A ‘Breakthrough’ in Budget Talks

Plus, time for a gas tax holiday? ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Happy Wednesday! Lots going on today, but we’ll just take a moment to note that "Obi-Wan Kenobi" is [coming]( May the Force be with us all! A ‘Breakthrough’ in Budget Talks: Negotiators Agree on Framework for Spending Bill Top negotiators in the budget talks for fiscal year 2022 said Wednesday that a deal is now within sight. "We have reached an understanding on the framework, which lets us go to the next step," Sen. Richard Shelby (R-AL), the ranking member on the Senate Appropriations Committee, [said](. "I believe this is a breakthrough in a bipartisan way." The framework will allow negotiators to produce topline numbers for defense and non-defense spending, one of the main sticking points in the talks. Senate Appropriations Committee Chair Patrick Leahy (D-VT) confirmed the progress. "I’m far more optimistic than I’ve been in months and I think we’re on a path to finish something," Leahy told reporters. House Appropriations Committee Chair Rosa DeLauro (D-CT) said the agreement will enable negotiators to move quickly. "I am pleased that we have reached agreement on a framework, which will allow our subcommittees to get to work on finalizing an omnibus," she said. None of the lawmakers provided further details on the topline numbers. The Senate is expected to take up the short-term bill that the House passed on Tuesday, which would avert a government shutdown after February 18, when the current stop-gap bill expires, and extend funding until March 11. That should give negotiators sufficient time to finalize appropriations for the 2022 fiscal year, which have been frozen in the absence of an agreement. The bottom line: Passing an appropriations package for 2022 will allow President Biden to put his stamp on spending at the federal agencies, which are still operating under instructions put in place by former President Donald Trump. The bill is expected to provide a sizable boost for defense spending, larger than the White House requested, and an increase for various social programs related to Biden’s domestic agenda. It would also unlock billions in spending provided by the bipartisan infrastructure bill signed into law last fall. Congress Looks to Deliver a $50 Billion Rescue Plan for the US Post Office Congress took a big step Tuesday toward reforming the U.S. Postal Service’s shaky finances and allowing the ailing agency to move ahead with modernization efforts. The House overwhelmingly approved a bill that would save the USPS about $50 billion over the next decade. "Today’s historic bipartisan vote brings us one step closer to finally putting the Postal Service on a sound financial footing so it can continue serving all Americans for years to come," Rep. Carolyn Maloney (D-NY), chairwoman of the Oversight Committee, said in a statement after the bill’s passage. She told [The Washington Post]( that the bill, which she sponsored, "will save taxpayers’ dollars while at the same time making the operations of the post office more financially stable and sustainable, and making postal jobs and employee health benefits more secure." The Postal Service Reform Act, approved in a 342-92 vote, would require retired USPS employees to enroll in Medicare when eligible. About a quarter of postal retirees do not enroll in the federal health care program for seniors, the House Committee on Oversight and Reform said in an outline of the reform bill. "This means the Postal Service is stuck paying far higher premiums than any other public or private sector employer," the committee said. The Postal Service estimates that the change could save it almost $23 billion over 10 years, and the Congressional Budget Office projected that the legislation overall would save the government $1.5 billion over a decade as postal retirees help lift Medicare’s prescription drug discounts. The legislation would also eliminate a requirement imposed by Congress in 2006 that the Postal Service pre-fund retiree health benefits 75 years into the future. Many experts noted that requirement went well beyond what private companies and other government entities do, and it strained the Postal Service’s finances, burdening it with liabilities that postal leaders said kept it from making much-needed operational and service improvements. Since 2007, the Postal Service has reported net losses totaling more than $90 billion, according to [Reuters](. The agency on Tuesday announced a loss of $1.5 billion for the fourth quarter of 2021, compared to a profit of $318 million for the same quarter the year before. It has reportedly defaulted on payments to the retiree health fund since 2012, and the pre-funding requirement has accounted for about $153 billion of the Postal Service’s $206.4 billion in liabilities, The Washington Post reports. The reform bill would wipe out $57 billion of liabilities to the retiree health benefit fund, and the Postal Service estimates that eliminating the pre-funding mandate would also save it about $27 billion over 10 years. Some critics opposed the requirement that postal retirees enroll in Medicare, reportedly charging that the change amounts to a bailout. "Nothing in this bill will make the post office truly solvent," Rep. Darrell Issa (R-CA) said. "It just wipes out and wipes away debt and shifts the burden on to taxpayers." The new bill also requires the Postal Service to keep delivering mail six days a week, develop an online dashboard with data on national and local service and expand special rates for local newspaper distribution. Why it matters: "The bill, if approved by the Senate, would be the first major piece of postal reform legislation to make it through Congress in more than 15 years, and would address issues that stem from the last reform effort lawmakers passed in 2006," writes Jory Heckman of the [Federal News Network](. The legislation is reportedly the result of months of negotiations between Democrats, Republicans, Postmaster General Louis DeJoy and Postal Service unions. "We are encouraged that Congress is moving forward with postal reform legislation and strongly support enactment," DeJoy said. "These reforms will help ensure that the Postal Service can operate in a financially sustainable manner." What’s next: Senate Majority Leader Chuck Schumer (D-NY) said that the bill, which also enjoys bipartisan support in the Senate, would be brought to a vote by the end of next week. Time for a Gas Tax Holiday? Against a background of surging gasoline prices at the beginning of an election year, a group of Democratic lawmakers are calling for a suspension of the federal gas tax for the rest of 2022. The Gas Prices Relief Act proposed by Sens. Maggie Hassan (D-HN) and Mark Kelly (D-AZ) — both of whom are up for reelection in the fall — would suspend the 18.4 cents per gallon federal gas tax until the beginning of 2023. The legislation would also empower the Treasury Department to monitor retail prices of gas to ensure that producers are passing the tax savings on to consumers. And it would require the Treasury to maintain the integrity of the federal Highway Trust Fund by covering the lost gas tax revenues with general tax revenues. "People are feeling a real pinch on everyday goods, and we must do more to help address rising costs, particularly the price of gas," Hassan said in a statement. Several Democrats — including Sens. Debbie Stabenow (MI), Catherine Cortez Masto (NV), Jacky Rosen (NV) and Raphael Warnock (GA) — have signed on as cosponsors of the bill. In the House, Rep. Josh Harder (D-CA) expressed support for the legislation. The nationwide price of a gallon of gas is now $3.45, about a dollar more than it was a year ago, according to AAA. A recovering economy and the threat of war in Ukraine are expected to keep upward pressure on gas prices, at least in the near term. States Ease Covid Mandates as White House, CDC Lag Behind As a string of states from California to New York move to relax or drop mask mandates, Dr. Rochelle Walensky, the director of the Centers for Disease Control and Prevention, told reporters Wednesday that the agency is not prepared to change it guidance on face coverings. "We continue to recommend masking in areas of high and substantial transmission — that's much of the country right now — in public indoor settings," Walensky said during a White House briefing. "And so we're, of course, taking a close look at this in real-time, and we're evaluating rates of transmission as well as rates of severe outcomes as we look at updating and reviewing our guidance." Walensky later added that hospitalizations and death rates remain high, so while current trends are encouraging, "we are not there yet." According to CDC data, 99% of U.S. counties still have high rates of coronavirus transmission. The seven-day average of daily cases is about 250,000, down about 44% from the previous week. Hospital admissions are doe about 25% to about 13,000 a day. And deaths are up slightly from last week to over 2,400 a day. Despite such numbers, a growing number of states have responded to declining case rates by announcing plans to drop indoor mask mandates or mandates for schools — moves that put the Biden administration and public health officials in an awkward position. "The tragic thing is that these are governors that would probably have followed the White House’s guidance," [said]( Dr. Leana Wen, a former Baltimore health commissioner. "They wanted CDC input and asked for it, but without a clear timeline, at some point they had to decide that they couldn’t wait any more. The fault is not theirs, but the CDC’s and by extension, President Biden’s, which, with each passing day, is making itself less and less relevant." Dr. Celine Gounder, an infectious disease specialist who served on President Biden’s Covid-19 Advisory Board transition team, told [The New York Times]( that the situation presents challenges for public health officials: "It’s highly variable across the country — how much transmission there is, what vaccination uptake has been — but the C.D.C. produces guidance for the entire country, so it makes sense for them to be cautious." Send your feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [Under Pressure to Ease Up, Biden Weighs New Virus Response]( – Associated Press - [The Biden Administration Remains Cautious About Easing Masking and Other Covid Safety Measures]( – New York Times - [World Marks 500,000 COVID Deaths Since Omicron, While Fauci Says U.S. Is Exiting ‘Full-Blown’ Pandemic]( – Washington Post - [Dropping Indoor Mask Mandate, New York Joins Blue States Easing Covid Rules]( – New York Times - [Republican-Led States Sue Biden Over Federal Contractor Minimum Wage]( – Bloomberg - [Voters Fed Up With Covid Are Turning Against Biden and the Democrats]( – Bloomberg - [Biden’s Approval Rating Tumbles While Gasoline Prices Keep Surging]( – Bloomberg - [Violent Crime to Labor Shortages: Mayors Say COVID’s Toll on Cities Is Far-Reaching]( – Politico Views and Analysis - [Biden’s Big Chance to Lower Drug Prices]( – David Dayen, American Prospect - [Congress May Rescue the Post Office From Itself]( – Timothy L. O’Brien, Bloomberg - [That Big Jobs Gain Might Not Be Real]( – Peter Coy, New York Times - [The U.S. Is Losing More People Than Other Nations to COVID-19. It’s Time for Honest Talk About Why]( – Charles Lane, Washington Post - [The IRS Can't Figure Out How to Tax Gig Workers]( – Alexis Leondis, Bloomberg - [America’s Long War on Cancer: What Was It Good For?]( – Stephen Mihm, Bloomberg Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](