What to Know in Washington: Businesses to Reap Earmark Benefits

Businesses could end up the big winners in the of return of earmarks even though lawmakers specifically limited funding for these projects to state and local governments and non-profit groups.

Many of the governments and groups likely to receive earmarks in spending bills and the massive infrastructure package are expected to use that funding to hire construction companies, consultants and other contractors to carry out the projects.

“There’s benefit here to a whole lot more than governments and not-for-profits,” Sen. Roy Blunt (R-Mo.), a senior member of the Senate Appropriations Committee, said in an interview. ”It’s all the people they work with and the projects they’re working on that can benefit by that investment.”

Billions in federal funds could be at stake. House leaders’ starting point is to earmark 1% of total annual discretionary spending. That could mean setting aside more than $13 billion for these projects, based on fiscal 2021 discretionary funding of $1.3 trillion. An infrastructure package like what President Joe Biden proposed totaling $2 trillion or more also could translate into billions of dollars in lucrative contracts for business.

Full Senate support for earmarking appropriated funds may be decided tomorrow when Republicans meet to determine whether they will embrace plans that both Senate and House Democrats and House Republicans already endorsed. Blunt said he favors earmarks and said the projects will have broad impact. Read more from Nancy Ognanovich.

Photographer: Doug Mills/The New York Times/Bloomberg
Biden held a meeting on infrastructure at the White House on Monday with Transportation Secretary Pete Buttigieg and a bipartisan group of lawmakers.

SALT Cap Revolt Snarls Biden Spending Plan: President Donald Trump’s 2017 tax law disproportionately targeted Democrats in high-tax states by eliminating a popular federal deduction. Now Trump’s legislative triumph has put Biden in a bind. Newly released Internal Revenue Service data show the politically lopsided impact of the $10,000 cap on deducting state and local taxes, or SALT — and why Democrats from the hardest-hit SALT states may be willing to cost Biden the crucial victory of passing his $2.25 trillion infrastructure and social services plan if he continues to insist on keeping Trump’s cap in place.

In some New York congressional districts, the average deduction lost because of the SALT cap can be more than $100,000 a year, according to the IRS data. And of the 40 congressional districts with the largest SALT deductions disallowed under the Trump tax law, 39 are represented by Democrats. “I’m not voting for any change in the tax code whatsoever unless there’s the restoration of the SALT tax deduction. I’m laying that chit on the table,” said Rep. Tom Suozzi (D-N.Y.), who’s emerged as a leader of a bipartisan SALT Caucus. Read more from Laura Davison and Gregory Korte.

The congressional districts where taxpayers lost the largest deductions because of the state and local tax cap are overwhelmingly represented by Democrats in Congress. Gregory Korte offers a list of the top 50 congressional districts by SALT deductions disallowed.

Happening on the Hill

Today’s Agenda:

  • Biden and Vice President Kamala Harris plan to meet this morning at the White House with leaders of the Congressional Hispanic Caucus. This afternoon, Biden will participate in a virtual tour of the Proterra electric battery facility in South Carolina.
  • House lawmakers are scheduled to vote on 17 measures under expedited procedures.
  • The Senate plans a vote on the nomination of SEC Chairman Gary Gensler for a full six-year term at the agency.
  • The Senate Appropriations Committee plans a hearing on Biden’s infrastructure plan with Commerce Secretary Gina Raimondo, Transportation Secretary Pete Buttigieg, EPA Administrator Michael Reagan, and HUD Secretary Marcia Fudge.
  • Click here for a complete list of today’s hearings and markups.

Senate to Call Spotify at Antitrust Hearing: Google will send a top policy executive to testify at tomorrow’s Senate app store antitrust hearing, while legal executives from Spotify, Tile and Match will be witnesses, people with knowledge of the matter said. Google’s senior director of government affairs Wilson White will be the search giant’s representative, joining Apple’s top compliance officer Kyle Andeer in the spotlight at the Senate Judiciary Committee’s antitrust subcommittee hearing. Mark Gurman and Mark Bergen have more.

House Passes Marijuana Banking Bill: The House passed a measure that would give state-authorized cannabis businesses easier access to banking services. The bill would bar federal regulators from penalizing banks and other institutions for offering banking services to pot businesses. It passed on a 321-101 bipartisan vote. A total of 36 states have authorized the use of marijuana for medical purposes and 17 states have authorized it for recreational use. But it’s still a prohibited substance under U.S. law. Jarrell Dillard and Tiffany Kary have more.

Colleges’ Foreign Cash at Risk in China Push: A broad attempt by Congress to stem China’s influence could put at risk research collaborations and funding that U.S. universities count on by subjecting some foreign gifts and contracts to national security reviews. Senators are seeking increased oversight of grants and contracts to universities from overseas as part of a bipartisan package of legislation designed to increase U.S. competitiveness with China in science and technology. The proposal would give U.S. national security officials new authority to scrutinize foreign gifts and contracts of more than $1 million to schools if the funding is related to research and development of “critical technologies” and provides access to material nonpublic technical information. Read more from Daniel Flatley, David McLaughlin and Janet Lorin.

Panels Launch Emergent Probe on Vaccine Deals: The House Oversight Committee and the Select Coronavirus Crisis Subcommittee are launching an a probe into Emergent BioSolutions’ performance under federal vaccine contracts, according to a statement from the panel chairs. The committees will probe whether the company leveraged its relationship with a key Trump administration official to profit from federal contracts, despite a track record of raising prices and failing to meet contract requirements, Max Zimmerman reports.

Officer Said to Die of Stroke After Riot: Capitol Police Officer Brian Sicknick, who confronted rioters during the insurrection at the Capitol on Jan. 6, died of a stroke, D.C.’s chief medical examiner said. Sicknick, the medical examiner’s office said in a statement, was “sprayed with a chemical substance” outside the Capitol during the early hours of the riot. At about 10 p.m. that night, he collapsed and was taken to a hospital, where he died about 9:30 p.m. the next day. Read more from John Harney.

States Brace For Census Report

States will soon learn if they’re going to gain or lose ground in the House and in presidential elections. By the end of next week, the U.S. Census Bureau will release the first official results of the 2020 Census: the state population counts that will redistribute the 435 House seats, and lock in that configuration for the next five congressional elections, from 2022 to 2030.

“It’s basically allocating how many voices you have in Congress. The more voices you have, the more potential sway your state has,” Kimball W. Brace, the president of Election Data Services Inc., said in an interview.

Because the House membership is fixed by law, states with above-average population growth will win House seats — and gain more clout in Congress — at the expense of states that were slower-growing or losing population. Projections show that states in the South and West will once again gain seats, and the Northeast and industrial Midwest will continue its decades-long contraction. Read more from Greg Giroux.

Corporate Actions on Voting Rights Fall Short: Corporate America is sounding the alarm over moves in Republican-led states to limit access to voting. But few companies have been willing to put their political might behind federal laws to protect those rights, underscoring the challenge to stopping such efforts, which disproportionately affect voters of color. Hundreds of U.S. corporations and executives signed a two-page ad published last week in the New York Times and Washington Post that opposed laws that would make it harder to vote, underscoring friction between the business community and the GOP establishment. But of 21 companies that were among the biggest represented on the list contacted by Bloomberg, only one — Levi Strauss — responded in support of one of the voting-protection bills proposed in Congress. Read more from Mike Dorning.

White House Adds Adviser on Democracy Policy: The White House is adding an adviser on democracy policy as Biden works to bolster voting rights and other aspects of representative government. Justin Levitt, a law professor at Loyola Marymount University in Los Angeles and a former deputy assistant attorney general, has been chosen for the position, a White House official said. Read more from Jennifer Epstein.

Walter Mondale Dies at 93: Walter Mondale, who asserted himself as an activist vice president under Jimmy Carter before losing a bid for the presidency in one of the worst routs in U.S. political history, Ronald Reagan’s 1984 re-election landslide, has died. He was 93. He died last night at his home in Minneapolis, according to Kathy Tunheim, a spokeswoman for the family, who said he died of “natural causes.” Read more from Bill Arthur and Laurence Arnold.

Around the Administration

Watchdogs Urge Austin to Curtail Budget Wish Lists: Fifteen organizations want Defense Secretary Lloyd Austin to slash the military services’ wish lists that notify lawmakers to what the president excluded in the annual budget request sent to Congress. The military services, combatant commands, and other Department of Defense components each year submit to congressional defense committees their unfunded requirements, which often sway decisions on defense policy and spending legislation. Read more from Roxana Tiron.

Biden Environment Agenda Spurs Court Pivots: The Biden administration has begun recasting environmental litigation as it reviews the government’s position in existing cases and adopts new policies already under attack by Republicans. Lawyers in the Justice Department and other agencies have assessed hundreds of pending cases and pressed pause on as many as possible—focusing on strategic delays rather than dramatic changes in position. The legal maneuvering as President Joe Biden approaches his first 100 days in office allows his appointees to implement their own policies for pollution reduction, climate change, environmental justice, public lands management, and other priorities. Read more from Ellen M. Gilmer.

Biden Agencies’ Pact Boosts Seasonal Visas: Two Biden administration agencies have struck a deal to offer 22,000 extra seasonal guestworker visas to employers in the coming months, providing additional opportunities for businesses to hire temporary foreign workers, a move that will cheer business interests but alienate unions who argue those jobs belong to Americans. Homeland Security Secretary Alejandro Mayorkas and Labor Secretary Marty Walsh agreed late last week to lift the cap on H-2B visas, two sources familiar with the process said. Once formally announced, the new stock of temporary visas would supplement a previous supply of 33,000 for the second half of fiscal 2021, all of which had been claimed. H-2B visas are capped annually at 66,000, divided evenly between two halves of the federal fiscal year, which started on Oct. 1. Read more from Ben Penn and Genevieve Douglas.

Xi Challenges U.S. Global Leadership: Chinese President Xi Jinping called for greater global economic integration and warned against decoupling while calling on the U.S. and its allies to avoid “bossing others around.” “International affairs should be conducted by way of negotiations and discussions, and the future destiny of the world should be decided by all countries,” Xi said today at the Boao Forum on Asia, without naming the U.S. specifically. “One or a few countries shouldn’t impose their rules on others, and the world shouldn’t be led on by the unilateralism of a few countries.” Read more.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Michaela Ross at mross@bgov.com