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August 1, 2023
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THE TOP
Happy Tuesday morning and happy August. Also, how is it already August?
Here’s another question: What happened to the House Republicans’ tax-cut package?
The Ways and Means Committee marked up three bills on June 13 — the Tax Cuts for Working Families Act, the Small Business Jobs Act and the Build It In America Act.
Since then, the GOP-drafted package has sat dormant in committee. House Republican leadership hasn’t shown any sign they’re prepared to bring the measure to the floor.
We canvassed the House GOP leadership and committee on Monday, and it’s clear the legislation has no pathway to final passage at the moment. Without any Democratic support, there are significant concerns that House Republicans can’t muster 218 votes to pass the legislation — which isn’t going anywhere in the Democratic-run Senate anyway.
The biggest drawback — Ways and Means Committee Chair Jason Smith’s (R-Mo.) proposal doesn’t do anything to address SALT, the state and local tax deduction that Republicans capped under former President Donald Trump until 2025. The New York delegation and other Northeasterners have told Republican leaders they oppose the bill for that reason.
With FY2024 appropriations season in full swing — and a government shutdown looming at the end of September — it’s not clear whether the tax-cut package will come to the floor before the fall. The big question is whether the leadership will have the political will to push Northeastern Republicans to vote yes in the heat of the government-funding fight that includes major spending cuts for federal agencies.
Here’s what Smith told us Monday about the future of the GOP tax-cut package:
In other words, Smith and the Ways and Means Committee want to move a tax bill. Adding SALT to the mix complicates the issue.
Overall, the three-part plan approved by Ways and Means is roughly revenue neutral, but it doesn’t do much for the economy either. It’s skewed toward restoring some business tax breaks to line up the 2017 Trump tax cuts, and it eliminates some green tax provisions from the Inflation Reduction Act.
The first portion of Smith’s package — the Tax Cuts for Working Families Act — would rename the standard deduction as the “guaranteed deduction.” There would be a “bonus guaranteed deduction” for tax years 2024 and 2025. The bonus deduction would phase out for filers making above $200,000 annually or $400,000 jointly. This bill will increase the deficit by $96 billion, per CBO.
The Small Business Jobs Act — which increases the limits on expensing depreciable business assets, among other provisions — has an $81 billion price tag by 2033.
The third piece of the House GOP tax package — the biggest one — is called the Build It In America Act. The highlights are restoring the research and development tax credit, in addition to eliminating big chunks of Democrats’ Inflation Reduction Act, including the clean vehicle tax credit. The Joint Tax Committee estimates this third bill would increase revenue by $157 billion over a decade, essentially offsetting the revenue loss from the other two measures.
Ways and Means ranking member Richie Neal (D-Mass.) called Republicans’ idea that the GOP tax package would reduce the deficit “nonsense.” And with Democrats united in opposition, plus a host of problems within the GOP Conference, Neal said he’s not surprised the bill has been MIA since June.
“The problem they have is pretty obvious and that is they can’t sell it to their own members. I never had that problem,” Neal, who chaired the committee last Congress, told us. “I can’t see us embracing anything that would come close to huge tax cuts again, that’s for sure.”
What’s more disappointing, Neal said, is there are areas for dealmaking between the two parties. But while Neal met with his GOP counterpart, former Rep. Kevin Brady (R-Texas), every two-to-three weeks last Congress, he rarely hears from Smith.
“The child tax credit could spring a lot of other issues — particularly on R&D and expensing. I’m very open on those issues,” Neal said. “But they aren’t showing any movement on the issues I’m interested in. And they apparently don’t have the votes to accomplish what it is they want.”
Neal said the GOP tax bill — whether Republicans can push it through the chamber or not — will be a key part of Democrats’ effort to take back the House next year.
“We intend to run on that issue, period. We’re going to run on what they’ve already put out. That is a fair conversation,” Neal said. “They’re all Johnny One Notes — more tax cuts for people who don’t need them.”
— John Bresnahan, Heather Caygle and Jake Sherman
OUT OF THIS WORLD
Alabama vows SPACECOM fight
President Joe Biden came into office vowing to reverse much of what his predecessor, former President Donald Trump, did. Few expected that to extend to a military basing decision.
Not Sen. Michael Bennet (D-Colo.).
On Monday, Biden decided to keep the U.S. Space Command headquarters in Colorado, where it’s been temporarily housed, defying Trump’s decision to move it to Alabama.
Bennet asserted Biden was simply correcting a bad decision by Trump.
“Donald Trump overruled the Air Force generals to make the decision he made the last week of his administration to send this to Alabama. That record is clear,” Bennet told us Monday evening. “The Biden administration made it clear they made their decision based on readiness, based on national security. Those should have been the criteria all along.”
Bennet said Biden’s move was an affirmation that “We’re not going to make these basing decisions politically and we are going to make them based on the national security interests of the United States.”
Biden’s decision came after months of squabbling between the states’ congressional delegations and an unprecedented blockade of senior military promotions by Sen. Tommy Tuberville (R-Ala.), which administration officials insist had nothing to do with the end result.
But there’s no denying that Tuberville’s actions, which have angered Biden and top Pentagon officials, had an impact.
Alabama’s lawmakers are already vowing that the fight isn’t over. However, none of them are blaming Tuberville for the setback — at least not publicly.
House Armed Services Committee Chair Mike Rogers (R-Ala.) said he’d investigate whether the administration “intentionally misled [Congress] on their deliberate taxpayer-funded manipulation of the selection process.”
The Alabamians are arguing that it was a politically motivated effort by Biden to reward a blue state at the expense of a red one. They also pointed to the various Air Force reviews that found Huntsville, Ala., to be the best site for Space Command.
Rep. Terri Sewell (D-Ala.), the lone Democrat in Alabama’s congressional delegation, previously told us she worried that the Biden administration would weigh Tuberville’s blockade as part of its decision. Sewell said Monday that Biden’s ultimate choice “bows to the whims of politics over merit.”
Here’s more from Sewell:
But the Air Force had initially decided that the HQ should remain in Colorado Springs and, during Trump’s final month in office, it was abruptly awarded to Huntsville. That prompted claims of political favoritism at the expense of national security, and it triggered a formal review when Biden came into office.
Brig. Gen. Pat Ryder, the Pentagon press secretary, said in a statement that Biden’s decision “ensures peak readiness in the space domain for our nation during a critical period.” And Colorado’s aerospace infrastructure is already extensive, Bennet noted.
Yet as the Biden administration’s review of the Trump-era decision dragged on, Tuberville’s blockade came into greater focus — and public attention.
The Biden team was also reportedly taking into consideration Alabama’s strict abortion law.
Still, Bennet was adamant that Colorado was chosen based on merit alone.
“I’ve never seen these issues as related,” Bennet said of Tuberville’s actions and the Space Command HQ decision. “He has a very extreme set of abortion policies he’s trying to work out by using a tactic that no senator in 230 years has used.”
— Andrew Desiderio
What we learned from Devon Archer’s testimony
There was something for everyone in Devon Archer’s behind-closed-doors appearance before the House Oversight Committee on Monday. Both Republicans and Democrats alike seized on portions of the former Hunter Biden associate’s testimony to back up preexisting claims about the Biden family’s business dealings. Here are our main takeaways.
Republicans secured a major talking point when Archer confirmed then-Vice President Joe Biden spoke with Hunter Biden’s business partners. Biden had been insistent in the past that he had “never spoken” with Hunter about his business dealings. The president has indicated a large degree of separation existed between him and his son’s overseas ventures.
But Archer testified that he witnessed Hunter put his dad on speakerphone with business partners numerous times over a decade. And Oversight Republicans released a list of connections between Biden and Hunter’s business partners.
“Devon Archer’s testimony today confirms Joe Biden lied to the American people when he said he had no knowledge about his son’s business dealings and was not involved,” House Oversight Committee Chair James Comer (R-Ky.) said in a statement.
For Hunter Biden, access to his powerful father was clearly a big plus for potential clients. Comer signaled that his panel will continue to “determine whether foreign actors targeted the Bidens, President Biden is compromised and corrupt.” Of course, talk of an impeachment inquiry into Biden is growing among House Republicans.
But Biden never discussed business specifics during any of these calls, according to Archer’s testimony. Democrats seized on this in an attempt to argue Biden’s involvement was innocuous.
“Those calls were all about mundane subjects like the weather, geography, and other niceties and pleasantries,” ranking member Jamie Raskin (D-Md.) said in a statement.
Democrats also pointed out that Biden talked constantly with Hunter in the aftermath of Beau Biden’s death. And Rep. Dan Goldman (D-N.Y.), who was present for the transcribed interview, argued it was “preposterous” to expect Biden to reject Hunter’s calls.
“[Biden] says hello to someone that he sees his son with. What is he supposed to say? ‘Hi, son. No, I’m not going to say hello to the other people at the table or the other people on the phone,’” Goldman said.
Archer denied any knowledge of an unverified claim that Hunter and Joe Biden received millions of dollars in bribes from the Burisma CEO.
This is notable because Archer served on the board of Burisma alongside Hunter. If the head of Burisma was bribing the Bidens with large sums of money, one would expect Archer to be aware of the plot. Republicans have made an internal FBI tip sheet alleging the bribery payments a central aspect of their investigation into the president and his family.
“Today, Mr. Archer explicitly stated that he is unaware of any $5 million payments to the Bidens and did not believe the allegations of bribery in the FBI Form 1023 were credible, thus debunking the unverified tip sheet Republicans released last week,” Raskin said.
Here’s White House Spokesperson for Oversight and Investigations Ian Sams:
An important note: Archer is a convicted felon. Archer and two others were convicted in June 2018 for defrauding a Native American tribe out of $60 million of bonds.
Last year, Archer was sentenced to a year in prison and required to repay more than $15 million.
— Max Cohen
PRESENTED BY WELLS FARGO
THE MONEY GAME
This week’s fundraising trips
It’s recess. So that means everyone is raising money everywhere. Here’s a peek at what’s going on.
Reps. Sean Casten (D-Ill.) and Brad Schneider (D-Ill.) both have Chicago trips beginning Wednesday.
Rep. Paul Tonko (D-N.Y.) has a PAUL PAC trip to Saratoga Springs, N.Y., beginning Wednesday, as well.
Rep. André Carson (D-Ind.) is hosting a fundraiser at the Beyoncé show at FedEx Field Saturday night.
CBC Chair Steven Horsford (D-Nev.) also has a Beyoncé fundraiser Sunday night featuring Rep. Lucy McBath (D-Ga.).
Looking for a trip to the West Coast? Rep. Brian Fitzpatrick (R-Pa.) has a Laguna Beach fundraiser beginning Sunday.
— Jake Sherman
… AND THERE’S MORE
News: EMILYs List, the pro-abortion rights Democratic campaign group, is endorsing Democrat Michelle Vallejo in her rematch campaign against Texas GOP Rep. Monica De La Cruz.
The endorsement is a sign that major Democratic groups are coalescing around Vallejo in 2024 as the party’s best shot to unseat De La Cruz. Vallejo lost to De La Cruz by eight points in 2022 in the south Texas district.
The Money Game: The Congressional Leadership Fund, the House GOP leadership aligned super PAC, raised $19 million in the first half of this year, including $5 million from Timothy Mellon and $1 million each from hedge fund giant Ken Griffin, billionaires Paul Singer and Warren Stephens.
House Majority PAC, the House Democratic leadership super PAC, raised $20 million from January to June.
Senate Leadership Fund, the Senate GOP super PAC, got $2.5 million from Griffin, $1 million from Singer and Stephens. They raised $10 million in the first half of the year.
Senate Majority PAC, a Senate Democratic super PAC, raised $37 million, including $2 million from Netflix’s Reed Hastings.
Downtown Download: 7-Eleven, the convenience store giant, has hired Venn Strategies to lobby on “[e]lectric vehicle policy issues; policy and regulatory issues related to electric vehicle charging.” … Nestlé has hired Mercury Public Affairs to lobby on plant-based food policy.
— Max Cohen and Jake Sherman
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