The House and Senate will reconvene Tuesday at 2 pm and Monday at 3 pm, respectively.
WHAT TO WATCH
Congressional Democrats have added another high-profile item to their growing list of legislative to-dos. In addition to the Build Back Better Act, voting rights legislation and confirming a new US Supreme Court Justice, Democrats are now aiming to approve legislation designed to bolster US competitiveness vis-à-vis China.
The lower chamber unveiled last week the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strengthen (COMPETES) Act, its companion to the Senate-passed US Innovation and Competition Act (USICA). However, unlike USICA, which passed the Senate with support from almost 20 Republicans, the America COMPETES Act was largely crafted without input from Republicans. As a result, the package, which will come to the House floor this week, is expected to pass along largely partisan lines.
Both bills contain financial services provisions, but the two take a slightly different approach:
- The House directs the federal government to take a hard line against Chinese investment by conditioning any loans to China on China’s participation in multilateral debt relief initiatives. It would also prohibit the use of multilateral development banks to co-finance projects with the Asian Infrastructure Investment Bank (AIIB). Finally, it would shorten the current grace period for US stock exchange-listed companies to comply with Public Company Accounting Oversight Board (PCAOB) inspection requirements.
- The Senate bill authorizes US representatives at international development banks to oppose additional assistance to China. It also authorizes the US governor to the Inter-American Development Bank to vote in favor of a 10th general capital increase to help counter predatory bilateral lending. Finally, the bill requires a review of the presence of Chinese companies in US capital markets that have contributed to undermining US national security or have committed serious human rights abuses.
Once the America COMPETES Act passes the House, which is expected, the House and Senate will enter a conference process to resolve the two versions. Click here to read Brownstein’s summary of the America COMPETES Act and analysis as to how it compares with USICA.
Another pressing item expected to see movement this week is federal appropriations. The government is currently operating under a continuing resolution (CR) set to expire on Feb. 18. If Congress fails to act before then—by either enacting another CR or passing new appropriations language—the government will be forced to shut down. Appropriators have been in negotiations to reach an agreement on appropriations legislation, and there is optimism that an agreement can be reached on an omnibus prior to the CR deadline, although another short-term CR might be required to provide lawmakers with additional time to finalize all the details.
On the Floor
The House is expected to vote on the America COMPETES Act, and the Senate will vote to advance district judge nominees.
House Financial Services Committee
On Wednesday, the Housing, Community Development and Insurance Subcommittee will hold a hearing entitled “Housing America: Addressing Challenges in Serving People Experiencing Homelessness.” No witnesses have been named.
The subcommittee is expected to consider legislative means by which it could promote housing stability for the homeless. One bill that could be discussed is the American Housing and Economic Mobility Act (HR2768). That bill, which is sponsored by Subcommittee Chair Emanuel Cleaver (D-MO), would, among other things, establish a grant program to remove unnecessary barriers to building affordable units, assist borrowers who have negative equity in their homes and assist state agencies in constructing or acquiring affordable rental housing.
On Thursday, the Diversity and Inclusion Subcommittee will hold a hearing entitled “Building Opportunity: Addressing the Financial Barriers to Minority and Women-Owned Businesses’ Involvement in Infrastructure Projects.” No witnesses have been named.
Equity, diversity and inclusion has been a top priority for congressional Democrats and the Biden administration, and this hearing is expected to focus on how to promote those values with federal funds. Congress enacted the Infrastructure Investment and Jobs Act (IIJA, PL 117-58) in November 2021, which authorized over $1 trillion in federal funds to rebuild roads and bridges and improve water and internet infrastructure, among other things. However, because federal appropriations have stalled, many agencies have paused their work on the programs under IIJA until additional funding is available. As a result, the discussion during this hearing could influence appropriations language, which could contain wage or diversity requirements for ultimate recipients of federal funds.
Senate Banking Committee
On Thursday, the committee will hold a confirmation hearing to consider the following nominations:
- Sarah Bloom Raskin to be vice chair for supervision and a member of the Federal Reserve System Board of Governors;
- Lisa DeNell Cook to be a member of the Federal Reserve System Board of Governors; and
- Philip Nathan Jefferson to be a member of the Federal Reserve System Board of Governors.
Sarah Bloom Raskin is expected to receive the most attention during this hearing. She could face questions similar to those raised by the US Chamber of Commerce in a letter to the Senate Banking Committee last week. In that letter, the chamber urged lawmakers to ask Raskin about her views related to the Federal Reserve’s COVID-19 pandemic response, climate change, the independence of the Federal Reserve and bank mergers, among other issues.
Inflation is also expected to play a central role in the discussion. All three nominees could face questions about how the Federal Reserve can use its tools to combat ongoing inflationary pressure, and they could also be asked to respond to recent comments by Fed Chair Jerome Powell, who said last week that the central bank has “quite a bit of room” to raise interest rates.
House Ways and Means Committee
On Wednesday, the committee will hold a hearing entitled “America’s Mental Health Crisis,” during which the following witnesses will testify:
- Wizdom Powell (director of the Health Disparities Institute and associate professor of psychiatry, UConn Health);
- Deborah Steinberg (health policy attorney, The Legal Action Center);
- Peggy Johnson (chief of psychiatry, The Commonwealth Care Alliance);
- Angela Sausser (executive director, The Public Children Services Association of Ohio); and
- Deepa Avula (chief operating officer & deputy director, North Carolina Department of Health & Human Services Mental Health, Developmental Disabilities & Substance Abuse Services)
The committee is expected to focus on mental health issues that have arisen or been exacerbated during the COVID-19 pandemic.
On Thursday, the Health Subcommittee will hold a hearing entitled “Bridging Health Equity Gaps for People with Disabilities and Chronic Conditions.” No witnesses have been named.
According to the National Institutes of Health, “health disparities exist among the common chronic diseases, such as hypertension, diabetes mellitus, HIV/AIDS, cancer, cardiovascular disease, and obesity, with ethnic minorities and the poor having higher incidence or worse outcomes. ” The subcommittee is expected to explore how it can advance legislation to address this inequity.
Senate Finance Committee
On Wednesday, the Fiscal Responsibility and Economic Growth Subcommittee will hold a hearing entitled “The Hospital Insurance Trust Fund and the Future of Medicare Financing,” during which the following witnesses will testify:
- Michael Chernew, chair, Medicare Payment Advisory Commission;
- Susan Rogers, president, Physicians for a National Health Program;
- Katherine Baicker, Dean and Emmett Dedmon professor at the Harris School of Public Policy, University of Chicago; and
- James Capretta, senior fellow and Milton Friedman chair, American Enterprise Institute
Medicare is funded in part by the Hospital Insurance Trust Fund, which is itself funded by payroll taxes, income taxes on Social Security benefits and interest earned on trust fund investments. The subcommittee is expected to explore how it can support the financial health of the trust fund through legislative means.
TAX AND FINANCE REWIND
In case you missed it…
- House Ways and Means Committee Chair Richard Neal (D-MA) and Rep. Bill Pascrell (D-NJ) introduced legislation last week would undo tax refund delays for recipients of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). The bill, according to the release, would allow the IRS to issue refunds of the EITC and the CTC before Feb. 15 if the amount on the tax return has been matched (verified) with Forms W-2.
- Sen. James Lankford (R-OK), a member of the Senate Finance Committee, sent a letter to Internal Revenue Service (IRS) Commissioner Charles Rettig last week asking for an update on multiple fronts. For instance, Lankford specifically asked Rettig to provide the latest with respect to the agency’s investigation into the ProPublica data leak, its progress updating its IT systems to guard against cyber vulnerabilities and the status of refund and customer service delays during the current tax season.
- On Jan. 25, 2022, the IRS released temporary regulations on passive foreign investment companies (PFICs) held through domestic partnerships. The IRS also released final regulations on the treatment of domestic partnerships for purposes of determining amounts included in gross income of their partners with respect to foreign corporations under section 958.
Click here for a list of recent regulatory developments.
Below is a complete list of all tax and financial services events in Congress, the administration and private sector for the upcoming week.
Tuesday, Feb. 1
Senate Budget Committee
Nomination hearing for Shalanda Young to be director of the Office of Management and Budget and Nani Coloretti to be deputy director of the Office of Management and Budget
Senate Small Business and Entrepreneurship Committee
Review of US Small Business Administration (SBA) Entrepreneurial Development Programs and Initiatives
Monday, Jan. 31
American Bar Association
Mid-year Tax Meeting
Tuesday, Feb. 1
Discussion on the global economy with Kristalina Georgieva, managing director of the International Monetary Fund
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