WASHINGTON — House Democrats on Tuesday resolved their procedural standoff over the infrastructure and reconciliation bills after moderates secured two concessions from Speaker Nancy Pelosi.
Concession #1: The House will vote on the Senate-passed bipartisan infrastructure bill by Sept. 27
Concession #2: The House will work only with a reconciliation bill that can get united Democratic approval in the Senate (or: 51 votes in the Senate).
It’s that second concession that seems to us to be the bigger deal, because it means that vulnerable House members won’t be voting on any measures that will be doomed in the 50-50 Senate (hello, BTU tax and cap-and-trade!).
And it also means that Sens. Joe Manchin, D-W.V., and Krysten Sinema, D-Ariz., have even more leverage over the reconciliation package than originally thought. The reason: They will have to be on board with any deal before it gets to the House.
Here’s the statement from the House moderates: “The Speaker of the House publicly agreed to only bring a reconciliation package to the House that has the backing of 51 votes in the Senate and complies with the Senate Byrd Rule.”
And here’s Pelosi’s statement: “We must keep the 51-vote privilege by passing the budget and work with House and Senate Democrats to reach agreement in order for the House to vote on a Build Back Better Act that will pass the Senate.” (Emphasis in italics is ours.)
As we wrote yesterday, this moderate-versus-progressive standoff on infrastructure/reconciliation was akin to watching an NFL preseason game.
Hitting, controversy, cheers, boos — all for a game that doesn’t count in the actual standings.
But now that we’ve entered the real season after House Democrats moved forward with their procedural vote yesterday, we did learn something important (again) from that preseason game.
The quarterback calling the plays is … Joe Manchin.
Why would House Dems want to give the Senate veto power over their own bill? They can prevent a situation where they’re pressured into voting for a much larger, more progressive, and more controversial bill that leaves them open to midterm attacks only to have it superseded by whatever Manchin and Sinema demand in the end.
Pelosi has experience with this: Members who voted on a sweeping climate bill before the 2010 midterms were left out on a limb when the Senate failed to do the same and the legislation ended up in attack ads.
In fact, Manchin himself famously shot the cap-and-trade bill in his own commercial.
Who’s out and who still remains
On Afghanistan, the Biden administration has placed a lot of attention on who has gotten out of the country.
But it has placed less attention who still remains.
“With President Joe Biden intending to stick to the Aug. 31 deadline for U.S. troops to leave Afghanistan, it's becoming clear that thousands of the Afghans who helped the U.S. won't be evacuated, a scenario that has engendered deep frustration inside U.S. national security agencies,” per NBC News.
“‘People are furious and disgusted,’ said a former U.S. intelligence official who declined to be quoted by name. A defense official said he grew nauseated as he considered how many Afghan allies would be left behind.”
Data Download: The numbers you need to know today
19,000: The approximate number of people evacuated from Kabul on Tuesday, according to the White House.
52 percent: The percentage of adults in America who say the Jan. 6 attack was an act of terrorism, according to the new NBC News poll that shows the attitudes on the attack settling along partisan lines.
456 percent: The 14-day change in Covid cases in South Dakota, according to the New York Times, (the largest change of any state) days after the Sturgis Motorcycle Rally.
38,226,251: The number of confirmed cases of coronavirus in the United States, per the most recent data from NBC News and health officials. (That’s 168,915 since yesterday morning.)
634,697: The number of deaths in the United States from the virus so far, per the most recent data from NBC News. (That’s 1,242 since yesterday morning).
51.6 percent: The share of all Americans who are fully vaccinated, per the CDC.
62.6 percent: The share of all American adults at least 18 years of age who are fully vaccinated, per CDC.
Tweet of the day
Talking policy with Benjy: The most important budget fight you’ve never heard of
Hello, First Readers! Might I interest you in an item about how U.S.-based corporations are taxed on certain types of foreign income and the formula used to calculate their liability? Wait, don’t go!
International tax policy is perhaps the least flashy topic in the reconciliation bill and involves an alphabet soup of policies — GILTI, FDII, BEAT — that mostly garner coverage in specialized trade publications rather than major outlets.
But First Read is covering the most critical choices facing Democrats in crafting their $3.5 trillion budget bill and this is unquestionably one of the biggest.
“I'd say it is one of the more important revenue raisers in the Biden agenda,” Kyle Pomerleau, a senior fellow at the American Enterprise Institute, told NBC News. “The international provisions, at most, will raise around $800 billion.”
With that in mind, Senate Finance Chairman Ron Wyden, D-Ore. put out a draft bill on Wednesday morning with backing from Sen. Mark Warner, D-Va. and Sen. Sherrod Brown, D-Ohio.
“While working families have struggled to get ahead, companies that saw their taxes cut in half are doing better than ever before, and paying less in taxes than any time since World War II,” Wyden said in a statement. “To right the ship, we’re ending incentives to ship jobs overseas and closing loopholes that allow companies to stash their profits in tax havens.”
Here’s the quick and dirty version of how it works: The 2017 Republican tax bill created a system where U.S.-based companies would pay taxes every year on foreign income, but at a lower rate and with a formula that exempted some revenue. This was a shift from the old system, where companies had to pay the full U.S. tax rate – but could park their profits abroad indefinitely rather than trigger the tax.
Democrats want to keep the new system, but increase the tax rates, apply them to more revenue, and calculate taxes on a country-by-country basis rather than use one formula based on a global average. The goal is to make it harder to take advantage of countries with much lower rates and to get rid of some features that they argue encourage companies to keep factories overseas to obtain favorable tax treatment.
Critics argue the changes would make US companies less competitive and the taxes would mostly hit factories abroad that exist to serve foreign markets rather than bring back jobs that would otherwise be in America. If the new rates are too high, U.S. companies might move their headquarters abroad to avoid them.
Some of those concerns might be mitigated by another Biden priority: Treasury Secretary Janet Yellen is in talks with other countries about setting a 15 percent minimum corporate tax in order to avoid a “race to the bottom,” in which companies flock to the country with the lowest rates.
There’s lots of room to tweak individual components depending on how lawmakers react to business concerns. How much money a bill raises also depends not only on the international provisions, but how high Democrats set the overall corporate tax rate, where moderates are likely to chop down Biden’s proposed 28 percent.
“After all is said and done, I don't think they will get all of that revenue,” Pomerleau said. “The proposals they put forth are more of a reach goal.”
ICYMI: What else is happening in the world
The Washington Post reports that President Biden has received an inconclusive intelligence report about the origins of the coronavirus, according to two U.S. officials familiar with it.
Republicans in the Pennsylvania state Senate are trying to reboot an effort to hold an Arizona-style investigation of the 2020 vote there.
The Centers for Disease Control and Prevention’s decision not to track all breakthrough cases has led to them relying on outdated data, Politico reports.
The Supreme Court rejected the Justice Department’s attempts to temporarily halt the Trump administration’s “Remain in Mexico” asylum policy.