The House and Senate will reconvene Tuesday at 2 p.m. and
Monday at 3 p.m., 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
U.S. Supreme Court Justice, Democrats are now aiming to approve
legislation designed to bolster U.S. 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 U.S. 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 U.S. stock exchange-listed companies to comply with Public Company Accounting Oversight Board (PCAOB) inspection requirements.
- The Senate bill authorizes U.S. representatives at international development banks to oppose additional assistance to China. It also authorizes the U.S. 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 U.S. capital markets that have contributed to undermining U.S. 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.
In Committee
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 (H.R.2768). 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, P.L. 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 U.S. 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.
UPCOMING ACTIVITY
Below is a complete list of all tax and financial services
events in Congress, the administration and private sector for the
upcoming week.
Congress
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 U.S. Small Business Administration (SBA) Entrepreneurial
Development Programs and Initiatives
Other
Monday, Jan. 31
American Bar Association
Mid-year Tax Meeting
Tuesday, Feb. 1
Washington Post
Discussion on the global economy with Kristalina Georgieva,
managing director of the International Monetary Fund
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