|Biden’s American Families Plan targets education, child care, paid leave|
Reports about the contents of President Joe Biden’s American Families Plan (AFP) have been circulating for weeks, but the President provided details in his address to a joint session of Congress on Wednesday night. Among other provisions, the AFP would make a “generation-defining investment in rural America.” It would provide free universal preschool for all three- and four-year-olds and two years of free community college. It calls for additional funding for teacher education and training and more funding to train and recruit special education teachers. It would make child care more affordable and more accessible, especially in rural communities. It would create a comprehensive national paid family leave program and expand summer food access and school meal programs. It would extend the child tax credit, permanently increase tax credits for child care, and make the Earned Income Tax Credit permanent.
How to pay for it
The question, of course, is how the federal government can pay for the initiatives the President is proposing. President Biden outlined his recommendations for tax reform in Wednesday’s speech. They include:
– Increasing the top marginal income tax rate to 39.6% for the top 1% of earners
– Increasing the capital gains tax rate to 39.6% for those earning more than $1 million
– Applying the 3.8% Medicare tax “consistently” for those making more than $400,000 a year
– Repealing the “step-up in basis” rule above the first $1 million passed to an heir
– Ending “like-kind” or 1031 exchanges that allow real estate investors to defer tax payments by rolling proceeds of real estate sales into future purchases
– Treating compensation from carried interest like wage income instead of like capital gains for tax purposes
– Permanently extending current limits on excess business losses
Biden promised not to raise taxes on anyone earning less than $400,000, but to improve IRS collection of past due taxes and enforcement against tax cheats.
Senator Warren has a plan
At a hearing of the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth on Tuesday, Subcommittee Chair Elizabeth Warren (D-MA) promoted three tax reform proposals of her own: a wealth tax of two cents on fortunes over $50 million, a Real Corporate Profits Tax of 7% on companies that report profits of more than $100 million to the shareholders and the public; and increasing tax enforcement against wealthy individuals and giant corporations. Senator Bill Cassidy (R-LA), the subcommittee’s ranking member, said that Democratic tax proposals would pit Americans against each other and vilify success in business.
Treasury calls for broader IRS data collection, enforcement powers
Treasury Secretary Janet Yellen endorsed President Biden’s proposed changes to the tax code, saying it would make the system more fair and help capture uncollected revenue. Treasury also endorsed proposed reforms to the IRS that it said would generate an additional $700 billion in revenue without any increase in taxation rates. These reforms would provide the IRS with a sustained, multi-year stream of funding that would deliver about $80 billion over a ten-year period. They would grant the IRS access to information financial institutions collect about the aggregate outflows and inflows of their customers’ accounts. They would provide funding for the IRS to update its technology infrastructure, improve taxpayer service, and deliver tax credits. They would also give the IRS additional authority to regulate tax preparers.
Brown warns against partnerships between banks and predatory lenders
Senate Banking Committee Chairman Sherrod Brown (D-OH) said at a hearing on Wednesday that the Office of the Comptroller of the Currency’s “true lender” rule had opened the door to predatory lenders to form partnerships with banks in order to evade state usury limits and victimize borrowers. Former Acting Comptroller of the Currency Brian Brooks said that the rule merely clarifies the language of existing law, and that bank-nonbank lending partnerships offer borrowers more protections than they would have if banks were not involved. Brown and other committee Democrats said they would seek to use the Congressional Review Act to overturn the rule. Brooks said that this would amount to imposing price controls on these loans, and that price controls would lead to shortages of credit available to small-dollar borrowers.
Water/wastewater infrastructure bill gets overwhelming Senate support
Yesterday the Senate voted 89-2 to approve S. 914, the Drinking Water and Wastewater Infrastructure Act of 2021. The legislation would reauthorize grants to state Clean Water and Drinking Water revolving funds and to programs funded under the Water Infrastructure Finance and Innovation Act. It would authorize the Environmental Protection Agency to make grants for improvements to drinking water and wastewater systems, including projects to replace lead drinking water pipes. It would also make more funding available for water infrastructure projects in rural and economically disadvantaged areas. The $35 billion the legislation would provide is considerably below the $56 billion included in President Biden’s American Jobs Plan. On the House side, Energy and Commerce Committee Chairman Peter DeFazio (D-OR) has introduced his own bill, HR 1915, which would provide $40 billion to the Clean Water State Revolving Fund and $10 billion for other projects.
How should the FTC’s restitution authority be restored?
The House Energy & Commerce Subcommittee on Consumer Protection & Commerce heard testimony from Acting Federal Trade Commission Chair Rebecca Slaughter and three other witnesses about how best to restore the FTC’s authority to force companies to return funds to defrauded customers. The Supreme Court ruled unanimously last week that Section 13(b) of the Federal Trade Commission Act does not give the agency authority see restitution or disgorgement on behalf of customers harmed by unfair or deceptive practices. Chair Slaughter endorsed HR 2668, legislation introduced by Rep. Tony Cardenás (D-CA) to reaffirm that power. Subcommittee Republicans agreed that the FTC needs some authority in this area, but expressed concerns about regulatory overreach and said any changes should be made in the context of broader FTC reform.
Correcting the pay gap in financial services
No one at yesterday’s hearing disagreed that disparities in pay levels persist between men and women in financial services, and even more so among White, Black, and Latino employees. What the House Financial Services Subcommittee on Diversity & Inclusion asked witnesses was why this is still happening, and what Congress can do to address it. The hearing focused on legislation that would require certain financial institutions to conduct pay equity audits, and would require public companies to report information about gender and racial pay equity. Subcommittee Chairwoman Joyce Beatty (D-OH) said that companies that ignore these issues suffer reputational risk, and that persistent disparities hurt recruitment and diversity efforts.
More nominations to fill Treasury leadership
President Biden will fill out the Department of Treasury’s leadership by nominating Heidi Crebo-Rediker to be Undersecretary for International Affairs and Brian Nelson as Undersecretary for Terrorism and Financial Intelligence (TFI). The President has already nominated Nellie Liang as Undersecretary for Domestic Finance. Crebo-Rediker was chief economist at the Department of State under Secretary of State Hillary Clinton; Nelson worked with Vice President Kamala Harris when she was Attorney General of California. The President will also nominate attorney Josh Berman as assistant secretary in charge of the Committee for Foreign Investment in the US (CFIUS) and Treasury counsel Elizabeth Rosenberg as assistant secretary for terrorist financing. All these nominations require Senate confirmation.
|Confirmations, Nominations, Departures|
|Rep. Tim Ryan (D-OH) has filed to run for the Senate seat being vacated by Rob Portman (R-OH), and will not seek reelection to the House of Representatives.|
Rep. Ted Budd (R-NC) has announced that he will run for the Senate seat being vacated by Richard Burr (R-NC), and will not seek reelection to the House.
Rep. Cheri Bustos (D-IL) announced that she will not seek reelection in 2022.
Alex Oh, named last week as the new head of the SEC’s Division of Enforcement, resigned this week. Melissa Hodgman will return to the role of Acting Director of the division.
|The Week Ahead|
|Neither the House nor the Senate will have floor votes next week. The Senate has no hearings scheduled until May 12.|
May 4 at 12:00 p.m. House Financial Services Subcommittee on Housing, Community Development and Insurance holds a hearing on “Built to Last: Examining Housing Resilience in the Face of Climate Change.”
May 5 at 11: 30 a.m. House Energy and Commerce Subcommittee on Energy holds a hearing on “The CLEAN Future Act: Driving Decarbonization of the Transportation Sector.”
May 6 at 12:00 p.m. House Financial Services Committee holds a hearing on “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, Part III.”
May 6 at 1:00 p.m. House Small Business Subcommittee on Innovation, Entrepreneurship, and Workforce Development holds a hearing on “Growing Jobs through Infrastructure Investment.”
May 7 at 12:00 p.m. House Financial Services Task Force on Artificial Intelligence holds a hearing on “Equitable Algorithms: How Human-Centered AI Can Address Systemic Racism and Racial Justice in Housing and Financial Services.”
|The Ellis Insight – Jim Ellis on political news|
Georgia: A surprising announcement came this week from Georgia. Former US Representative and 2020 US Senate candidate Doug Collins (R), widely believed to again become a Senate candidate, said that he will not run for any office in 2022. Mr. Collins did not rule out again running for public office in the future, however. This could open the door for Georgia football legend Herschel Walker (R) to join the race.
State Attorney General Chris Carr (R), who had also been considered a potential US Senate, said that he will run for re-election to his current position. Should Mr. Walker decline to run, Rep. Buddy Carter (R-Pooler/Savannah) has indicated a desire to become a Senate candidate. Sen. Raphael Warnock (D), who won the 2020 special election, will stand for a full six-year term in 2022.
North Carolina: Both former North Carolina state Supreme Court Chief Justice Cheri Beasley (D), who lost her position in the 2020 election by just 401 votes statewide, and US Rep. Ted Budd (R-Advance) this week announced for the state’s open US Senate race.
Ms. Beasley becomes the tenth Democrat to enter the race, but the only one who has ever been elected statewide. At this point, her most serious Democratic opponent appears to be state Sen. Jeff Jackson (D-Charlotte). Rep. Budd faces former Gov. Pat McCrory and ex-US Rep. Mark Walker in the Republican primary. Sen. Richard Burr (R) is retiring.
Ohio: As expected, Ohio Rep. Tim Ryan (D-Warren/Youngstown) officially announced that he will run for his state’s open US Senate seat next year. Mr. Ryan, first elected to the House in 2002, also briefly ran for President in the 2020 election cycle. With other prominent Democrats opting not to run, it appears the Congressman has a clear shot at the party nomination. He will face a strong Republican in the general election.
National Apportionment: The Census Bureau yesterday announced the national apportionment numbers from the 2020 census a full four months after the January 1st deadline, and the report contained more than a few surprises.
First, only seven seats changed states and not the ten that analysts had projected. Texas gained two seats instead of the projected three. Florida, one instead of the predicted two. The states gaining one seat apiece were Colorado, Montana, North Carolina, and Oregon. The states losing one seat are California, for the first time in history, Illinois, Michigan, New York, Ohio, Pennsylvania, and West Virginia. New York missed holding all 27 of their seats by just 89 people, apparently the second closest number in history. This allowed Minnesota to barely hang onto its eighth CD.
The surprises came with Texas and Florida gaining one seat less apiece than expected. Arizona was also projected to gain but did not. Alabama, Minnesota, and Rhode Island were expected to lose but were able to keep their full complement of districts.
The US population rose just 7.4% for the entire decade. Only the 1930 census report, with a 7.3% uptick rate, was lower in the modern era. Utah, with a growth rate of 18.4% during the previous ten years, is the fastest growing state in the country. Illinois, Mississippi, and West Virginia actually lost population during the decade.
AK-AL: Alaska at-large Rep. Don Young (R-Ft. Yukon), the Dean of the House who was first elected in a 1973 special election, announced during the week that he will return to seek a 26th term next year. Rep. Young is 87 years of age and has spent well over half his life as a member of Congress. In 2020, overcoming strong opposition, Rep. Young was re-elected with a 54-45% victory margin.
FL-20: Florida state Rep. Omari Hardy (D-West Palm Beach) announced that he will enter the special Democratic primary to replace the late Rep. Alcee Hastings (D-Delray Beach). Gov. Ron DeSantis (R) has yet to schedule the replacement election, but that has not stopped now eleven Democrats from announcing their candidacies. Winning the Democratic primary is tantamount to election in this congressional district that occupies most of the territory between Ft. Lauderdale and Miami with a segment stretching into Palm Beach County.
LA-2: Last Saturday, New Orleans state Senator Troy Carter won the double-Democratic special election to replace resigned Rep. Cedric Richmond (D-New Orleans) with a 55-45% victory over his colleague in the legislature, state Sen. Karen Carter Peterson (D-New Orleans). Turnout reached 87,806 voters, down a touch over 7% from the March 20th jungle primary that sent the two finalists into the runoff election.
The Carter victory will return the Democrats to 219 seats in the House upon the Representative-Elect officially taking office. Republicans will then drop to 211 when Ohio Rep. Steve Stivers (R-Columbus) resigns his seat on May 16th. The special primary election to fill the late Rep. Ron Wright’s (R-Arlington) North Texas seat is scheduled for this Saturday. The NM-1 vacancy will be filled on June 1st. The two Ohio vacancies, along with the open South Florida seat, have longer election cycles and come before the voters in 2021’s fourth quarter.
ME-2: GOP state Rep. Mike Perkins (R-Oakland) announced on Friday that he has formed a federal exploratory committee to assess his chances of defeating two-term Maine US Rep. Jared Golden (D-Lewiston) next year. Rep. Golden was re-elected last November with a 52-46% victory over former state Rep. Dale Crafts (R) in the district that ex-President Donald Trump won to capture an extra electoral vote. Maine is one of two states that splits its electoral votes, Nebraska being the other. The 2022 congressional election here is likely to again be competitive.
Montana: Less than a week since the Census Bureau made official that Montana would gain a second congressional seat, former Interior Secretary and ex-US Rep. Ryan Zinke (R-Whitefish) filed a 2022 Federal Election Commission committee for the state’s new CD.
Since the new congressional map will likely divide the state into a western and eastern district, the way Montana used to look before the second district was lost in the 1990 census, it is clear that freshman at-large Rep. Matt Rosendale (R-Glendive) will run in the eastern seat since his hometown lies so close to the North Dakota border. This means we will see a new open western district that will likely be the more Democratic of the two.
Ryan Zinke was elected to the House in 2014 and re-elected in 2016. Shortly after Donald Trump won the presidential election, he selected Rep. Zinke as his Interior Secretary. Mr. Zinke returned to Montana after serving two years in the Trump cabinet.
NJ-5: Investment banker Frank Pallotta (R), who held Rep. Josh Gottheimer (D-Wyckoff) to a 53-46% re-election victory in November said late this week that he will return for a re-match next year. Mr. Pallotta can count on heavy funds being spent against him because Rep. Gottheimer is one of the strongest fundraisers in the House. In 2020, he raised just under $8 million for his re-election effort and he’s already obtained close to a $1 million in the 2022 election cycle. This race has competitive potential, but Rep. Gottheimer remains the definitive favorite for re-election.
OH-15: In a move that surprises no one, Gov. Mike DeWine (R) announced that he will schedule the special election to replace outgoing Rep. Steve Stivers (R-Columbus) to run concurrently with the calendar for the 11th District special election necessary to replace HUD Secretary and former Representative Marcia Fudge (D-Cleveland/Akron). This means a primary on August 3rd, with the associated general election on November 2nd. Rep. Stivers has announced that he will leave the House on May 16th to become the President/CEO of the Ohio Chamber of Commerce.
During the week, state Rep. Jeff LeRe (R-Violet Township) and Fairfield County Commissioner Jeff Fix (R) joined state Sen. Bob Peterson (R-Fayette County) and state Rep. Brian Stewart (R-Circleville) as special election candidates. The only Democrat so far to announce is actor Daniel Kilgore.
PA-16: Ending rumors that western Pennsylvania US Rep. Mike Kelly (R-Butler) would either run for the open Senate or Governor’s position, the Congressman announced yesterday that he will run for neither but intends to seek re-election to his House seat. Rep. Kelly was re-elected to a sixth term in November with 59.3% of the vote after a close 52-47% result in 2018.
TX-6: The Data for Progress research organization tested the North Texas special congressional election scheduled for May 1st (4/5-12; 344 TX-6 likely special election voters; text and web panel response) and found Susan Wright (R), widow of Rep. Ron Wright (R-Arlington), leading the pack of 23 candidates with 22% of the vote. In second place is 2018 congressional nominee Jana Lynne Sanchez (D) with 16% as state Rep. Jake Ellzey (R-Waxahachie) trails with 13%. All others have 10% or less.
If Ms. Wright and Ms. Sanchez advance, the early ballot test gives the former a ten-point lead, 53-43%. In 2020, Rep. Wright was re-elected with a 53-44% margin. Once the primary vote canvass is complete and a runoff is officially necessitated, Gov. Greg Abbott (R) will schedule the secondary vote likely for late June.
California: Six weeks after more than 2.2 million signatures were presented demanding a recall of Gov. Gavin Newsom (D) from office, the Secretary of State’s office finally issued a statement officially qualifying the election. With counting still progressing, more than 1.6 million signatures have already been validated.
Reality TV star and Olympic Gold Medal winner Caitlin Jenner announced during the week that she will enter the California gubernatorial recall election. Once the vote is scheduled, likely in October or November of this year, California voters will first choose whether to recall him from office. If they do, then candidates such as Ms. Jenner will be voted upon within the same election framework.
Currently announced as candidates are 2018 gubernatorial finalist John Cox, former San Diego Mayor Kevin Faulconer (R), and ex-US Rep. Doug Ose (R-Sacramento). Another 36 minor candidates have also declared their intention to run.
Florida: In what appears to be a prelude to another gubernatorial run, US Representative and former Florida Governor Charlie Crist (D-St. Petersburg) has formed a state committee for what appears to be purposes of running for Governor next year. Mr. Crist served one gubernatorial term as a Republican from 2007-2011. Prior to winning the Governorship, Mr. Crist was elected Attorney General, Education Commissioner, and state Senator, all as a Republican, before winning his congressional seat in 2016 as a Democrat. He has also lost statewide races as a Republican, Democrat, and an Independent.
Florida CEO Nikki Fried (D) is also making preparations to run for Governor. Additionally, as noted above, state Sen. Randolph Bracy (D-Orlando) said he wants challenge Gov. Ron DeSantis (R) next year unless US Rep. Val Demings (D-Orlando) decides to run. Gov. DeSantis is expected to seek re-election.
Virginia: A new poll from Christopher Newport University of the Virginia Tidewater region (4/11-20; 800 VA registered voters) tested the Democratic primary electorate for the upcoming 2021 gubernatorial campaign.
Confirming other data, former Gov. Terry McAuliffe maintains a big lead for the June 1st nomination election, 47-8-6-5-1% over Lt. Gov. Justin Fairfax, state Sen. Jennifer McClellan (D-Richmond), former state Delegate Jennifer Carroll-Foy, and state Delegate Lee Carter (D-Manassas), respectively. Mr. McAuliffe is expected to easily win the party nomination and begin the general election campaign as the favorite opposite whomever the Republicans nominate in their hybrid May 8th convention.
Florida: In an unusual move, and particularly so since the legislature adjourned today, the state Senate Democratic conference voted unanimously to replace Minority Leader Gary Farmer (D-Ft. Lauderdale) with state Senator Lauren Book (D-Plantation), who also represents part of Broward County.