On The Money — The Democratic divide on taxes

On The Money — The Democratic divide on taxes
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Happy Friday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: thehill.com/newsletter-signup.

Today’s Big Deal: Dueling tax plans among House and Senate Democrats. We’ll also look at another debt default projection and the battle of Bernie and Joe.

But first, a look at a very effective but inconvenient button.

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For The Hill, I’m Sylvan Lane. Write me at slane@thehill.com or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at njagoda@thehill.com or @NJagoda and Aris Folley at afolley@thehill.com or @ArisFolley.

Let’s get to it.


Senate, House Democrats split over taxes in $3.5T package 

A rift is starting to emerge between the chairmen of the two tax-writing committees on Capitol Hill over the size and details of Democratic plans to pay for President BidenJoe BidenTrump endorses challenger in Michigan AG race On The Money: Democrats get to the hard part Health Care — GOP attorneys general warn of legal battle over Biden's vaccine mandate MORE’s broad economic agenda.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Richard NealRichard Edmund NealWant a clean energy future? Look to the tax code Democrats brace for toughest stretch yet with Biden agenda The Hill's Morning Report - Presented by National Industries for the Blind - What do Manchin and Sinema want? MORE (D-Mass.) are taking different approaches to laying out the funding mechanisms designed to fuel a $3.5 trillion Democratic-only bill.

  • Wyden has put out much more detail about what’s under consideration for the Senate’s tax plan and has announced publicly that he’s ready to raise whatever amount is needed in taxes to pay for the spending package.
  • Neal, by contrast, has been much more circumspect in previewing what the House tax package will look like, reflecting the tougher path he must trod to round up enough votes in a chamber where moderate and progressive Democrats are deeply divided.

“Getting the Senate and House together is a yeoman’s task. I think that task is just as serious as getting Republicans and Democrats together,” said Rep. Bill PascrellWilliam (Bill) James PascrellDemocrats brace for toughest stretch yet with Biden agenda LIVE COVERAGE: Tax hikes take center stage in Ways and Means markup Democrats draw red lines in spending fight MORE (D-N.J.), a member of the House Ways and Means Committee. “We’re assuming some things here that we’re in the same boat as Democrats in the Senate,” he added. The Hill’s Alexander Bolton tells us why.

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LEADING THE DAY

US could default on national debt as soon as mid-October

The federal government is on track to default on the national debt sometime in between the middle of October and the middle of November without action to raise the debt ceiling, according to an analysis released Friday.

  • The Bipartisan Policy Center (BPC), a centrist think tank that closely tracks the debt limit, said the Treasury Department will likely run out of ways to keep the U.S. solvent sometime after the start of the fiscal year. 
  • BPC originally projected the so-called x-date to occur as soon as the beginning of October, but slightly delayed and narrowed that window after an unexpectedly strong summer surge in federal revenues.

But BPC experts warned that a potential slowdown and deepening uncertainty driven by rising COVID-19 cases could shift that window sooner, bringing the U.S. closer to an unprecedented default on the national debt.

“It's unclear what the next month or two is going to bring in federal revenues, and that can make a big difference in terms of the timing,” said Shai Akabas, director of economic policy for BPC.

“But what's also clear is that they don't have much more time than the end of the fiscal year,” he continued. I have the latest here.

BERNIE VS. JOE

Manchin, Sanders set for clash over Biden spending package

Sens. Joe ManchinJoe ManchinBriahna Joy Gray: Push toward major social spending amid pandemic was 'short-lived' Overnight Energy & Environment — Presented by Climate Power — Emissions heading toward pre-pandemic levels Biden discusses agenda with Schumer, Pelosi ahead of pivotal week MORE (D-W.Va.) and Bernie SandersBernie SandersBriahna Joy Gray: Push toward major social spending amid pandemic was 'short-lived' Sanders 'disappointed' in House panel's vote on drug prices Manchin keeps Washington guessing on what he wants MORE (I-Vt.) are hurtling toward a showdown over President Biden's $3.5 trillion spending plan as they draw red lines around their legislative priorities.

  • The two veteran lawmakers are at opposite ends of the Senate Democratic Caucus, with no close working relationship and some high-profile public splits in their past.
  • But the White House and Democratic leaders will need to figure out a way to bring them together, and satisfy their contradictory demands, or suffer a massive defeat of the party’s top goals.

“They really do mirror each other in terms of representing different ends of the Democratic coalition. ... They're kind of avatars of like the two wings of the Democratic Party,” said Democratic strategist Joel Payne.

The backstory: Asked about the relationship between the two, a former Manchin aide added: “There is no relationship. ... They do not talk.” But there have still been plenty of flashpoints:

  • Manchin supporters are quick to point back to a photo that Sanders’s wife, Jane Sanders, took at a conference in 2017 with Manchin’s then-primary opponent, Paula Jean Swearengin.
  • Manchin, two years later, vowed that he would “absolutely not” support Sanders if he was the Democratic presidential nominee in 2020.
  • During a caucus call late last year, they clashed over the size of a second round of coronavirus stimulus checks and  were also on opposite sides of the minimum wage fight earlier this year.

The Hill’s Jordain Carney and Aris Folley break it down here.

POISONED WELLS

Wells Fargo to pay $250M fine for mortgage oversight lapses

Wells Fargo agreed to pay a $250 million fine Thursday after the Office of the Comptroller of the Currency (OCC) charged the company with failing to improve oversight of its mortgage business and comply with a 2018 agreement to fix decades of internal lapses.

Under a consent order issued by the OCC, the bank agreed to take several steps to improve risk management and customer protections within its home lending operations, three years after Wells Fargo paid a record-breaking fine for a series of damaging lapses. 

The background: Wells Fargo agreed to a consent order in 2018 with the OCC and agreed to pay a $1 billion fine after failing to make promised adjustments to customers’ interest rates on mortgages and automobile loans, and forced millions of auto loan customers to buy unnecessary insurance products. 

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  • Wells Fargo was fined $100 million by the Consumer Financial Protection Bureau in 2016 for opening millions of bank and credit card accounts for customers without their consent.
  • Two years later, the Federal Reserve banned Wells Fargo from growing beyond $1.95 trillion in assets following the unauthorized accounts scandal, issues with its mortgage oversight and charging veterans hidden fees on refinancing their home loans. 

The bank is still operating under that cap after senior leaders repeatedly failed and even ignored demands from Fed officials to take more aggressive action to overhaul its internal controls.

The Week Ahead

Monday

  • The House Financial Services Committee begins a markup of the housing-related portions of the Democratic infrastructure, climate and social services bill at 12 p.m., one of several markups happening in House committee.

Tuesday

Wednesday

  • The Senate Banking Committee votes on the nominations of Brian Eddie Nelson to be Treasury under secretary for terrorism and financial crimes; Elizabeth Rosenberg to be assistant secretary for terrorist financing; Julia Ruth Gordon  to be an assistant secretary of Housing and Urban Development; David Uejio to be an assistant secretary of Housing and Urban Development; and Solomon Jeffrey Greene to be an assistant secretary of Housing and Urban Development at 9:30 a.m.

 

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GOOD TO KNOW

Powerful business groups whose members are directly affected by President Biden’s recently announced coronavirus vaccine requirement applauded Biden’s effort to boost vaccinations but said that the administration needs to provide more details about its plan.

Here’s what else have our eye on:

  • Apple is not an illegal monopoly but has engaged in illegal anti-competitive conduct, a California federal judge ruled Friday in the high-profile case brought by Epic Games. 
  • Tech trade groups representing Facebook, Twitter and Google are vowing to fight what Texas is labeling as a crackdown on social media “censorship” of conservatives.
  • Harvard University President Larry Bacow on Thursday announced it will pull its $42 billion investment from fossil fuel industries, making it one of the wealthiest and most prestigious institutions to do so.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you Monday.