The Senate failed to advance the bipartisan tax bill that would reverse several harmful tax changes put in place by the Tax Cuts and Jobs Act (TCJA), such as the requirement to pay taxes on R&D activities and the ability to only expense 60 percent of capital expenditures, and the reduced Section 163(j) deduction. The procedural cloture motion on the Tax Relief for American Families and Workers Act of 2024, H.R. 7024, which needed 60 Senators to support, failed by a vote of 48-44. Senators Josh Hawley (MO), Markwayne Mullin (OK), and Rick Scott (FL) were the only Republicans to vote to advance the measure. Independent Senators Bernie Sanders (VT) and Joe Manchin (WV) voted against the measure.
The bipartisan, bicameral legislation, co-authored by Sen. Ron Wyden (D-OR) and Rep. Jason Smith (R-MO) overwhelmingly passed the House on January 31, 2024, by a vote of 357-70. The legislation reverses the harmful changes made to these critical tax provisions by reinstating R&D expensing while eliminating capitalization and amortization requirements, restoring 100 percent Bonus Depreciation, and including the full EBITDA standard for interest deductibility on business loans.
One Voice members sent hundreds of messages to their Representatives to help ensure the important passage of the bill in the House. While this vote on the bill did not reach the sixty needed, members of the National Tooling and Machining Association and Precision Metalforming Association sent 270 messages to their Senators last week ahead of the August 1st vote. This was an important effort to show Congress the critical need to act and reverse the changes to these tax provisions which are vital to manufacturers. Congress could consider a slimmed down two-year bill addressing 2024 and 2025 following the election, however, much of the discussion over taxes has shifted to the $4.6 trillion in taxes slated to increase on January 1, 2026.
Congress Leaves Washington for August Recess
Both the House of Representatives and the Senate have officially adjourned for their August recess. House members left town on July 25, and Senators departed after their session on August 1, 2024. Before leaving, Congress was working on the appropriations process to fund the government for the next fiscal year (FY).
In the House, the Appropriations Committee has approved all funding measures, and five of the twelve annual funding bills have passed on the House floor: Defense, Homeland Security, Interior-Environment, Military Construction-Veterans Affairs, and State-Foreign Operations. These bills passed mostly along party lines, with Republicans receiving only a handful of Democratic votes. As seen last year with the FY24 funding bills, the House has produced highly partisan measures with several “poison pill” policy riders that lack bipartisan support.
In the Senate, the Appropriations Committee has approved all but one of their funding bills with strong bipartisan support. However, none of these bills have advanced through the full Senate. When Congress returns on September 9, members will have only 15 legislative days before the fiscal year ends on September 30. Additionally, both chambers are scheduled to adjourn at the end of September until after the election on November 5. With such a limited calendar, it is almost certain that Congress will need to pass a short-term continuing resolution to fund the government into the new fiscal year.
EPA Issues Risk Assessment for Hexavalent Chromium
The Environmental Protection Agency has issued an updated Integrated Risk Information System (IRIS) Assessment for hexavalent chromium [Cr(VI)]. The assessment, released on August 1, 2024, concludes that Cr(VI) is “carcinogenic to humans” via inhalation and ““likely to be carcinogenic” vial oral exposure. Hexavalent chromium was first deemed carcinogenic to humans via inhalation following an IRIS assessment in 1998. The assessment also found adverse effects to humans, other than cancer, to the gastrointestinal and respiratory systems through oral and inhalation exposure, respectively. The IRIS human health assessments are risk assessments developed through the evaluation of publicly available scientific study to identify “s adverse human health effects and to characterize exposure-response relationships.” These assessments can then be used by the EPA when drafting regulations. The EPA’s IRIS database contains assessments on over 571 chemicals. For the full toxicological review of hexavalent chromium contained in the assessment visit: https://iris.epa.gov/ChemicalLanding/&substance_nmbr=144
Vietnam to Remain as “Non-Market Economy”
The Commerce Department announced on August 2, 2024, that Vietnam will continue to be classified as a “non-market economy” (NME) for the purposes of antidumping and countervailing duty (AD/CVD) cases. Despite Vietnam’s long-standing desire for market economy status, an official request for this change was only submitted in September 2023.
A non-market economy is defined by Commerce as a country that “does not operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of merchandise.” Along with Vietnam, only eleven other economies, including China, Russia, and North Korea, hold this designation from Washington.
While the U.S. and Vietnam have collaborated on various regional security and economic issues, including membership in the Indo-Pacific Economic Framework for Prosperity (IPEF), some opposition to changing Vietnam’s status arose in Congress. In January, eight senators, including Elizabeth Warren and Bernie Sanders, sent a letter to Commerce Secretary Raimondo, expressing concerns that granting Vietnam market economy status would “worsen ongoing trade distortions, erode the U.S. manufacturing base, threaten American workers and industries, and reinforce Vietnam’s role as a conduit for goods produced in China with forced labor.”
In its decision, Commerce stated, “Despite Vietnam’s substantive reforms made over the past 20 years, the extensive government involvement in Vietnam’s economy distorts Vietnamese prices and costs and ultimately renders them unusable for the purpose of calculating U.S. antidumping duties.”
House Planning “China Week”
The House of Representatives is planning a “China week” after the August recess, focusing on passing various China-related bills. During this week, lawmakers will potentially consider legislation on outbound investment, reforming de minimis rules for Chinese goods, and export control.
In a recent speech, Speaker Mike Johnson (R-LA) labeled China as “the greatest threat to global peace,” urging Congress to counter this threat “with every tool at our disposal.” The bills set to be considered this fall stem from the work of several committees over the past year, including Ways & Means, Foreign Affairs, and Financial Services, along with recommendations stemming from the work of the House Select Committee on China.
The Ways & Means Committee’s de minimis bill aims to prohibit goods subject to Section 301 tariffs from receiving de minimis treatment. The End China’s De Minimis Abuse Act, H.R. 7979, was approved by the Committee in April.
The House Foreign Affairs Committee has passed several export control measures and is currently working on a comprehensive bill that may be introduced during China week. This bill would adjust licensing policies, clarify Bureau of Industry and Security authorities after the Supreme Court’s overturning of the Chevron doctrine, and promote international cooperation.
Both the House Foreign Affairs and Financial Services committees have proposed legislation to address outbound investment. The Foreign Affairs Committee’s bill, authored by Chair Michael McCaul (R-TX) and ranking member Gregory Meeks (D-NY), seeks to codify an August 2023 executive order establishing a regime within the Treasury Department’s Office of Investment Security to review U.S. investments in three Chinese technology sectors. Meanwhile, Rep. Andy Barr (R-KY) from the House Financial Services Committee has introduced the Chinese Military and Surveillance Company Sanctions Act. Approved by the Financial Services Committee in September 2023, this act would impose blocking sanctions on Chinese entities across several existing government blacklists. It remains uncertain which bill will be brought to the floor during China week, or if a compromise measure will be proposed instead.
House leaders are eyeing late September for China week.