Orange cones are appearing across the country as spring ushers in highway construction season to upgrade the more than four million miles in the U.S. highway system. Road closures and traffic will cause driver frustration which serves as an appropriate backdrop for the debate in Washington over infrastructure spending that will likely be long and difficult.
President Joe Biden recently unveiled the first portion of a comprehensive infrastructure plan that includes $2.25 trillion in spending and a corporate tax increase. A second major package that will be announced in late April will focus on social measures, including expanding health care and paid-leave access, as well as extending the child tax credit. The proposal will be offset by tax increases on high-income individuals. Discussions have begun to unify support among Democratic members with negotiations on issues such as repeal of the cap on state and local tax (SALT) deductions. With such a slim majority and a few empty House seats, groups of two to three Democrats have the power to hold up bill passage.
A group of Republicans released an alternative infrastructure framework of $568 billion in investments over a five-year period that includes $299 billion for roads and bridges, $61 billion for public transit systems, and $20 billion for rail.
The debate over elimination of the filibuster continues as Democrats consider the best way to pass their agenda. Any changes to the filibuster, however, will require the support of all Democrats, including moderate hold-outs U.S. Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ). A recent decision by the Senate’s Parliamentarian may allow the use of budget reconciliation twice per fiscal year, lessening pressure to change the filibuster.
President Biden’s nominees continue to move through the U.S. Senate. Recent confirmations include Secretary of Housing and Urban Development (HUD) Marcia Fudge and Gary Gensler as Chair of the Securities and Exchange Commission, while the U.S. Senate Committee on Banking, Housing, and Urban Affairs has advanced the nomination of Rohit Chopra to Director of the Consumer Financial Protection Bureau (CFPB). Biden’s announcement of a nominee for the Office of the Comptroller of the Currency continues to be delayed. Michael Barr, a former U.S. Department of the Treasury official, was expected to be selected, but progressive Democrats pushed back favoring Mehrsa Baradaran, a law professor at the University of California Irvine. In recent weeks, additional names have emerged making it unclear when a decision will be made.
The American Jobs Plan
President Biden’s first portion of a comprehensive infrastructure plan called the American Jobs Plan includes $2.25 trillion in total spending and the following provisions.
- $213 billion to build and renovate more than 2 million affordable homes
- Enactment of the Neighborhood Homes Investment Act that creates a federal tax credit that covers the cost between building or renovating a home and the price at which they can be sold. This is expected to build and rehabilitate more than 500,000 homes for low- and middle-income homebuyers
Corporate Tax Provisions:
- Raise the corporate tax rate to 28% from 21% with a 15% minimum tax on a corporation’s profits for financial reporting purposes
- Impose a minimum tax on the profits that U.S. corporations earn overseas, increasing the rate to 21% from approximately 13%
- Additional funding for the Internal Revenue Service to increase audits on corporations
- Transportation: $620 billion
- Broadband Internet: $100 billion
- Manufacturing: $300 billion
- Workforce Development: $100 billion
- Oil and Gas Tax Breaks: eliminate all tax preferences for the oil and gas industry
President Biden’s Fiscal Year 2022 Discretionary Funding Request
President Biden provided his topline Fiscal Year 2022 (FY22) discretionary funding request of $1.52 trillion to Congress. The president’s FY22 discretionary request provides a total of $68.7 billion for HUD, an increase of $9 billion over the 2021 enacted level. This includes expansion of the Housing Choice Voucher program to $30.4 billion and $1.9 billion for the HOME Investment Partnerships Program, an increase of $500 million. A full budget request is expected later this spring.
Fannie Mae and Freddie Mac Won’t Buy QM Under GSE Patch After July 1
Fannie Mae and Freddie Mac announced that recent changes to the senior preferred stock purchase agreement (PSPA) require loans with application dates beginning July 1, 2021 must meet the CFPB’s new price-based General QM loan definition to be acquired. As a result, they will no longer acquire loans under the GSE Patch or the old debt-to-income based General QM definition after that date.
CFPB Proposed Rule to Prohibit Foreclosures Until the End of the Year
The CFPB proposed a set of rule changes intended to help prevent avoidable foreclosures as the emergency federal foreclosure protections expire. Due to the COVID-19 pandemic and the ensuing economic crisis, nearly 3 million homeowners are behind on their mortgages nationwide. The proposed rule would amend Regulation X to provide a special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after December 31, 2021.
The proposed rule would permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application. Normally, with certain exceptions, Regulation X requires servicers to review a borrower for all available options at once, which can mean that borrowers have to submit more documents before a servicer can make a decision. Allowing this flexibility could allow servicers to get borrowers into an affordable mortgage payment faster with less paperwork. This provision would only be available for modifications that do not increase a borrower’s monthly payment and that extend the loan’s term by no more than 40 years from the modification’s effective date.
President Biden Nominated Adrianne Todman for HUD Deputy Secretary
President Biden nominated Adrianne Todman, who is currently the CEO of the National Association of Housing and Redevelopment Officials (NAHRO), as HUD Deputy Secretary. Before joining NAHRO in 2017, Todman served as Executive Director of the District of Columbia Housing Authority and served in several career positions at HUD. She also served as a Legislative Director in then-Congressman Ron de Lugo’s office.