While the Democrats choose to move a partisan COVID-19 relief bill by using the reconciliation process for this bill, it remains to be seen whether the remainder of the legislation that will be considered on the floor of the Senate this congress will take the same path. While Democrats in the Senate could attempt to move an agenda on their narrow margin of a majority, the fact remains that it only takes ten Republicans, less than 1/3 of the Caucus, to move something in a bipartisan manner. And of course, getting this bipartisan effort in the Senate would also ensure a more moderated result from whatever the House passed. Whether this framework ultimately prevails – or if progressives forces continue to strive for the perfect over the good – will be a determining factor in the functionality of Congress, and President Biden’s purported goal of unifying the country.
While both chambers will have a busy schedule over the next two weeks, it will not involve passing legislation on the floor of either chamber. The Senate is set to be consumed with the second impeachment trial, while the House is scheduled to be in a remote Committee work period.
In notable committee activity next week, Neera Tanden — President Joe Biden’s pick to lead the Office of Management and Budget (OMB) — will appear before the Senate for a pair of confirmation hearings next week. Tanden is scheduled to testify before the Committee on Homeland Security and Government Affairs on Tuesday, followed by the Budget Committee on Wednesday. On the House side, the House Financial Services Committee will mark-up its piece of the reconciliation instructions, which among other things, includes the imposition of a Military Lending Act (MLA) style rate cap on the $10 billion dollars of small business loans to be administered through the State Small Business Credit Initiative. Later in the week, a Judiciary Subcommittee will hold a hearing on legislation to impose a blanket prohibition on mandatory arbitration clauses, while an Energy and Commerce subcommittee will examine climate change issues.
Last Week in the House
House lawmakers passed a budget resolution by a vote of (218-212) on Wednesday that kicked off the reconciliation process for another round of COVID-19 legislation. After the Senate’s marathon “vote-a-rama” process to debate amendments to the resolution, the House voted on Friday to approve the budget plan — beginning the process of turning President Biden’s stimulus proposal into legislation. The instructed 25 committees across both chambers have until Tuesday, February 16 to write bill text for the $1.9 trillion relief measure. Democratic leadership is aiming to get the relief legislation onto President Biden’s desk by March 14 — the same day that the current unemployment insurance benefits expire.
HFSC Hearing on COVID-19 Relief (2/4): On Thursday, the House Financial Services Committee held a hearing to discuss the need for additional COVID-19 stimulus relief. The discussion comes after the release of President Biden’s American Rescue Plan, as well as Congressional Democrats’ efforts to move another virus relief package through budget reconciliation. The topic of discussion largely remained along party lines, with Republicans critical of the size and “untargeted” scope of the Biden administration’s plan, while Democrats urged the need for immediate and significant aid. Conversation around state and local aid, housing, minimum wage, and enhanced unemployment benefits dominated much of the discussion and debate. Republicans maintained that raising the minimum wage to $15 an hour will crush struggling small business and harm the most vulnerable workers. Democrats called for continued housing relief measures to keep people in their homes, and cited state and local aid as a means to address many of the issues facing middle America.
HFSC Sub on Small and Minority Owned Businesses (2/4): On Thursday, the House Financial Services Subcommittee on National Security, International Development and Monetary Policy held a hearing to address the challenges faced by small and minority-owned businesses during the pandemic. The witnesses spoke of the disproportionate hardships faced by these businesses from the pandemic — due in part to a lack of educational awareness efforts on federal aid opportunities, as well as inequities in distribution of aid from programs such as PPP and EIDL. While Members highlighted the increased CDFI utilization and increased set asides in recent legislation to ensure low-and-moderate income communities are being served, they called for permanent programs to help these businesses grow long term. Mr. Sands, CEO of Lendistry, outlined the need to systematically change the way capital is deployed. He argued that more capital for large banks often leads to larger loans, and instead called for more capitalized banks to capitalize smaller banks in order to provide smaller loans to small and minority owned businesses. Members also provided mixed reviews on the efficacy of the State Small Business Credit Initiative (SSBCI) and highlighted the bicameral Small Business Credit Act released this week. The discussion underscored the vitality of community banks in facilitating the success of small and minority owned businesses.
H.R. 659 (Ocasio-Cortez): To repeal the limitation on the construction of new public housing, known as the Faircloth Amendment, and for other purposes.
H.R. 685 (Axne): To amend the Internal Revenue Code of 1986 to exempt a portion of unemployment compensation received during 2020 from income taxes.
H.R. 725 (Roy): To amend the Internal Revenue Code of 1986 to expand and improve health savings accounts, and for other purposes.
H.R. 733 (Steil): To authorize the Secretary of the Treasury to require special measures for domestic financial institutions in connection with INSTEX, and for other purposes.
H.R. 738 (Watson Coleman): To require employers to pay essential pay to health care employees during public health emergencies, and to provide a tax credit for the cost of such pay.
H.Res.100 (Pressley): A bicameral resolution calling for President Biden to use existing authority under the Higher Education Act to cancel up to $50,000 in student loan debt for Federal student loan borrowers. The resolution calls on the President to use executive authority to cancel student loan debt and ensure there is no tax liability for Federal student loan borrowers resulting from administrative debt cancellation.
GREEN Act (Thompson): Thirty-five House Democrats cosponsored this legislation to expand the use of renewable energy through Federal tax incentives, in order to promote clean energy technologies and faster deploy zero-emissions vehicles.
House Financial Services Committee Roster: Outside of losses from the 116th Congress, the Committee saw the addition three Democrats —Ritchie Torres (NY), Nikema Williams (GA), and Jake Auchincloss (MA) — and the loss of both Katie Porter (D-CA) and Jennifer Wexton (D-VA) to other committees. Full current Committee membership can be found here. Last week, Ranking Member McHenry also issued a press release announcing Republican Financial Services Subcommittee assignments.
Democrats Call for NOL Provision Repeal: On Tuesday, 120 Democrats wrote to Speaker Pelosi and Majority Leader Schumer, urging the next COVID-19 legislation to repeal changes to the tax treatment of net operating losses (NOLs) for corporations and other taxpayers. The provisions, enacted through the CARES Act, allowed a five-year carryback of any NOL generated in a taxable year beginning after December 31, 2017, and before January 1, 2021. The provisions also allowed taxpayers to elect to waive the carryback period of NOLs from those tax years and only carry those NOLs forward to future years. The Members argue that “These special-interest giveaways will confer over 80 percent of the benefits to just 43,000 taxpayers, each earning at least $1 million per year.” The repeal of these provisions would save over $250 billion, the letter states, “which should be repurposed to help Americans who have lost income due to the pandemic and its economic fallout.”
Last Week in the Senate
committees under Democratic control.
The Senate Banking Committee, on Thursday, approved the nomination of Rep. Marcia Fudge (D-Ohio) to lead the Department of Housing and Urban Development by a vote of 17-7 vote. The Committee also unanimously approved Cecilia Rouse to chair the Council of Economic Advisers.
Early Friday morning, Senators wrapped up consideration (51-50) of a budget resolution for COVID-19 relief legislation following roughly 15 hours of debate on amendments. The Senate agreed to several amendments during the marathon “vote-a-rama” process, including provisions such as:
- an amendment sponsored by Sen. Susan Collins (R-ME) that aims to strengthen the health care provider relief fund;
- an amendment sponsored by Sen. Mike Lee (R-UT) that seeks to expand health savings accounts;
- an amendment sponsored by Sen. Marco Rubio (R-FL) that would prevent tax increases on small businesses during the pandemic;
- an amendment sponsored by Sen. Kyrsten Sinema (D-AZ) that would fund a grant program for food service and drinking establishments impacted by the pandemic;
- an amendment sponsored by Sen. Ben Cardin (D-MD) that seeks to improve COVID-19 vaccine distribution; and
- an amendment sponsored by Sen. Shelley Moore Capito (R-WV) that aims to ensure “effective and efficient” implementation of existing water pollution prevention and control laws.
DOL Nomination Hearing (2/4): On Thursday, the Senate HELP Committee held a hearing to consider the nomination of Marty Walsh to serve as Secretary of Labor. Mr. Walsh expressed a commitment to advancing inclusion in the workforce for women and minorities, including addressing the pay equity gap and advocating for workforce development investments. He is expected to pursue the administration’s labor goals of recovering millions of jobs lost last from the pandemic, expanding who qualifies for overtime pay and pressing Congress to raise the federal minimum wage to $15 an hour. He expressed support of the PRO Act and is expected to pursue the administration’s plans to boost labor unions. Republicans are largely expected to support his nomination, and we expect a Senate confirmation vote soon.
S. 175 (Durbin): A bill to amend the Internal Revenue Code of 1986 to exempt a portion of unemployment compensation received during 2020 from income taxes.
S. 153 (Cruz): A bill to amend the Internal Revenue Code of 1986 to expand and improve health savings accounts, and for other purposes.
S. 243 (Cramer): A bill to amend the Internal Revenue Code of 1986 to expand tax-free distributions from individual retirement accounts to include rollovers for charitable life-income plans for charitable purposes.
S.258 (Peters): A bill to help small businesses access capital and create jobs by reauthorizing the successful State Small Business Credit Initiative.
Competition and Antitrust Law Enforcement Reform Act (Klobuchar): As the incoming head of the Senate antitrust subcommittee, Sen. Klobuchar (D-MN), is proposing broad changes to U.S. antitrust laws to press the issue of perceived monopoly power in technology and other industries. The legislation that would bar companies that dominate their sectors from making acquisitions unless they can prove their deals don’t “create an appreciable risk of materially lessening competition” —putting the onus on the government to prove a merger substantially lessens competition.
Family Security Act (Romney): A bill to provide a monthly cash benefit for families, amounting to $350 a month for each young child, and $250 a month for each school-aged child. The Act would replace the Child Tax Credit with a $3,000 yearly benefit per child — $4,200 for kids under the age of 5 — spread out in monthly installments. Sen. Romney predicts this would boost nearly 3 million children out of poverty.
Senate Banking Membership: The Senate Banking Committee roster was finalized this week, with the additions of both Georgia Senate Democrats, Jon Ossof and Raphael Warnock, and the departure of Hawaii Senator Brian Schatz on the Democratic side. Republicans, having lost two Members last Congress, added Bill Hagerty of Tennessee, Cynthia Lummis of Wyoming, and Steve Daines of Montana, with Nebraska’s Ben Sasse and Arkansas Tom Cotton leaving the Committee.
The Committee stands at 12-12, membership as follows:
Sherrod Brown (D-OH), Chairman
Jack Reed (D-RI)
Robert Menendez (D-NJ)
Jon Tester (D-MT)
Mark R. Warner (D-VA)
Elizabeth Warren (D-MA)
Chris Van Hollen (D-MD)
Catherine Cortez Masto (D-NV)
Tina Smith (D-MN)
Kyrsten Sinema (D-AZ)
Jon Ossoff (D-GA)
Raphael Warnock (D-GA)
Pat Toomey (R-PA), Ranking Member
Richard Shelby (R-AL)
Mike Crapo (R-ID)
Tim Scott (R-SC)
Mike Rounds (R-SD)
Thom Tillis (R-NC)
John Kennedy (R-LA)
Bill Hagerty (R-TN)
Cynthia Lummis (R-WY)
Jerry Moran (R-KS)
Kevin Cramer (R-ND)
Steve Daines (R-MT)
Last Week in the Administration
Money Market Fund Reform
On Thursday, as one of its first moves in the Biden administration, the Securities and Exchange Commission published a request for public comment on potential reform measures to improve the resilience of money market funds and prepare for a future economic crisis. The move comes after a December 2020 report by the President’s Working Group on Financial Markets, which said that policymakers should consider taking measures to prevent runs on the funds, improve the resilience of short-term funding markets, and reduce the likelihood that the government will have to intervene in the future as it did last March in response to the COVID-19 pandemic.
New Agency Staff
Key staff members were announced recently at Treasury and the SEC. Treasury Secretary Janet Yellen was confirmed by the Senate on January 25, with an 84-15 vote. Meanwhile, Commissioner Allison Herren Lee is serving as SEC Acting Chair while Gary Gensler — Biden’s nominee for Chairman — awaits confirmation.
Shelton Fed Nomination Withdrawal
On Thursday, President Biden formally withdrew Judy Shelton’s nomination to the Federal Reserve Board, officially closing the book on her pursuit to join the central bank. Although the Democratic majority in the Senate in January effectively ended any chance of Shelton’s confirmation, Biden’s withdrawal merely clears the way for his eventual nominee to fill the final vacant spot on the Fed board. Biden has not yet indicated who he would pick to fill the role.
Federal Reserve Real Time Payments in 2023
Last week, the Federal Reserve made clear that it expected to have its FedNow real time clearing payments system operational by 2023. This revised a previous expected start date of sometime in 2023 or 2024. Despite the stepped up timeline, the he Federal Reserve continues to indicate that it is taking a phased approach to bringing the FedNow Service to market, with it’s initial launch will include core clearing and settlement functionality and key value-added features, such as a request-for-payment capability and tools to support participants in their handling of payment inquiries, reconcilements and certain exceptions.
CFPB Reconsiders QM, Debt Collection Rules
On Thursday, the Bureau’s Acting Director David Uejio issued a blog post discussing priorities and potential changes to Trump era regulations. In the blog post, Uejio announced he is mulling scrapping two Trump-era rules — a revision of the agency’s “Qualified Mortgage” rule and a rule updating requirements for debt collectors. Both rules were finalized last year but have not yet been implemented, and the CFPB staff has been directed by him to “explore options for preserving the status quo with respect to QM and debt collection rules.” The post also outlined that the Bureau is working hard to address housing insecurity, promote racial equity, and protect small businesses’ access to credit as some of its initial focuses.
This Week’s Schedule
- Organization Meeting: House Education and Labor Committee – 4:00 PM – The House Education and Labor Committee will hold its organizational meeting for the 117th Congress. Details here.
- PIIE Webinar on Global Tech Rules – 9:00 AM – The Peterson Institute of International Economics (PIIE) will host a webinar entitled “Getting the Best Out of Tech: Would International Rules of the Road Help?” Details here.
- Confirmation Hearing: Senate Homeland Security Committee – 9:15 AM – The Senate Committee on Homeland Security and Government Affairs will hold a hearing to examine the nomination of Neera Tanden to be Director of the Office of Management and Budget (OMB). Details here.
- Organization Meeting: House Budget Committee – 11:00 AM – The House Budget Committee will hold its organizational meeting for the 117th Congress. Details here.
- BPC Webinar on Capitalism – 2:15 PM – The Bipartisan Policy Center will host a webinar entitled “What’s Next for Stakeholder Capitalism in 2021.” Details here.
- PIIE Webinar on Tech Regulation – 9:00 AM – The Peterson Institute of International Economics (PIIE) will host a webinar entitled “A Holistic Look at Big Tech Regulation.” Details here.
- Confirmation Hearing: Senate Budget Committee – 10:00 AM – The Senate Budget Committee will hold a hearing to examine the nomination of Neera Tanden to be Director of the Office of Management and Budget (OMB). Details here.
- Future of Privacy Forum 11th Annual Privacy Papers – 1:00 PM – The Future of Privacy Forum will host its 11th Annual Privacy Papers for Policymakers event, featuring a keynote speech from Acting FTC Chair Rebecca Slaughter. Details here.
- Executive Session: Senate HELP Committee – 10:00 AM – The Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold an executive session to vote on the nominations of Miguel Cardona to be Secretary of Education, and Marty Walsh to be Labor Secretary. Details here.
- Hearing: House Judiciary Sub. on Arbitration – 10:00 AM – The House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law will hold a hearing entitled “Justice Restored: Ending Forced Arbitration and Protecting Fundamental Rights.” Details here.
- Brookings Webinar on Digital Markets and Blockchain – 3:00 PM – The Brookings Institution will host a webinar entitled “The future of blockchain and digital markets: A perspective from the World Economic Forum.” Details here.
- No events scheduled.
- Hearing: House Financial Services Committee on the Stock Market – Feb. 18 – The House Financial Services Committee will hold a hearing entitled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide.” Details here.
- Hearing: House Financial Services Sub. on Terrorist Financing – Feb. 23 – The House Financial Services Subcommittee on National Security, International Development, and Monetary Policy will hold a hearing entitled “Dollars against Democracy: Domestic Terrorist Financing in the Aftermath of Insurrection.” Details here.
- Hearing: House Financial Services Sub. on Climate Change – Feb. 23 – The House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets will hold a hearing entitled “Climate Change and Social Responsibility.” Details here.
- Hearing: House Financial Services Committee on State of the Economy – Feb. 24 – The House Financial Services Committee will hold a hearing entitled “Monetary Policy and State of the Economy.” Details here.
- Hearing: House Financial Services Sub. on Discrimination – Feb. 24 – The House Financial Services Subcommittee on Oversight and Investigations will hold a hearing entitled: “How Invidious Discrimination Works and Hurts: An Examination of Lending Discrimination and Its Long-term Economic Impacts on Borrowers of Color.” Details here.