Weekly Legislative Update February 15, 2021




February 15, 2021
How Reconciliation Works
There has been much discussion and speculation regarding whether the Democrats will try to pass parts of President Biden’s proposed COVID relief bill using a process known as reconciliation.
As we watch all this play out, we thought this would be a good opportunity to bring back our quick refresher on reconciliation – how it works and what its limitations are. 
Some History
As a product of the 1974 Congressional Budget Act, the process of reconciliation is relatively new compared to other elements of American democracy. Since its introduction, a number of important measures have been enacted through the reconciliation process, the most recent example being the 2017 Tax Cuts and Jobs Act (TCJA). Other recent examples of legislation enacted through reconciliation have been Bush-era tax cuts and the Health Care and Education Reconciliation Act of 2010, which made a number of budgetary changes to the Affordable Care Act (despite common misconception, the ACA itself was not passed using the reconciliation process).
The Process
The first step in the reconciliation process is the passage of a budget. Taking advantage of the reconciliation process is optional and not all budgets are structured to provide for reconciliation. Where the budget is teeing up reconciliation, it will include what are known as reconciliation instructions (or reconciliation directives). These instructions will direct specific committees to develop legislation that meets certain budgetary parameters. While the reconciliation instructions do not specifically spell out how any particular committee is expected to meet these targets, they are structured with an understanding as to the end goal of the bill (ex. reforming certain provisions of the tax code).
From there, the committees to which the reconciliation instructions have been directed draft legislative language that meets the instruction’s parameters (or, as was the case last time around with the TCJA, the leadership drafts the language and the committees review and sign off on it). 
If the reconciliation instructions are only addressed to one committee, that committee will produce the reconciliation bill. If the reconciliation instructions are targeted to multiple committees, each committee’s legislative language will go to the Budget Committee which will make no substantive changes but which will bring the various parts together into a single omnibus reconciliation bill.
Once the bill has been produced, the chambers will discuss and vote on it much like they would any other bill (with the exception that, as discussed further below, the bill will only need the support of a simple majority to pass the Senate). Just as with any other piece of legislation, both the House and Senate need to pass the same version of the reconciliation bill. Accordingly, if the chambers initially pass different versions, they will either need to reconcile the two and hold new votes or have one of the chambers pass the version already passed by the other.
Again, as with any other bill, the President has the opportunity to sign or veto the reconciliation bill. This typically becomes simply a formality when the same party holds the White House and the Senate. Because reconciliation is really only used when the legislation lacks the support of at least sixty Senators (because of the time limits discussed below), if the President does veto a reconciliation bill the legislation is almost surely dead (because two-thirds of the Senators won’t vote to override the veto). This is exactly what happened in 2016, when President Obama vetoed the ACA repeal bill that Congress had passed under reconciliation.
The Benefits
The primary benefit of using the reconciliation process, rather than simply trying to pass a bill through the standard procedure, is that reconciliation bills are passed under special rules with time limited debate in the Senate. Give the availability of the filibuster to any one objecting Senator, when a bill is going forward through the ordinary legislative course, it will need the support of at least sixty Senators who will vote for cloture to end the filibuster and allow the chamber to actually vote on the substance of the bill itself. Without enough votes to get cloture, the bill will generally stall and die. However, under reconciliation where the debate is limited and there is no need for cloture, the bill can pass with the support of only fifty Senators (assuming, as we expect will be the case here, the Vice President supports the bill and will break the tie).
The Limits
There are a few limiting factors when it comes to reconciliation and it is these factors that we expect to see make their mark on the language of any relief bill.
First and foremost, provisions can only be included in a reconciliation bill if they directly impact federal spending, revenues or the debt limit (this is part of what is known as the “Byrd Rule”). If a provision has only an indirect impact or is otherwise extraneous, any Senator can raise a parliamentary point of order to get the provision removed. In other words, there are a number of policies and items that could not be included in a reconciliation bill.
Also part of the Byrd Rule, the reconciliation provisions cannot increase the deficit outside of the budget window (typically ten years). This means that if the reconciliation bill does not include sufficient revenue raisers to offset any cuts over the long term, these cuts cannot continue after the end of the budget window. This is the reason why certain of the tax cuts in the TCJA (such as the increased federal estate tax exemption and the 199A deduction for pass-through companies) will sunset at the end of the budget window. 
The final, and least addressed, limitation of reconciliation is that the reconciliation bill is tied to the underlying budget. As we saw in prior years with the ACA repeal and replace efforts, using reconciliation means that Congress only has until the end of the fiscal year to pass the bill. 
Of course, we will keep you apprised as we learn more about if, and how, reconciliation might be used this year. Interestingly, since Congress did not pass a budget for the 2021 fiscal year (which began on Oct. 1, 2020 and runs through Sep. 30, 2021), the Democrats have the opportunity to utilize two reconciliation bills this year – one for the FY2021 budget and one for the FY2022 budget. 
U.S. DOT Secretary Pete Buttigieg Confirmed
On February 2nd the U.S. Senate overwhelmingly approved Buttigieg’s nomination 86-13 to become the 19th U.S. Department of Transportation Secretary.
TIA looks forward to the opportunity to collaborate with Secretary Buttigieg on important highway transportation initiatives to ensure roadway investment is a top priority and to make our roads safer and less congested.  
TIA issued the following statement:
“The Tire Industry Association congratulates Secretary Buttigieg and is enthused to work with the Secretary and his team to advance major investments in our roads and bridges and to help make every roadway users’ experience a better one going forward.”
Biden Issues Executive Order on ACA
On January 20, 2017, the date of his inauguration, former President Trump issued the first of several executive orders directing the federal government to “minimize the economic burden” of the Patient Protection and Affordable Care Act (ACA).
On Thursday January 28, 2021, President Biden signed his own executive order intended to strengthen the ACA.
This new order included directing the federal agencies to review all existing guidance relating to Medicaid and the ACA to identify and change:
•Any policies and practices
that may undermine protections for individuals with pre-existing conditions (including COVID-19);
•Any demonstrations or waivers (or policies regarding such demonstrations or waivers) that may reduce coverage under Medicaid or the ACA;
•Any policies or practices that may undermine
the health insurance market (including the individual, small, and large group markets);
•Any policies or practices that may present an unnecessary barrier to individuals and families attempting to access health coverage, including mid-year enrollment; and
•Any policies or practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents.
This Executive Order highlights the changes that we can expect to the rules and enforcement surrounding the ACA over the next four years. The order also has the impact of repealing the executive orders issued by President Trump that restricted the applicability of the ACA. Several of the rules adopted under President Trump’s executive orders are now likely to change.
These include:
•The creation of individual coverage health reimbursement arrangements (ICHRAs);
•The expansion of short-term limited duration health insurance plans;
•The “new” association health plan rules (which are still being challenged in federal courts); and
•The IRS safe harbor that loosened the distribution requirements for IRS Form 1095-Bs.
While many of the actual changes that will result from Biden’s Executive Order will take months to materialize, one big change is taking place quickly. In response to the Executive Order, CMS immediately announced that the federal health insurance marketplace will have a new open enrollment period from February 15, 2021 – May 15, 2021.
This new open enrollment period is intended to make it easier for people to enroll in coverage in light of the pandemic. The change only applies to the federal exchange; however, CMS is strongly encouraging states that maintain their own health exchanges to allow for such a mid-year open enrollment period as well.
TIA Signs onto Letter Opposing Federal Minimum Wage Increase
Dear Chair Murray, Chairman Scott, Ranking Member Burr, and Ranking Member Foxx:
On behalf of Main Street businesses across America, we write to strongly oppose the Raise the Wage Act of 2021. Small businesses, ravaged by the COVID-19 pandemic, are struggling to keep their doors open and keep employees on payroll. More than doubling the federal minimum wage presents a significant obstacle to ailing small businesses trying to survive the pandemic.
The Raise the Wage Act of 2021 would increase the federal minimum wage to $15 per hour over five years, allow for annual automatic increases without the consent of Congress, and eventually eliminate the tipped wage. When small employers are confronted with increased labor costs, they are left with few options, all undesirable. They can increase the price of their product or service or reduce spending. Often, this means that employers reduce their total labor force, keep open positions unfilled, and reduced employees’ hours.
In 2019, the House of Representatives considered legislation under the same title, the Raise the Wage Act (H.R. 582), which sought to increase the federal minimum wage to $15 per hour by 2025. According to the nonpartisan Congressional Budget Office (CBO), this legislation would result in up to 3.7 million job losses by 2025, with a median estimate of 1.3 million job losses. A $15 per hour federal minimum wage would reduce business income and raise prices as higher labor costs were absorbed by business owners and then passed on to consumers. CBO estimates the legislation would represent a $64 billion reduction in business income and a reduction in total real family income of $9 billion by 2025.
Additionally, your proposal includes increasing the federal minimum tipped wage from $2.13 per hour to $15 per hour. Tipped workers are already required to earn the full federal minimum wage from a combination of their base wages and tips, and many earn far more than the minimum. There is concern among tipped workers that if the tipped wage is eliminated, restaurants will either close or adopt no-tipping models—leaving these workers with less take home pay or without a job. The prospect of eliminating the minimum tipped wage was so unpopular with food service workers in Washington, D.C. that the Mayor and D.C. Council repealed a 2018 ballot initiative to eliminate the minimum tipped wage. Increases to the federal minimum wage would also impact the agriculture industry. Farmers rely on skilled employees and pay competitive rates, often well above minimum wage. In an industry where margins are slim, farmers often struggle to keep up with rising costs while remaining competitive with agricultural imports. Taking a one-size-fits-all approach to wages could drive more farms out of business at the cost of jobs rural economies depend on.
More than doubling the federal minimum wage while small businesses across America are barely surviving shutdowns due to an unprecedented pandemic is a recipe for more shuttered businesses and millions more job losses. On behalf of Main Street employers across America, we strongly oppose the Raise the Wage Act of 2021.
NFIB, TIA, and other trade associations
Notice of Staff Workshop:
California Replacement Tire Efficiency Program
The California Energy Commission (CEC) will host a remote-access workshop to discuss information regarding the Replacement Tire Efficiency Program (program) pursuant to an Order Instituting Information Proceeding (OII) adopted on November 10, 2020, (https://www.energy.ca.gov/filebrowser/download/2387). The order directs the CEC to gather and assess information related to the fuel efficiency of replacement tires for passenger vehicles and light-duty trucks that are sold in California. A quorum of commissioners may participate in this workshop, but no votes will be taken.
The workshop will be held remotely, consistent with Executive Orders N-25-20 and N-29-20 and the recommendations from the California Department of Public Health to encourage physical distancing to slow the spread of COVID-19. The public can participate in the workshop consistent with the direction in these Executive Orders. Instructions for remote participation via Zoom are below.
Thursday, February 18, 2021
10:00 AM
Notice and Agenda
Remote Attendance
The meeting may be accessed at https://join.zoom.us by entering the unique Meeting ID and password listed below. To comment, use the “raise hand” feature. To participate by telephone, see instructions below.
Workshop Link:
Workshop ID: 947 0036 9426
Workshop Password: 891968
To Participate by Telephone, dial (877) 853-5257 or (888) 475-4499 (toll free). When prompted, enter the Meeting ID: 947 0036 9426. To comment, dial *9 to "raise your hand" and *6 to mute/unmute your phone line. International numbers are available: https://energy.zoom.us/u/ac9AN1oMHR.
For more information:
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