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WASHINGTON WATCH: November 2, 2021


THE LONG GAME: Congress inches closer to votes on social spending, infrastructure bills—but big deadlines loom in December

Before departing for Europe, President Biden announced that he and congressional Democrats had reached a “historic” framework for their major social spending package. The revised “Build Back Better” proposal now carries a price tag of about $1.75 trillion—roughly half the original amount. In order to win over centrists, further concessions were made; some high-profile items, including paid family leave and plans to lower prescription drug prices, were eliminated from the bill. However, there was a late push over the weekend to reinstate the curbs on drug costs, a major priority for Senate Budget Committee Chairman Bernie Sanders (I-VT). Overall spending could also be increased by about $100 billion if an immigration-related proposal gains approval from the Senate parliamentarian. House Democrats have set the goal of holding a vote on the package this week, along with the bipartisan infrastructure bill. According to congressional sources, House progressives signaled that they would support both bills.

As the calendar turns to November, Democratic leaders in Congress and the administration have just a little over a month to resolve some pressing issues. First, they will need to find a way to prevent a government shutdown by December 3, when the current stopgap spending bill expires. House and Senate appropriators will meet this week to evaluate how to move forward. Meanwhile, the clock is ticking on the moment when the government could default on its debt. According to a study released last week by the Bipartisan Policy Center, that could occur between mid-December to mid-February. However, it could come sooner if the infrastructure bill is implemented, since billions of dollars will be transferred from the Treasury’s general fund to the highway trust fund. Treasury Secretary Janet Yellen said on Sunday that Democrats should move ahead without GOP support to fix the debt ceiling, suggesting Democrats use Section 304 of the reconciliation process to prevent a filibuster.

Washington Watch is published weekly when Congress is in session. Published monthly during extended recess or adjournment.


Spotlight on Puerto Rico

***see corrected language below***

Approval of Plan of Adjustment heading into court

A day after a status hearing with Judge Laura Taylor Swain, both the Puerto Rico House and Senate held votes on P.C. 1003—now Act 53 of 2021— approving the issuance of bonds as required by the Plan of Adjustment. The most recent version of the bill, which included amendments discussed by legislators the week before last, passed by a 14-13 vote, with Senator Gregorio Matías Rosario of the New Progressive Party (NPP) providing the critical vote. Later that Tuesday, Governor Pedro Pierluisi signed the bill into law and the Financial Oversight and Management Board (FOMB) expressed its approval of the bill on Thursday.

Although the various government entities are now on the same page, diverse groups continue to express objections to the Plan of Adjustment. Leaders of some municipalities, for example, have expressed concerns that it could leave their governments underfunded. However, amendments to mitigate harm to municipalities were included in the final version of the bill. The University of Puerto Rico and its students have also been among the most vocal opponents of the measure, which would fix the University’s yearly budget at $500 million—about half of what it would obtain under Puerto Rican law. Nov 8th marks the beginning of the weeks of confirmation hearings on the Plan of Adjustment.

Pared-down budget proposal includes SSI, other provisions for Puerto Rico

Although the latest budget reconciliation bill—a key part of President Biden’s Build Back Better platform—has been reduced to nearly half its original size, the bill could still prove to be beneficial to Puerto Rico, as it is slated to add $10 billion in new funds for Puerto Rico, while addressing several key promises made to Island residents. For instance, the bill would allow Puerto Rico residents to access Supplemental Security Income (SSI), a benefit for low-income children and adults with disabilities, starting in January 2024. According to calculations by El Nuevo Día, this would amount to around $2.27 billion per year. Additionally, the bill would increase the amount Puerto Rico receives through Medicaid to $3.6 billion per year; Medicaid funds are the chief source of funding for Puerto Rico’s health plan. However, although this amount represents a substantial increase, it does not represent Medicaid parity, which according to the Puerto Rican government would require $5.2 billion per year.

The wide-ranging reconciliation bill would also provide Puerto Rico with some $5 billion in public housing funds, according to Rep. Nydia Velázquez (D-NY), as well as nearly $1 billion to territories in the form of Universal Pre-K funds. It would also bring Puerto Rico to parity when it comes to the Child Tax Credit, among other things.

Governor Pierluisi calls for tax cuts to incentivize luxury car purchases

Governor Pedro Pierluisi announced on Friday that he asked Puerto Rico Treasury Secretary Francisco Parés to eliminate the tax rate on luxury vehicles, in an attempt to incentivize luxury car purchases in Puerto Rico. “If we have better vehicles, in better conditions, on our streets, that’s better for everyone—as well as for our quality of life,” the governor said.

Puerto Rico’s Internal Revenue Code sets six different tax rates for automobiles, with a 40 percent tax on vehicles costing more than $43,170. Various governors and lawmakers from both major parties have attempted to cut this tax in recent years, without success. The most recent attempt came in 2020, when a bill passed the Legislature but was pocket-vetoed by then-governor Wanda Vázquez Garced.


View From The White House

  • In response to requests from employers, the Biden administration on Monday granted federal contractors new flexibility to decide how to enforce the Covid-19 vaccination mandate.

  • According to multiple media outlets, the administration is weighing making payments of as much as $450,000 per person to settle with immigrant families who were separated from their children under the Trump administration’s “Zero Tolerance” policy.

  • The White House unveiled a strategy on Monday for achieving net-zero greenhouse gas emissions by 2050, coinciding with President Biden’s appearance at the U.N. Conference on climate in Scotland.

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