Data privacy will be an early legislative priority in the House this year. (ddp)

Cutting Spending, Phase 1. The House passed a number of bills this week to end immediately the federal government’s declaration of COVID as a national emergency. Removing the designation would end the continued availability of certain federal funds for public health measures (such as free COVID testing and vaccinations) and expanded social safety net programs (including expanded food stamp benefits and access to Medicaid). Ending the emergency designations of these programs will restore them back to pre-2020 eligibility rules and levels of assistance. Expanding government services to individuals during the height of the COVID crisis made sense to lawmakers from both parties at that time (the designations began during President Trump’s term). However, with COVID turning the corner from pandemic to endemic, many lawmakers believe it is time to curtail the extra funding in view of the $31 trillion national debt. These measures passed by the House this week would end the assistance right away, but the Democratic-controlled Senate will not act on the measures. President Biden announced this week that he would end the designations on May 11, so they are going away soon regardless.

COVID Spending. It’s unclear to us exactly how much savings would be accomplished by the House Republican legislation mentioned above. We have seen reports suggesting that the amount is approximately $250 billion. Congress has passed legislation committing a total of $4.6 trillion to combat COVID since 2020. To date, the government has spent $4.1 trillion of those funds, leaving $500 billion unspent. The money that has been spent was not offset and therefore has added to the federal debt. House Republicans will argue that a claw back of the $500 billion plus the $250 billion mentioned above is a good start to begin spending reductions, but these cuts are non-starters for now in the Senate and with President Biden. Expect to hear about them again when debt ceiling negotiations begin and budget reduction options are discussed.

State and Local Tax Deduction. We continue to receive many calls and notes from individuals in high tax states with concerns over the $10,000 limit for the state and local tax (SALT) deduction that was included in the 2017 tax bill. The bad news for these individuals is that the limit likely will remain in place until the end of 2025 when it is scheduled to expire along with many other parts of the 2017 tax bill. Some potential good news came this week when two Republican members from New York and another from California were added to the House’s tax writing panel, the Ways and Means Committee. This may give the effort to repeal the cap before 2025 a boost. It will fracture House Republican unity to defend the cap and result in spirited debate about the cap’s future. We are not predicting the cap will be phased out before 2025, but the issue will be given a fresh look by the committee, especially if Republicans can find other acceptable revenue sources to replace it.

Privacy Legislation. Data privacy will be an early legislative priority in the House this year. Given that the banking industry already has been subject to federal privacy standards for over two decades, House Financial Services Committee Chairman Patrick McHenry (R-NC) is interested in approving his own legislative marker as the House Energy and Commerce Committee continues its work on developing privacy standards that apply more broadly to all companies. That committee hit the ground running this week with a hearing on US competition with China that honed in on data privacy. It is building upon progress made last year when it approved a bill that would require companies to limit the amount of data that they collect and prohibit the collection of sensitive information (with limited exceptions). The bill was a bipartisan compromise that made trade-offs on key issues like preemption (it would preempt state laws) and enforcement (it had a private right of action that begins four years after the passage of the bill). Differences on these contentious issues have sidetracked efforts to advance a federal privacy standard into law for years and likely will continue to do so. Even if the House is able to pass a privacy bill, it will face resistance from key lawmakers in a Democratic-controlled Senate.

Police Reform Legislation Back in Play? The death of Tyre Nichols at the hands of Memphis police officers has resurrected calls for the passage of reforms to policing, an effort that fell short last year. Though many members from both parties have agreed on some reforms, negotiators on a bill last year couldn’t resolve differences over the extent to which police officials should be legally liable for their actions while on the job (qualified immunity). Under Democratic control, the House passed a bill last year with comprehensive reforms, but that bill was held up in the Senate pending efforts to forge a bipartisan compromise. Senate negotiators will meet soon to determine whether there is any appetite to revive those talks, but qualified immunity still looms as a major area of disagreement. We do not believe such a bill will move forward in Congress this year, though there could be reforms enacted at the state and local levels.

Read more in Washington Weekly 3 February 2023.