• The Senate will move first to determine if other bills will be attached to the stopgap—the final legislative package before November’s mid-term elections. (House Majority Leader Steny Hoyer (D-MD) website, Sept. 12)
• The process of moving the funding package has been complicated by a deal reached last month between Senate Majority Leader Charles Schumer (D-NY) and Sen. Joe Manchin (D-WV) to consider permitting rules for energy pipelines and exports. The agreement was reached to secure Manchin’s support for the Inflation Reduction Act. (Roundtable Weekly, Aug. 12 and Manchin’s Outline of Energy Permitting Provisions)
• Sens. Schumer and Manchin are working to gather support for permitting legislation, which would require 60 votes to pass the Senate. In the House, a coalition of 77 Democrats recently expressed their disapproval of linking a permitting reform bill to the “must-pass” CR. (Reuters and The Hill, Sept. 13)
• House Speaker Nancy Pelosi (D-CA) addressed the possibility of a permit bill yesterday. "We have agreed to bring up a vote, yes. We never agreed on how it would be brought up, whether it be on the CR, or independently or part of something else. We'll just wait & see what the Senate does," Pelosi said. (E&E News, Sept. 15)
• A CR that expires in December could be followed by consideration of a FY2023 “omni” spending package —with possible extensions of certain tax provisions—during a lame-duck session. 

• House Republicans plan to unveil an outline of their “Commitment to America” platform on September 23 in anticipation of the November 8 midterm elections. (Tax Notes, Sept. 15)
• Rep. French Hill (R-AR), a member of the GOP Jobs and the Economy task force, told Tax Notes there will be a “skinny version” of the House GOP Platform and a less widely circulated “deep blueprint for legislative work to lay out that first year of Congress.”
• Extending portions of the Tax Cuts and Jobs Act past their December 31, 2025 expiration will be at the core of the the House Republican tax plan— including 2017’s tax reductions for individuals, the 20 percent rate cut on pass-through income, and bonus depreciation. (Tax Notes, Sept. 15)
• The White House released its own economic blueprint last week, reciting recent accomplishments and signaling tax measures it plans to pursue, including tax increases on capital gains, carried interest, and the step-up in basis of assets at death, as well as a new minimum tax on billionaires’ wealth. (White House news release and blueprint, Sept. 9)
• Meanwhile, the Biden administration announced plans on Wednesday to distribute $900 million throughout the country to build electric vehicle infrastructure across 53,000 miles of the national highway system—funding that is part of last year’s bipartisan infrastructure law. (PoliticoPro, Sept. 14)
• Transportation Secretary Pete Buttigieg said, “With the first set of approvals we are announcing today, 35 states across the country—with Democratic and Republican governors—will be moving forward to use these funds to install EV chargers at regular, reliable intervals along their highways.” (Approvals and each state’s deployment plan for 2022) 

As the Federal Reserve accelerates the unwinding of its nearly $9 trillion balance sheet this month, there is growing concern about the impact that quantitative tightening (QT) may have on credit market liquidity and the overall economy. (Financial Times, Sept 14 and Reuters, Sept. 15)

QT & Liquidity

• The Fed launched its QT initiative on June 1 with initial caps set for $30 billion in U.S. Treasuries and $17.5 billion in agency mortgage-backed securities—but scheduled the caps to increase this week to $60 billion and $35 billion, respectively. (Federal Reserve, Plans for Reducing the Size of the Federal Reserve's Balance Sheet, May 4)
  
  
• The increased QT pace of up to $95 billion per month has sparked concerns about how contracting liquidity conditions could impact the overall economy and whether the Fed may seek an early exit from QT. (Financial Review, Sept. 14 and BGov, Sept. 12)
  
  
• The QT increase prompted a Bank of America warning to clients this month that strain on bond market liquidity is "one of the greatest threats to global financial stability today, potentially worse than the housing bubble of 2004-2007." (MarketWatch, Sept 15 and New York Times, Sept. 11)
  
  
• The Fed’s expected policy interest rate increase by 75 to 100 basis points next week would keep borrowing costs elevated as the central bank’s scheduled QT effort increases.

Soft Landing Challenge

• The challenge for the Fed is whether it can achieve a “soft landing”—reducing the inflation rate while avoiding a recession—while the U.S. economy faces volatile inflationary factors from the war in Ukraine, high energy costs, and supply chain disruptions.
  
  
• Rising interest rates and various market conditions around the world could lead to a global recession next year, resulting in “lasting harm” to emerging and developing economies, according to an analysis released today by the World Bank. (Financial Times and UPI, Sept. 16)
  
  
• “Recent tightening of monetary and fiscal policies will likely prove helpful in reducing inflation,” said Ayhan Kose, the World Bank’s Acting Vice President for Equitable Growth, Finance, and Institutions. “But because they are highly synchronous across countries, they could be mutually compounding in tightening financial conditions and steepening the global growth slowdown.” (World Bank news release and analysis, Sept. 16)
  
  
• Roundtable Board Member Barry Sternlicht (Chairman and CEO, Starwood Capital Group), above, appeared on CNBC’s Squawk Box yesterday to discuss the Fed, inflation, and the U.S. economy. Sternlicht stated the economy is “braking hard” and that prices will begin to decrease after recent Fed measures.

The Roundtable’s Fall Meeting next week in Washington will include a discussion on the Fed’s actions and economic conditions with Dr. Austan Goolsbee, former White House Chairman of the Council of Economic Advisers from 2010-2011 and a member of President Barack Obama's cabinet.

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• Committee Ranking Member Pat Toomey (R-PA) opened the hearing by stating, “The SEC is wading into controversial public policy debates that are far outside its mission and its expertise.”
• Toomey pressed Gensler about a June Supreme Court ruling that executive branch agencies “cannot use novel interpretations of existing law to pretend they have legal authority to support sweeping policy changes, including on climate change, that Congress never intended.” (Toomey Opening Statement)
• Toomey asked, “In light of the EPA v. West Virginia case, have you given any consideration to rescinding that rulemaking?” Gensler replied that the Commission is “seriously” considering the high Court ruling and 14,000-plus public comments to assess its legal authorities to ensure that registered companies provide material, decision-useful information about climate risks to investors. (SEC docket with list of organizations and individual comments)

• Senator Jon Tester (D-MT) explained that the SEC’s proposal would require farms and other small businesses to estimate and disclose carbon emissions because they sell products and services to public companies. Senators Mike Rounds (R-SD) and Steve Daines (R-MT) shared Tester’s concerns (CQ, Sept. 15)

• The SEC’s climate proposal, if finalized, would require all SEC registrants to quantify direct GHG emissions (“Scope 1”) and emissions attributable to electricity purchases (“Scope 2”) through annual 10-Ks and additional filings. (SEC News Release | Proposed Rule | Fact Sheet, March 22)
• The SEC also proposed that a company would need to report on “Scope 3” indirect emissions if they are “material” to investors. In June 10 comments, The Roundtable objected to the Commission’s proposed Scope 3 approach because real estate companies neither control nor have access to data regarding emissions from third parties in their “value chains.” (Roundtable Weekly, June 10 and June 24)
• A joint letter filed on June 13 from 11 national real estate industry trade groups echoed the issues raised by The Roundtable in its earlier comments.