House passage of Sen. Bernie Sanders’ (I-VT) $3.5 trillion reconciliation plan last month was not the end of the process, but rather just the beginning. Analysts are calling this one of the most complicated tax and spending pieces of legislation ever proposed as almost no area of the federal budget or tax code is off limits.
Much was made in reporting about the price tag of the package and the fact that utilizing this method allows the Senate to bypass the filibuster so it can be passed with only Democratic votes. However, there was little discussion of specific policies or tax measures in it because it did not contain any.
Reconciliation is simply a directive to Congress to do something while leaving the details to be worked out later. This lack of particulars also is partly by design so there would be little opportunity to organize opposition to specific measures in the compressed timeframe during which the legislation is being considered.
The split between the progressive and moderate wings of the party could prove problematic, however, as it would only take one Democratic senator or four House Democrats to sink the entire package.
Progressives have gone on record that they will not support the $500 billion bipartisan infrastructure bill until after the House passes the $3.5 trillion reconciliation package. Speaker Pelosi’s three-vote cushion to pass the Democrat-only measure makes it extremely difficult to negotiate a reconciliation package that can pass before the end of the fiscal year September 30. Plans are already being made to pass a continuing resolution (CR) to fund the government until December.
Complicating matters is that the Speaker promised a group of nine moderate House Democrats a separate vote on the infrastructure bill by September 27 in exchange for their votes in August to move forward with reconciliation. One option being floated is to pass and delay sending the infrastructure bill to the President until after reconciliation is complete. However, Reps. Jim Clyburn (D-SC) and John Yarmuth (D-KY) both stated September 19 that there is a chance Congress will not vote in time to meet the promised deadline for the infrastructure bill.
Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have said that they do not support the reconciliation bill’s $3.5 trillion price tag. Manchin has called for a pause on the budget reconciliation process and now says that Congress should not proceed with the bill until sometime in 2022.
Apart from this, Republicans are threatening to vote against raising the federal debt limit where their votes are needed for passage in order to assert their leverage.
Senate Democratic leadership is working through final draft reconciliation language, but face obstacles from Senate Parliamentarian rulings in relation to several portions. A ruling September 19 all but foreclosed proposed immigration policy reforms that would have provided 8 million green cards and a pathway to citizenship for millions of immigrants. Labor, clean energy and prescription drug pricing issues will also likely require Parliamentary approval that could restrict their scope.
There are several progressive “wish list” items that may still be included in the final package with many that could negatively impact the waste and recycling industry. Committees have spent the last week or so marking up their portions of reconciliation with significant proposals emerging in the areas of regulation, labor, environment and taxes.
The House Ways and Means Committee, which is responsible for initiating all tax measures in Congress, completed their portion of the bill but Senate Finance Committee Chairman Ron Wyden (D-OR) has indicated that he has a somewhat different vision than his House counterpart Chairman Richard Neal (D-MA).
The Ways and Means markup seeks to increase the corporate tax rate from 21 percent to 26.5 percent for businesses earning at least $5 million, hikes the capital gains tax from 20 to 25 percent and raises the top individual tax bracket (which also covers unincorporated small businesses) from 37% to 39.6% starting in 2022 and lowers the point at which it kicks in to $400,000. The House did not include repeal of the stepped up basis at death which would effectively create a double death tax for small business owners. The National Waste & Recycling Association (NWRA) had lobbied against repeal of this provision.
The House Committee on Natural Resources began their markup with a draft calling for raising $6 billion through various funding streams including the imposition of a “carbon pollution fee” that takes into account all extracted methane. While this is aimed at the oil and gas industry, it has the potential to impact landfills if the language is not worded carefully. Additionally, they are proposing to repeal ANWR drilling leases and ban most offshore oil and gas drilling, which would result in higher energy prices.
The committee is also looking to rollback National Environmental Policy Act (NEPA) reforms instituted by the Trump administration that expedited analyses and environmental review of major infrastructure projects. This is in direct conflict with elements of the bipartisan infrastructure package, which proposes speeding up environmental review and solidifying the changes put in place by the previous administration.
The House Education and Labor Committee began tackling its portion of reconciliation September 9. While committee Democrats were unable to add the Protecting the Right to Organize (PRO) Act to their part of this legislation, several provisions of it have been incorporated into it including creating brand new unfair labor practices, giving the National Labor Relations Board broader powers and empowering it to conduct union elections online. The cost of labor violations would also be increased with some penalties being assessed at $50,000 for a first violation and $100,000 for repeat offenders.
On a positive note, Sen. Ben Cardin (D-MD) included repeal of the Federal Excise Tax (FET) on heavy trucks among his priorities during a meeting with Senate Finance Committee Democrats held by Chairman Ron Wyden (D-OR) to discuss their policy priorities in reconciliation. The Modernize the Truck Fleet (MTF) coalition, of which the NWRA is a primary member, will meet with Senate Finance Democrat offices on FET repeal and ask them to cosponsor the FET repeal bill (S. 2435) and support Sen. Cardin’s efforts.
The MTF coalition also asked Rep. Chris Pappas (D-NH) to raise FET repeal with House Transportation & Infrastructure Committee Chairman Peter DeFazio (D-OR) and asking the signatories of the Pappas FET repeal letter on the House Ways & Means Committee to raise FET repeal with Chairman Richard Neal (D-MA).
NWRA remains vigilant in tracking these and other proposals being put forward as part of budget reconciliation in order to protect the industry and advance its interests.