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Senate Republican Leader Mitch McConnell proclaimed in Kentucky this past week that his mission was to stop the socialist agenda of President Biden; while the White House looks for a bipartisan agreement on infrastructure. The President and his White House team continue to talk to a handful of Republicans who have put forward a $600B infrastructure bill that moves ahead with traditional projects such as roads, bridges, airports etc. Democrats are split with some supporting Biden’s outreach to Republicans and others committed to “going big” with only Democratic votes. In my view there is a chance that Congress may move forward on a two-track approach with a bipartisan traditional infrastructure bill, and a second program passed exclusively with Democratic votes under Budget Reconciliation rules. If there is going to be a bipartisan bill a stumbling block could be paying for the program. The Biden Administration has proposed using an increase in the corporate tax as the “pay-for.” Increasing the corporate tax is a non-starter for Republicans. The reduction of the corporate tax rate from 35% to 21% was the centerpiece of the Trump tax cuts. Prior to the Trump/Republican cut the US had one of the highest corporate tax rates in the world. President Trump and Congressional Republicans argued that the lower rate made American companies more competitive with global rivals and played a significant role in the robust economy pre-pandemic. Republicans will not support any bill that reverses this accomplishment. While increasing the corporate tax may be off the table for a bipartisan infrastructure bill it is possible that Republicans could support an increase in the gas tax, a user tax. The gas tax hasn’t been increased since 1993 and is only $.18.4 a gallon. As autos have become more efficient the tax has brought in less and less revenue, and an increase might make sense to pay for roads and bridges. A related issue is what to do about the expected increase in electric cars, EVs, which avoid the gas tax altogether. Republicans could expand that gas user tax in some form to capture revenue from EVs. A third possible bipartisan tax might be an initiative to give the IRS more money for audits to collect from tax cheats. It’s estimated that the US may be missing $1T in uncollected taxes. Republican controlled Congress have cut IRS funding, but as part of an infrastructure bill compliance might be an acceptable way to raise revenue. The White House is reportedly ready to give the bipartisan talks another month but at some point they will reach a decision to fish or cut bait. I continue to believe that there is a 75% chance that an infrastructure bill will pass by the fall; if there is no bipartisan bill infrastructure will pass using Reconciliation. West Virginia Democratic Senator Joe Manchin has expressed a preference to have a bipartisan bill; but West Virginia is a poor state that needs federal infrastructure dollars, it is my view that at some point he will agree to a Democrats only reconciliation approach. If it is a Democrats only bill increasing the corporate tax is back in play. Manchin, and a few others, have said they believe that the 28% rate proposed by the White House is too high; but there is support for a lower number such as 25%. Indeed when the Trump White House pushed for the lower corporate tax rate many thought the final figure would be 25%, and there was some surprise it ended up as low as 21%. There is considerable Democratic support for giving the IRS more money to go after tax cheats and this could become part of a Democrats only reconciliation bill. In any event I expect parts of the Biden infrastructure proposal to pass by fall Intellectual Property (IP) This past week the Biden Administration indicated that it would support an effort to waive the intellectual property protection given to the Covid 19 vaccine. I will be writing more about this in coming weeks; but as a former adviser to the US Government on trade issues it is my view that this is a mistake. Protecting IP is a cornerstone of US trade policy and to waive the protection undermines the government’s negotiating position. From negotiations with China to WTO the US has stood with the EU and others to insist on the protection of private sector breakthroughs. To blink and waive the protection for the vaccine is a mistake. There are other alternatives to ensure that the vaccine gets to poor nations and it can be done with the full cooperation of the vaccine manufacturers.

Infrastructure Debate Continues, Biden Intellectual Property Decision
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  • US Policy
Mar 6, 2020

Biden Pulls in Moderates Support; More Primaries Tuesday

A big political turnaround last week. It has been a defining week in the Democratic primaries, with four key moderates (Minnesota Senator Amy Klobuchar, former Indianapolis mayor Pete Buttigieg, Beto O’Rourke, and, after Tuesday, Michael Bloomberg) all backing former Vice-President Biden. Supporters of the three who dropped out before Tuesday’s vote seemed to rally behind Biden. Surprisingly when Massachusetts Senator Elizabeth Warren left the campaign on Thursday she failed to endorse Vermont Senator Bernie Sanders, who seemed like her closest political ally in the progressive wing of the party. Sanders appears isolated on the left wing of the party, and is again the outsider trying to get in, a similar role to his revolutionary campaign of 2016. Hillary Clinton supporters blame bitter Sanders’s supporters who didn’t vote in 2016 as contributing to her loss, and Democrats will be on their guard this year to try and bring a conclusion to the campaign that has the party as united as possible. The selection of a veep candidate could play a role in this process. It seems likely that both Biden and Sanders would choose a woman as a running mate after all the female candidates failed to make the final cut. Tuesday brings six more primaries with Michigan and its 125 delegates the biggest prize. Furthermore, as Michigan has become a key swing state, a primary victory there strengthens the winner’s story that he is the best candidate to defeat President Donald Trump. Coronavirus The Congress and White House moved quickly to pass the $8 billion funding bill for fighting the coronavirus outbreak. The President’s initial proposal for $2.5 billion was quickly replaced with a bipartisan agreement for the higher level. However, the bill only provides assistance for immediate medical needs ranging from testing kits to aid to local health authorities as they staff up to face the crisis. The legislation contains money for accelerated research but, as the medical experts have cautioned, that is 12 to 18 months away under the most optimistic forecasts. The bill does nothing to help communities and businesses that could be hard hit by the spread of the disease as Americans cut back activities from travel to eating out. There are already some discussions of a broader stimulus bill, but deciding how money is distributed, picking winners and loser, and keeping it out of politics in an election year will be a challenge. However, a stimulus bill aimed at the crisis could be in the tens if not hundreds of billions of dollars and potentially be a boost to markets. Figure: Top Trump Tweets The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!— Donald J. Trump (@realDonaldTrump) March 3, 2020 There can be few things worse in a civilized, law abiding nation, than a United States Senator openly, and for all to see and hear, threatening the Supreme Court or its Justices. This is what Chuck Schumer just did. He must pay a severe price for this!— Donald J. Trump (@realDonaldTrump) March 5, 2020

Biden and Democrats Push Job, Infrastructure and Family Bills

President Biden gave his initial speech to a Joint Session of Congress; but with Covid protocols in place the speech had a unique atmosphere. As I watched I wrote on Twitter that having tried, and failed, many times in my youth to get a ticket for a Joint Session; this past week’s nearly empty House Chamber was an eerie picture. As has become the practice at Joint Sessions the simple act of applauding the President’s comments became political statements. Speaker Pelosi would signal Democrats when they should stand, and Leader McConnell would set the tone for Republicans. President Biden is an experienced and poised speaker and both practiced his speech and participated in the writing of the remarks; even most Republicans conceded it was well delivered. The content had been well leaked so there were no surprises. The President gave a strong pitch for bipartisanship; and there does seem to be a ray of hope that the two sides may be able to find some common ground on the more traditional infrastructure ideas. A group of Republicans have given the White House a proposal totaling $568B; and while much less than the $2T proposed by the President it is a significant proposal. Republicans left projects on Broadband buildout and electric grid upgrades out of their proposal; but as bipartisan negotiations continue these areas could be added and drive the bipartisan package closer to $1T. Financing the compromise could be a contentious issue; but while an increase in the corporate tax is unlikely to make the cut, there are proposals that range from increasing the gas tax to building the ability of the IRS to find cheats that could fund part of the legislation. If Republicans and Democrats can reach agreement on a large traditional infrastructure bill Democrats could look to Budget Reconciliation to pass some of Biden’s ideas on housing, schools and senior care living. Under Reconciliation Democrats could fund some of these programs with an increase in the Corporate Tax rate, though probably less than the 28% in the Biden proposal. The Democrats will have a tougher job getting many of the ideas in the American Families Plan through even if they attempt to use Reconciliation. While Democrats can get budget ideas passed with only Democratic votes using Reconciliation it requires the unanimous agreement of Senate Democrats, and near unanimity among House Democrats where currently Speaker Pelosi only has a four seat cushion. I believe some of the more expensive ideas pushed by progressive Democrats may have to wait until they can gain a larger majority; and paying for the changes with an increase in the capital gains tax seems like a tough goal with Democrats representing high tax areas where at 39.6% when combined with state and local taxes the rate would rise to over 50%. This would be a tough sell in competitive House districts. Bottom line: It is my view that there is less than a 20% chance that capital gains tax rise anywhere near the proposed rate of 39.6%, though an increase from 21% to 25% might be more doable.

Capital Gains And Infrastructure Lead DC Debate

Capital Gains Over the years I have often found it interesting in the two views of the world held by Wall Street and under the Capitol dome. On Thursday and today all my Wall Street contacts were asking about the “leaked” intent of President Biden to raise the capital gains tax rate to the same rate as ordinary income. The Biden proposal would raise the top personal rate from 37% to 39.6%. First things first, is this news? In his campaign papers last year candidate Biden proposed exactly this idea; how this is news is somewhat a mystery to me. Second, the Bloomberg report was “leaked.” Not sure how one leaks a plank of the platform of a victorious candidate, but someone wanted to start the debate. Leaks are never a good source for decision making. Those who leak have all sorts of motives, and without knowing the viewpoint of the leaker motives are hard to judge. Politicians and investors live in different universes; interestingly the capital gains story, the lead on Bloomberg, didn’t make page 1 of the Washington Post. The Washington political newsletters I read barely mentioned the capital gains Bloomberg story. In a 50/50 Senate, and expectation that not a single Republican would vote to increase personal tax rates, it is hard to count 50 votes the Democrats will need. New Hampshire is a state with no income tax and where low taxes are at their political core. It has two Democratic Senators and one expecting a very competitive race in 2022. Manchin and Sinema seem like hard to get votes, and Sinema’s AZ colleague Mark Kelly is up for re-election in 2022 and with so many retirees who can live on capital gains who live in AZ it seems like a tough vote. Bottom line is the raise in capital gains to 39.6% seem unlikely. Infrastructure Thursday Republicans unveiled their counter proposal to the President’s $2.5T infrastructure bill. The Republican proposal totaled $568B and was limited to more traditional infrastructure that included roads, mass transit, airport etc. However, the Republican proposal did include water projects focused on safe drinking water. While some progressive Democrats panned the proposal; leading moderates such as Senators Coons and Manchin thought it was a good starting point. Senator Coon (D,DL) had previously raised the possibility of dividing the Biden proposal into two bills: traditional infrastructure under “regular order” and the more progressive ideas such as schools and housing in a second bill that would be taken up under Reconciliation. The $568B seems like a good starting point for discussions, and the addition of ideas such as broadband and electric car battery chargers may be programs that Republicans could accept. The White House didn’t dismiss the Republican proposal and talks may yield a two-track approach to legislation.

Congress Returns But Little Action Happening

Congress returned this week but it was slow on plotting next steps on the big issue of infrastructure and corporate taxes. On the sidelines of Congress there have been a few discussions continuing the elusive effort to find a bipartisan way forward on infrastructure. Delaware Senator Chris Coons, who is very close to President Biden, floated the idea of breaking the infrastructure package into two baskets: one the more traditional definition of infrastructure and a second that might include ideas from progressive Democrats such as housing and childcare facilities. The thought is that the more traditional roads and bridges could get bipartisan support and pass under regular order; while the new ideas related to social structure would be hammered out among Democrats and considered under the narrower Budget Reconciliation process. While the idea has not been widely embraced, it has also not been immediately rejected. For many Democrats it would increase the chances that at least some large infrastructure bill would be approved even if some of the ideas on the progressive agenda have to wait. The more progressive ideas were always going to have a problem getting the support of the moderate Democrats led by West Virginia Senator Joe Manchin, and a two-tier approach could deliver a nearly trillion dollar package in the fall and lay the groundwork for Democratic campaigns in 2022. Democrats Narrowing Majority The return of Congress saw the swearing in of the newest House Member Louisiana Republican Julia Letlow who was elected to replace her husband who died on December 29, 2020. Letlow brings the Republican numbers up to 212 Members, and with the death of Democrat Alcee Hastings and vacancies created by Members joining the Biden Administration, Pelosi’s caucus is down to just 218 Members or a margin of just six votes. Japan and US Under the radar screen this week the President hosted his first foreign leader, Japanese Prime Minister Yoshihide Suga. The two leaders had talks that focused on China and the global supply chain issue. While former Japanese Prime Minister Abe had a good personal relationship with President Trump, built on their mutual love of golf, it didn’t stop threats against Japan, especially their auto industry. The visit of PM Suga is welcomed by the Japanese as a hopeful return to more normal relations based on the mutual values both nations have shared since the end of WWII.

Biden’s Budget And Infrastructure Welcomes Congress Back

After the Easter/Passover break Congress returns next week with the legislative focus on President Biden’s proposed budget, and the continuing discussion of a large infrastructure bill. On Friday the Biden Administration released the outline of its budget recommendations. Democrats have long complained that too much federal spending was going towards defense at the expense of needed domestic spending. The proposed Biden budget starts to realign budget priorities with defense spending increasing just 1.7% to $753B, while non-defense spending is increased 16% to $769.5B. The Department of Education, which was cut during the Trump years, has a 40% proposed increase. Other domestic agencies also see proposed increases with 23.1% at HHS, and 15.1% at HUD. However, Presidential budget requests are just that – requests – and are regularly changed by Congress no matter who controls the White House or the legislative branch. It has become regular practice for Congress to miss the completion of the federal budget by October 1 when the new fiscal year begins. The common practice is for Congress to approve a Continuing Resolution (CR) to fund the government at current spending levels. Democrats in Congress are anxious to see increases in domestic spending so there may be some incentive to reach agreement with Republicans which is likely to require greater spending of defense. In addition to federal spending, by year end Congress will need to pass an increase in the debt ceiling. One of the oddities of the US Government is that there is a legal celling on the amount of debt the US can have outstanding at any one time. The debt ceiling is regularly increased to accommodate increased spending, but it is always a difficult vote for Members of Congress. The current ceiling exemption expires on August 1, but Treasury has developed a package of “extraordinary measures” that can keep the government afloat for several months. But at some point by yearend Congress will need to increase the ceiling, and it is sure to add drama to the closing weeks of the Congressional calendar. In addition to the President’s fiscal year 2022 budget, Congress is starting to develop a strategy to act on the Biden $2T infrastructure proposal. While the President plans meeting next week with Republicans in an effort to develop a bipartisan infrastructure program, there is a great deal of focus on ways to approve the Democratic package without Republican support, as Congress did in the Covid Relief bill earlier this year. The Covid bill was passed using the filibuster proof Budget Reconciliation procedure. In the past Congress has been limited to one Budget Reconciliation Bill; but Senate Leader Schumer has developed a plan with the Senate Parliamentarian that would allow for one amended version of the Budget Resolution which would contain instructions for an amended Reconciliation Bill. At this point it is not clear whether or not this is an agreed upon plan to pass the infrastructure bill using Reconciliation or leverage to try and win some Republican support. It is important to remember, as seen in the failure to include a minimum wage increase, that there are limits as to what can be in a Reconciliation Bill. In the coming weeks the issues of the 2022 Federal Budget, increasing the debt ceiling, and acting on infrastructure will all be front and center in DC.

Infrastructure, Taxes and Border Mess

While Congress will be taking a break for Passover and Easter, President Biden is heading to Pittsburgh on Wednesday to formally announce his infrastructure program. Reports run as high as $3T for the price tag, though talks behind the scenes with moderate Democrats and a handful of Republicans could see a lower dollar amount in order to get broader support. There are two big questions that the White House and Congress will need to work out: first, will there be enough Senate Republicans who support the final bill to allow the program to be approved under regular order; and second, will taxes need to be raised in order to at least partially pay for the programs. On the first issue of Republican support, as I have written the renewal of Member earmarks might help generate support among Republicans. Republicans have long argued that folks back home know much more about spending priorities than bureaucrats in Washington. Earmarks are the legislative tool to make the decision making process more local, if adopted it may put pressure on some Republicans to participate in a process that brings infrastructure dollars to their states. If a bipartisan compromise can’t be assembled Democrats are likely to turn to the Budget Reconciliation process to move a large infrastructure bill. There is already discussion around the argument that infrastructure is a good investment and the type of spending that makes sense to pay for over time with borrowing. With a 50/50 Senate most of the tax raising ideas that have been brought forward would have a tough time getting 50 Democratic votes, and even Susan Collins, the most moderate Republican, literally laughed when asked if she could support a Democratic tax increase. This past week Senator Sanders unveiled a tax program that included a large increase in corporate taxes, and tax increases for estates. It is important to note that while Senator Sanders serves as Chair of the Budget Committee, it is Finance not Budget, that writes tax laws. The infrastructure bill is on a fast track, the same can’t be said for tax increases. While the White House has wanted to focus on the accomplishments to date with respect to both vaccines and the large Covid legislative package, much of the press this past week was centered on the flood of immigrants at the Southern border. In fact at Thursday press conference there were many questions on the immigration problems, and not a single question on Covid or the rollout of the massive $1.9T legislation. Republicans plan to spend time during the Congressional break down at the border, they know that Trump and Republicans got hammered on immigration policy, but they also know that for the Trump base immigration and the border wall are central issues. The President wants to keep the national debate focused on his successful vaccine effort and $1,400 checks flowing into personal checking accounts; but immigration is likely to be putting attention on an issue that seems to have no good solution in the near-term.

Holidays see House head home, vacancies narrow House margins, tax talk starts

With the approach of Easter and Passover the House will not have votes for the next three weeks but will have committee hearings. The Congressional leadership and White House are in talks to develop the next round of legislation. The legislative strategy for Democrats is complicated by the narrow House majority and the 50/50 tie in the Senate. Infrastructure has been the most widely discussed next step for the White House and Congress; and there is already talk as to whether or not it can be jammed through under Budget Reconciliation or if a bipartisan consensus can be reached. In my view the decision by the House Republican Caucus to join Democrats and to renew budget earmarks may be a sign that a bipartisan infrastructure bill may be possible. Earmarks give members a direct link to the spending decisions. In fact, in earlier days the rule was if a Member opposed the overall bill they couldn’t get their earmarks into the legislation. It was a great tool for Leadership to build support for the underlying legislation. There have been some early discussions about whether or not an infrastructure bill would need to be fully funded, and if so what the funding sources would be. The gas tax hasn’t been raised since 2009, but it is viewed as a very regressive tax, with newer cars having better gas mileage it is a tax that Congress may turn to. Just as the massive COVID bills, both Biden and Trump, were not paid for it is possible that the strategy may be to pass infrastructure without funding the projects. Tax policy, both increases under Obama and Clinton and cuts under Trump and Bush, have been passed under Budget Reconciliation and there is some pressure from progressive Democrats to increase taxes on the wealthy and corporations. Talks on tax policy are in the very early stages; but with the 50/50 Senate, and several Senate Democrats in tough 2022 races it is my view that while an increase in the corporate tax rate is possible, increases in personal tax rates will be tough to pass. There are a handful of moderate Democrats in addition to Manchin and Sinema, there were eight Democratic Senators who voted against the effort of Senator Sanders to insert the minimum wage increase in the COVID Relief Reconciliation package. One of these eight is up for re-election in 2022 and is one of several Democratic Senators who would be questionable on votes to increase personal tax rates or capital gains; though an increase of the corporate tax rate is very much on the table. Another issue that Democrats have to worry about is their narrow majority in the House, with five current vacancies the lineup is 219 Ds to 211 Rs. The three D vacancies were caused by appointments to the Biden Administration and the two R vacancies by death of Members due to complications from COVID. The first specials elections to fill the vacancies will be this weekend in Louisiana where a candidate must get 50% of the vote to avoid a runoff. Two of the five vacancies are in Louisiana – one from each Party.

COVID Relief Done, What’s Next?

President Biden and Congressional Democrats met the tight deadline of passing the massive $1.9T relief package by March 14 when the current federal unemployment benefits expire. The federal supplemental payments will stay in place until September 6 and remain at $300 a week. This of course is just a small part of the package that includes $1,400 stimulus checks, money for state and local governments, vaccine programs, child credits and much more. In the coming weeks the President, First Lady, Vice President and Second Gentleman will all be hitting the road selling the President’s relief package. In order to avoid the unemployment cliff and prevent a Republican filibuster, Democrats used the Budget Reconciliation process. Democrats will have the opportunity to use Reconciliation again later in the year but have not yet determined what items would be included in the next budget package. The Biden Administration has not submitted its FY 2022 budget request on which the Budget Bill will be based and it will likely not be submitted until April. Democrats have a growing list of priorities including infrastructure that includes clean energy proposals, lowering the price of prescription drugs, immigration overhaul, and increasing the minimum wage. Democrats have already started talking to Republicans in search of a possible bipartisan bill on the topics of infrastructure and minimum wage. In the past both of these issues have received bipartisan support. From the debate on the COVID bill it is clear that minimum wage won’t be part of the next Budget Reconciliation Bill; therefore, a bipartisan “regular order” proposal will need to be drafted. It was largely overlooked but when Senator Sanders offered his amendment to overrule the Senate Parliamentarian and put the minimum wage increase back in the COVID Relief Bill, eight Democratic Senators voted against the Sanders amendment demonstrating that Democratic opposition to $15 an hour runs deeper than just Senator Manchin. There is also a lot of Republican support for infrastructure; it became an inside joke in DC that every week was going to be Infrastructure Week during the Trump Administration. A potential roadblock to bipartisanship on infrastructure may be the Democratic desire to tie climate change and clean energy projects to a traditional bridges and roads infrastructure bill. However, wind and solar energy are growing in red states, and other ideas such as building thousands of electric car charging stations is gaining support across the political spectrum. The issue of a bipartisan infrastructure bill may boil down to whether or not Republicans believe any Democratic success is a step backwards from their goal of recapturing the House and Senate in 2022.

Covid Relief Moving Forward, Minimum Wage Will Wait

The Senate is considering the Biden $1.9T Covid Relief package. The legislation is being considered under Budget Reconciliation which allows for unlimited amendments which could drag the debate on into the weekend. However, there appears near certainty that all 50 Democrats will vote for the final bill, and VP Harris will break a 50/50 tie if needed to approve the bill. To broaden the support of moderate Democrats the final Senate product is likely to reduce the House supplemental unemployment payments from $400 a week to $300. However, the Senate bill will extend the federal unemployment benefit a month from the end of August until the end of September. This could prove to be an important change as the federal unemployment expiration will now run parallel to the end of the US Government fiscal year and would allow any further extension to be tied to the “must pass” government funding legislation that needs to pass by October 1. In a further compromise to more liberal Senators the Senate bill will make the first $10,200 of unemployment tax free for 2020. Another interesting vote was the amendment by Senator Sanders to overrule the Senate Parliamentarian and put the $15.00 minimum wage back in the bill. The House passed version of the package included the increased minimum wage proposal but the Senate Parliamentarian ruled it violated the Byrd Rule governing Budget Reconciliation. The Sanders effort lost on a vote of 58 to 42, with 8 more moderate Democratic Senator voting NO. While the $15.00 minimum wage won’t be part of the stimulus package it is far from dead, and I expect it to return and likely to pass later in the year but at a level below $15.00 an hour. The Senate process will be tedious and lengthy lasting through the weekend; however at some point either late on Sunday or early next week the Senate will approve the Biden package. The next step will be for the House to consider the bill as amended by the Senate. There are two bitter pills for House progressives to swallow. One is the loss of the minimum wage increase, and the other is the lower unemployment weekly payment. However, insuring that the federal $300 a week payment doesn’t expire on March 14, and getting the $1,400 stimulus checks into people’s pockets should be enough of an incentive to get the bill passed. Congress has a week to negotiate if Speaker Pelosi can’t get the votes to pass the Senate version of the bill. With the help of the President and Leader Schumer they could use the legislative tool known as “ping pong” where the House would make changes to the Senate bill and send it back to the Senate for final action. At this point any changes have not been announced it is part of the process that will need to be followed in the coming days.

Covid Relief Moves Forward, Trump to Re-Emerge

The House is expected to pass President Biden’s $1.9T Covid Relief Bill tonight. The bill is being considered under the Budget Reconciliation process in order to make it possible to be considered by the Senate under rules that prohibit a filibuster by Republicans. Last night the Senate Parliamentarian gave an advisory opinion that under the so-called Byrd Rule that governs Reconciliation in the Senate the provision to raise the minimum wage to $15.00 an hour would not be in order. As a Senate aide when the Reconciliation process was being developed it seemed to me that increasing the minimum wage was beyond the scope of Reconciliation. The process was developed to make it easier to make budget decisions on an expedited process, and in the Senate avoid filibusters. To be eligible for Reconciliation a matter had to have a direct budget impact either with changes to spending levels or revenue. President Biden, a Senate veteran, had hinted that while he favored the increase he had doubts if it would be ruled eligible under Reconciliation. The removal of the minimum wage increase from the Senate version of the bill creates a legislative complication in that the House will pass its version tonight with the $15.00 an hour provision, and it will not be in the Senate version to be worked on next week. The next big question in the process will be whether or not the Senate adds or deletes any other provision to the Senate version of the bill. One idea that is being actively considered by Senator Sanders and others is placing a penalty tax on employers who don’t pay their workers at least $15.00 an hour. While the details are still being worked on, one idea would be to place a 5% surcharge on payrolls for non-compliant employers. Since it’s a revenue measure it should pass the scrutiny of the Senate Parliamentarian. The Senate is expected to start working on the House passed bill next week. After the Senate completes action the House will need to decide whether or not they can accept the Senate version of the bill. The goal remains to get the legislation to the President for his signature prior to the March 14 unemployment cliff when federal unemployment programs expire. Pelosi, Schumer and the White House should all be in close communication next week so as to assure House acceptance of any changes made by the Senate. Obviously, the Senate removal of the minimum wage increase will be a tough pill for the House progressives to swallow, but the benefits of the large package seems to outweigh the goal of a $15.00 minimum wage. If the Senate does add the penalty payroll tax that might make the final bill more acceptable to House Democrats. But in any event the idea of increasing the minimum wage is not dead and will come back again this year. Trump at CPAC Former President Donald Trump will speak on Sunday at the conservative Republican gathering in Orlando. The CPAC annual meeting has long been a launching pad for Republican Presidential candidates and many who are thinking of running in 2024 are lined up to speak. In fact private citizen Donald Trump gave his first major political speech at CPAC in 2011, it set the tone for the campaign he would launch in 2015. Trump thrives in front of large, friendly crowds and that is what will greet him on Sunday. While he reportedly has a scripted speech, he hates reading from the teleprompter and will likely give the freewheeling train of thought speech. Reports from the Trump camp say that the former President will get up close to the line of announcing a 2024 candidacy but will stop just short of formally becoming a candidate. However, it is hard to predict what he will do when greeted by his loyal followers. The strength that Trump brings to a potential run was seen this past week when Senate Leader McConnell, who laid into Trump’s role in the 01/06 insurrection at the Capitol, said that he would “absolutely” support Trump if he is the 2024 nominee. In my view it is a very important speech as without doubt Trump is the titular head of the Republican Party. While McConnell and McCarthy may hold the senior elected positions, their role is minor compared to the former President, and Trump relishes the spotlight that he will carefully nurture for the next few years. The future strategy for Trump starts with the Sunday speech.

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