Weekly Legislative Update - March 9, 2020
Energy Tax Incentives Likely To Propel Efforts For Bi-Partisan Extenders Bill
Senate Finance Chairman Grassley and Ways and Means Chairman Neal have committed to work for a bi-partisan bill to renew energy tax incentives expiring at year end, as well as consider additional energy incentives contained in the House GREEN Act discussion draft.
While the focus is on energy now, there's little doubt WOTC and other tax provisions expiring at year-end must eventually be considered. (A list of tax provisions expiring in 2020 and later is at the Joint Committee on Taxation web site, www.jct.gov, click on "Expiring Provisions.")
Several lawmakers in both houses have been vocal about getting their energy ideas aired. Speaker Pelosi and Senator McConnell are paying attention, and the leading Finance Committee Democrat, Senator Ron Wyden, and others, recently signed a letter to Senator Grassley urging him to start writing a bill.
Nobody has worked harder than Senator Grassley to pass the energy tax extenders and he responded promptly. Senator Grassley can be counted on to follow up and produce a bill. Our job is to ensure WOTC, Empowerment Zones, and Indian Employment are included.
Bi-partisan consensus on last year's WOTC extension jelled only on the final day of the session. Our many friends in Congress don't want that to happen again, nor do we. They're demanding an early start and hearings, markups, and votes in committee on their proposals. We will be part of the process, fighting for permanent WOTC and other credits, or temporary extension through 2025.
Any new tax provisions must be paid for. Chairman Neal has begun negotiating with Treasury Secretary Mnuchin for a deal to fund the GREEN Act (which hasn't been marked up yet), a $740 billion infrastructure bill, EITC expansion, refundable Child Credit, extenders, and other Democratic priorities. But Mnuchin won't allow tax hikes or changes to TCJA except a handful of technical corrections, so while some moneys may be agreed, the odds of finding several hundred billion are low.
We'll be watching, for if Neal and Grassley find money to make certain extenders permanent-a goal they've committed to-we'll press hard for $21 billion over ten years for permanent WOTC, $8.3 billion for Empowerment Zones, and $2.2 billion for Indian Employment.
What's most likely though, is funding will fall short and another temporary extension for WOTC and our other extenders will occur. Again, we'll be urging a five-year extension with improvements for armed forces spouses and reservists, people with disabilities, and others.
WOTC extension attached to appropriations bills will be riskier this time, not so much from Congress but from the White House. The budget deficit is a trillion a year, the budget won't balance till 2035, the debt keeps rising, and the White House is determined to rein in spending-including spending through the tax code.
Appropriators are getting an early start this year, but Senate-House agreement has often taken to December. We expect a Grassley-Neal bi-partisan extenders bill to again be attached to appropriations because it's the best vehicle to assure the extenders' passage. But assurance won't be ironclad if our bill comes to the floor after the election, for the White House can threaten a government shutdown to knock the extenders out.
Our best defense is Senator McConnell and Speaker Pelosi pushing to get appropriations passed before the election, with a bipartisan extenders bill that Congress will hold firm to. That's the bill we'll be working with Congressman Neal, Senator Grassley, and committee members to deliver.
Senate Votes To Proceed To American Energy Innovation Act
The Senate has voted 90-4 to proceed to S.2657, the legislative vehicle for the American Energy Innovation Act.
Title of the bill has been changed from "Advanced Geothermal Innovation Leadership Act" to "American Energy Innovation Act."
None of the 85 pending amendments to the bill have been taken up, they'll be considered in the Finance Committee, and the committee's bill will be sent to the floor for debate and passage, let's say, by Memorial Day.
No Finance Committee meeting on S.2657 has been scheduled. At the moment, Senator Grassley is heavily involved persuading senators to support the bi-partisan Prescription Drug Pricing Reduction Act, which Grassley and Wyden authored and the President has been pressing Grassley to get done. The problem is several Republican senators are balking, calling the bill "price control" (it would hold the rise in drug prices to the rate of inflation).
Nevertheless, S.2657 is the likely Senate vehicle for extending tax provisions expiring this year, including WOTC, VOW To Hire Heroes Act, Empowerment Zones, Indian Employment, and our requested improvements to WOTC covering people with disabilities and armed forces spouses and reservists, among others.
We can now talk to Finance Committee members and staff about the prospect of adding non-energy measures like WOTC to the bill.
There's no companion energy bill in the House, although a discussion draft is awaiting markup in Select Revenue Measures Subcommittee.
There is also an extenders bill approved last year by Ways and Means, H.R. 3301, Taxpayer Certainty And Disaster Tax Relief Act, which was placed on the House calendar on January 21st, 2020. Although dated, the bill remains a vehicle for House action on extenders and energy.
Chairman Neal's need to combine EITC and Child Credit expansions with tax extenders failed last year due to GOP objections-both Ranking Member Brady and Senator Grassley said the expansions were too costly. Neal's current strategy is to negotiate with Treasury Secretary Mnuchin for a funding source for the same EITC and Child Credit expansions, in exchange for high-priority changes to TJTC that Mnuchin wants.
For instance, the President's budget includes tax cuts of $1.4 trillion by making individual, estate, and pass-through tax provisions of TCJA permanent when they expire at the end of 2025. There's lots of money here if alterations to these tax cuts are made, but can Mnuchin tap it? The outcome of these talks is uncertain.
Given the Senate's action on S.2657, try lobbying Ways and Means with the entre, "Grassley and Wyden have an energy bill covering new and existing energy credits, the goal is a bi-partisan bill and we expect non-energy credits like WOTC to be included at some point. Will Chairman Neal cooperate with Grassley and Wyden like he did last year, so the Senate bill, if passed, will find support in the House?"
We will keep you informed.
Save the Date!
TIA would like you to save the date for our 2020 lobby day and international environmental summit.
The lobby day will take place on May 6th with the international environmental summit to take place the following day on May 7th.
Both events will take place in Washington, D.C.
More details are RSVP instructions to follow. But for now, mark your calendar!