch the vote live from the Senate gallery. These votes will be in the 4 p.m. hour – the first votes of the day.
These two big items were on the Senate’s to-do list before the August recess. Now that they’re both completed, or very close, Schumer has just one more task before leaving town for the August recess – passing the $740 billion reconciliation package.
This is the most important moment for Schumer as majority leader and the most important moment for his 18-month old majority. Schumer was keenly aware of these stakes during a Tuesday press conference on the what the Inflation Reduction Act means for Democrats:
So here are the five things to watch this week on reconciliation.
| → | Oh parl, where art thou? The timeline of this entire process is dependent on when the Senate parliamentarian, Elizabeth MacDonough, renders her judgment on the agreement cut by Schumer and Sen. Joe Manchin (D-W.Va.). It’s already Wednesday and we still haven’t seen anything from the “Byrd bath” on the legislation. The Byrd Rule controls the reconciliation process, and MacDonough’s job is to determine if the Democrats’ legislation complies with that hyper-complex rule. This takes time, and there are no deadlines. |
Sure, Senate Democrats can bring their reconciliation package to the floor without the full guidance from the parliamentarian. Yet that’s risky since Sen. Kyrsten Sinema (D-Ariz.) says she’s waiting for MacDonough’s ruling before deciding how to vote.
There’s already buzz that the Senate could be in session all weekend with a vote-a-rama, which takes two to three days. The House probably will need a day or two to clear this package. Speaker Nancy Pelosi’s chamber is tentatively expected to come back into session at some point next week, but that’s up in the air.
Yet as much as everyone is focused on how long it takes, it’s what MacDonough decides that’s so critical. For instance, MacDonough ruled that the $15 minimum wage didn’t belong in the American Rescue Plan back in February 2021. Despite howls of protest from Sen. Bernie Sanders (I-Vt.) and other progressives, the ruling stuck. Millions of Americans were impacted by that decision. So don’t forget that in all the talk about what’s in or out of this bill.
| → | Sinema, Sinema, Sinema. Did we mention Sinema? The entire Democratic agenda is now at the mercy of the 46-year-old senior senator from Arizona, and she’s not sharing her position yet. The view by many – wrong, of course – is that Sinema and Manchin act as essentially one unit. Sinema isn’t one to chat with the Hill press corps either – unless she has something to say. So here we sit, waiting for Sinema to make up her mind on the package. Needless to say, she has a lot of leverage. If Sinema wants something removed from the package, she has the power to do so. Yet this bill is a bit like a Jenga tower. If you remove too many pieces – or the wrong one – the entire thing may fall apart. |
| → | Will Wall Street win or take it on the chin? Perhaps the biggest question in the reconciliation process is whether the elimination of the carried-interest loophole makes it through Congress. Manchin is pushing for it, and he’s got a lot of other Democrats backing him up. |
If you don’t understand carried interest and how it’s taxed, here you go, via the Congressional Research Service:
In other words, many fund managers are getting a pretty good tax rate on their income due to this provision. Despite all of the attention it’s getting, eliminating this loophole will only bring in $14 billion in revenue – a relatively small amount in a $740 billion bill. Some in the Capitol have surmised that Sinema will ask for this provision to be removed. That would be a major victory for hedge fund and private equity managers. Should it stay in, it would mark a symbolic victory for Hill Democrats.
| → | Insulin. Democrats want to include a proposal by Sen. Raphael Warnock (D-Ga.) to cap monthly payments for insulin at $35 per month in the Inflation Reduction Act. |
However, the provision could violate the Byrd Rule – if Republicans decide to challenge it. This issue came up when Democrats were trying to craft the Build Back Better Act last year, but since that legislation never moved forward, it was never resolved. It could be now.
| → | The amendment vibe. If there’s one thing a vote-a-rama is good for, it’s a series of politically charged amendments lobbed up by the minority. How much pain will Republicans put Democrats through during this process? We predict a lot. But, then again, at the end of this process is the August recess. So maybe Republicans want vacation as much as they want to put Democrats through a series of tough votes. |
Also remember this: At the end of the vote-a-rama, Schumer can design what is called a “wraparound amendment,” which basically strips out any amendment that is passed. Manchin has complained about this maneuver in the past, however, so we’ll see what happens.
– Jake Sherman and John Bresnahan
WASHINGTON X THE WORLD
Pelosi in Taiwan: An overview
Speaker Nancy Pelosi is in the middle of her first full day in Taiwan. No House speaker has visited the island in a quarter century.
Here are a few highlights:
| → | Pelosi pointed out that members of Congress visit Taiwan all the time: |
| → | As the Chinese government planned military drills in response to Pelosi’s visit, the speaker sought to minimize the controversy. But Pelosi also took a poke at President Xi Jinping. |
The South China Morning Post wrote this about Beijing’s plans:
The Coverage
| → | NYT: “Pelosi’s Taiwan Visit Risks Undermining U.S. Efforts With Asian Allies,” by Jane Perlez |
| → | WSJ: “Pelosi Vows ‘Ironclad’ Defense of Taiwan’s Democracy, as China Plans Live-Fire Drills,” by Brian Spegele in Beijing and Joyu Wang in Taipei |
| → | Bloomberg: “Pelosi Hints Gender Is Real Reason China Is Mad at Taiwan Trip,” by Jenni Marsh and Sarah Zheng |
| → | AP: “China blocks some Taiwan imports but avoids chip disruption,” by Joe McDonald in Beijing |
PRESENTED BY HEALTHCARE LEADERSHIP COUNCIL
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Punchbowl News Presents
Introducing Tech – our newest policy vertical. From high-profile interviews with industry influencers & policymakers to key lobbying updates, Punchbowl News Tech will be your go-to for timely technology insights.
Read our first Tech Quarterly now