House Panel Moves to Boost Retirement Accounts: Congress Update
(Bloomberg) -- The U.S. Congress ramped up its work on President Joe Biden’s economic agenda on Thursday with House committee votes on core pieces of a planned $3.5 trillion tax-and-social-spending budget bill.
The key House Ways and Means Committee is at the center of Thursday’s action, debating measures including an expansion of Medicare and paid family leave, new funds for elder-care workers and a provision bolstering retirement savings. Behind the scenes, panel members will be seeking agreement on other elements, including the tax increases to be unveiled in coming days.
In the Senate, meantime, Democratic lawmakers have to hammer out a deal on the overall cost of the legislation. Budget Committee Chairman Bernie Sanders paints the current price tag as a compromise relative to his initial $6 trillion, while moderates led by West Virginia’s Joe Manchin want a bill notably smaller than $3.5 trillion. Republicans have vowed to oppose the bill, requiring unity in the Democratic caucus.
Key Stories and Developments:
- Democratic lawmakers remained divided over scope of key bill and on SALT deduction
- House Ways and Means panel releases draft text for Medicare, family-leave, retirement and other provisions
- Education and Labor Committee announces its proposals for education and workforce training
- Energy and Commerce releases its proposals including health care, electrical vehicles and broadband.
All times are U.S. Eastern Time:
Automatic Enrollments in Retirement Accounts Advance (6:14 p.m.)
The House Ways and Means Committee, by a 22-20 vote, approved measures aimed at bolstering Americans’ savings for retirement.
The legislation would apply a tax penalty to employers with more than five employees who do not automatically enroll in a retirement plan unless the workers opt out. The bill specifies that the retirement accounts must deduct 6% of wages from paychecks, rising to 10% over several years, and sets target-date funds as the default investment.
Committee Republicans lamented the tax penalty, warning that it would lead to job losses and hurt the smallest businesses. Two Democrats, Stephanie Murphy of Florida and Ron Kind of Wisconsin, voted against the retirement legislation. -- Erik Wasson
House Panel Approves $25 Billion in Small-Business Aid (4:28 p.m.)
The House Small Business Committee approved $25 billion in small-business aid over the next decade in its portion of the $3.5 trillion tax and spending legislation.
The panel’s bill includes $9.5 billion for a new initiative to provide capital to firms in underserved markets and critical industries, such as infrastructure, child care and manufacturing. The initiative will work through Small Business Investment Companies, which are privately owned entities licensed and operated by the U.S. Small Business Administration to provide financing to small businesses and startups.
The legislation also devotes $1 billion for business development academies and accelerator programs at historically Black colleges and universities and other institutions that serve minorities. -- Mike Dorning
Key House Panel Approves Paid Family Leave (3:48 p.m.)
The House Ways and Means Committee approved paid family leave for U.S. workers on a 24-19 vote largely along party lines.
The legislation ensures 12 weeks of leave annually for employees who have at least four hours of caregiving responsibilities per week. For those workers not paid by their employer, the bill would provide a cash benefit designed to equal two-thirds of pay up to $250,000 for most workers and a larger amount for low-income workers.
Democrats defeated Republican amendments to the paid leave provisions. Those amendments included one to limit benefits to those making less than $100,000 per year; one to require 30 days advance notice to large employers in order to take leave and 60 days notice for small employers; and one to delay the program until the Treasury Department can certify it is able to enforce it.
Representative Stephanie Murphy, a moderate from Florida who has voiced frustrations with the “rushed” process, was the only ‘no’ vote among Democrats.
The committee then moved to take up provisions that would require companies to automatically enroll employees in tax-sheltered retirement accounts. -- Erik Wasson
Democrats Fret Over Funds for Training, Pell Grants (3:31 p.m.)
Workforce training programs and Pell Grants need to be robustly funded in President Joe Biden‘s broad $3.5 trillion spending package, Democrats on the House Education and Labor Committee said Thursday as they debated the panel’s portion of the tax and spending bill.
Representative Suzanne Bonamici of Oregon said she feared Senate Democrats would “significantly decrease” an $80 billion increase to workforce development in the bill and urged them to match that amount.
Representative Frederica Wilson of Florida called the bill “far from perfect,” urging a larger increase to Pell Grants for low-income college students and more money for teacher preparation. The bill calls for a $500 increase in the Pell Grant cap, about one-third of what the White House proposed. -- Andrew Kreighbaum
Moderate Democrat Vents Over ‘Rushed’ Budget Process (12:41 p.m.)
Representative Stephanie Murphy, a moderate Democrat from Florida, said she will vote “no” on proposals to provide paid family leave, expand Medicare and provide other social benefits because she has not yet seen enough of the Biden economic package.
Murphy, a leader of the fiscally conservative Blue Dog Caucus, said during a House Ways and Means Committee meeting that the process has been “rushed” and she cannot evaluate the benefits without knowing the total cost and tax increases used to pay for it.
“Unless something changes, I have no choice but to vote ‘no’ on each subtitle and on final passage,” Murphy said.
Murphy spokeswoman MacKensie Kvalvik later clarified she intends to vote ‘no’ in committee until she sees the full Ways and Means portion of the bill. The committee does not expect to release tax provisions until this weekend.
Murphy’s vote won’t be critical in the committee, where Democrats have a seven-vote majority. But her objection is a red flag for House Speaker Nancy Pelosi, who can only afford to lose three votes on the floor and pass the Biden bill, if Republicans as expected all oppose it. -- Erik Wasson and Jack Fitzpatrick
SALT Cap Continues to Vex House Democrats (11:08 a.m.)
Ways and Means Democrats remain divided on the $10,000 cap on the state and local tax deduction and whether it should be fully repealed.
Representative Bill Pascrell, a Democrat from New Jersey, said lawmakers were still working on it. “I feel good about it, though,” he added.
The cap was part of the 2017 tax law and many Democratic lawmakers from high-tax places such as New York and New Jersey say it unfairly targets their states. Some progressive Democrats are wary of a full repeal because it would disproportionately benefit the wealthy. -- Kaustuv Basu
Yellen Pleased With Congressional Progress on Global Tax Rules (11:03 a.m.)
Treasury Secretary Janet Yellen is urging the swift implementation of a global agreement on tax rules for multinational corporations.
Yellen said she was “pleased with the progress the U.S. Congress is making to strengthen the U.S. international tax rules,” a reference to steps being taken by Democrats to include measures enforcing a global minimum tax in the reconciliation legislation. She made no specific mention of a potentially thornier component allowing countries to tax big companies’ profits based on where revenue is sourced.
That will require either a formal treaty or legislation that overrides existing bilateral tax treaties, and its passage by the U.S. Senate, where lawmakers from both parties have expressed reservations, is far from certain. -- Christopher Condon
Top Republican Says Biden Agenda Will Cost Jobs (10:29 a.m.)
The top Republican on the House Ways and Means Committee blasted majority Democrats for their work on the $3.5 trillion bill, arguing that tax increases in the plan will cost as many as 4 million U.S. jobs.
“The one thing you can absolutely count on is higher prices and our economy will only get worse if Democrats succeed in ramming through trillions of dollars in higher spending and tax hikes,” Texas Representative Kevin Brady said at the outset of Thursday’s legislative markup, which is expected to extend into next week.
Brady argued that plans to increase corporate rates by reversing the 2017 Trump tax cuts would give companies incentives to move jobs overseas. “The casualties of applying the highest tax burden in the world are American jobs,” he said. -- Erik Wasson
Key House Panel Expects Tax Plan This Weekend (10:04 a.m.)
House Ways and Means Committee Chairman Richard Neal said his panel will “probably” release its much-anticipated tax plan to pay for Biden’s economic agenda at some point this weekend.
Neal also said he expects his committee to extend the expanded child tax credit for an additional four or five years.
The Massachusetts Democrat has gaveled in the committee’s markup of its portion of the $3.5 trillion budget bill. The panel is expected to vote on a number of measures on Thursday and Friday, ranging from an expansion of paid family leave to increased funding for elder-care workers. Key tax provisions will be debated next week.
“We have a once-in-a-generation opportunity to make transformative change,” Neal said in his opening statement. “This is our moment of opportunity.” -- Erik Wasson
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