Situational Awareness
The House is in session this week to consider a roadmap for the budget resolution, infrastructure and voting rights The Senate is in session this week and will be consider the nomination of James Kvaal to be undersecretary of education. Majority Leader Chuck Schumer (D-N.Y.) has also filed for cloture to end debate on three other nominations to the federal courts. The House will be holding a pro-forma session, but no votes are scheduled. House committees will continue their work on the $3.5 trillion reconciliation package.
Reconciliation Dominates DC Agenda
The massive $3.5 trillion reconciliation package will consume all of the attention in the coming weeks as House committees continue drafting section by section what will be a legislative behemoth. Under reconciliation instructions passed by the House and Senate, each committee has been tasked with converting topline numbers into policy. Eight House Committees have markups scheduled this week in an attempt to finalize language by a self-imposed deadline of the end of this month. While drafting large sections of a package can be difficult to manage within just one chamber, the markups are further complicated because they are trying to compile a package that could pass the evenly divided Senate as well as meet the demands of moderates and progressives in the House of Representatives. Democrats have so far tempered some of the tax increases contemplated in President Biden’s proposal by raising the corporate tax rate from the current level of 21% to 26.5. Biden had proposed increasing the rate to 28%. Capital gains tax rates would increase to 25% under the plan instead of the individual tax rate of 39.6% proposed by the president. These levels are thought to appeal to more moderate Democrats worried about reelection in swing districts as well as moderate Democrats in the Senate. Other provisions contained in the Ways and Means package would return the highest individual tax bracket back to the 39.6% level that was lowered under the Trump tax bill passed in 2017. So far, the package does not address the state and local tax deduction (SALT), which has been cited as a priority for many Democrats in high-income and high-tax states and districts. A list of the tax provisions is provided below.
- Capital gains increases to 25% from 20%
- Corporate taxes increases to 26.5% from 21%
- Carried-interest holding period increases from three years to five
- Reduces some estate tax discounts while exempting family farms and businesses
- Reduces tax rates for businesses with income of less than $400,000 to 18%
- Crypto currency sales rules altered
- $900 billion in corporate tax changes
- $1 trillion in revenue from high-income individuals
All told, the tax provisions of the reconciliation package are expected to raise $2.9 trillion. Additional amounts of $900 billion are expected to be raised from prescription drug provisions under the Medicare program, $600 billion of economic growth are estimated due to spending increases, $16 billion from limitations on executive compensation deductions, and $96 billion from higher taxes on tobacco products, including e-cigarettes.
Labor Provisions Included in Reconciliation
The House Education and Labor Committee will be marking up its section of the larger reconciliation package this week. Among the items included are several provisions affecting labor policy and employers under the National Labor Relations Act. The package will include $5 million for the implementation of electronic voting for union elections and increased penalties for unfair labor practices which would apply to both the employer and company directors/officers. The section would also prohibit employers from permanently replacing striking workers, lockouts, captive audience meetings, and arbitration agreements.
WOTUS Saga Continues
The seemingly endless saga of the rules to define water jurisdiction has begun a new chapter with the Environmental Protection Agency (EPA) accepting comments from a request for information proposal to scrap the Trump-era Navigable Waters Protection Rule (NWPR) and rewrite the Waters of the United States Rule (WOTUS). A federal court in Arizona recently ruled against the Trump rule throwing its implementation into a holding pattern while legal issues are sorted out and the EPA readies action to repeal it. NCA joined with other interested parties in filing comments supporting the NWPR due to its clarity and certainty for the regulated community. The EPA has indicated it will embark upon a rulemaking to address what the agency and environmental groups believe are the shortcomings of the NWPR. NCA will continue to monitor the actions of the agency and advocate for clubs affected by the rule.
Ohio Special Election
Last week I had an opportunity to have a one-on-one conversation with Mike Carey, who is the Republican nominee running in the special election for Ohio’s 15th Congressional District to be held on November 2. While no election outcome is certain until the votes are cast and counted, the Republican is heavily favored in the 15th. Carey and I spoke for roughly 30 minutes about his election and the issues clubs are concerned about at the federal level. He is very familiar with clubs and is affiliated with an NCA member club in his district. If elected, Carey would like to serve on the Energy and Commerce Committee or Ways and Means, but recognizes those are often difficult to obtain as a freshman.