Good Thursday evening. Congressional offices once again faced the threat of violence today as a man claimed to have a bomb in a truck outside the Library of Congress. The library, the Supreme Court and several Capitol office buildings were evacuated. The man ended up surrendering to police after about five hours, but this is the third time in nine months that the seat of government has been shut down due to violent threats.
Here’s what else you need to know.
How Pelosi Could Squash Centrist Democrats’ Rebellion
Centrist Democratic Sens. Joe Manchin and Kyrsten Sinema are reportedly advising — and encouraging — the nine moderate House Democrats who are threatening to derail the party’s $3.5 trillion budget plan containing major portions of President Biden’s economic agenda.
The nine House members have threatened to withhold their support for the budget blueprint unless House Speaker Nancy Pelosi (D-CA) agrees to a quick vote on the $ 1 trillion bipartisan infrastructure bill passed by the Senate.
Axios’s Hans Nichols reports that Manchin (WV) and Sinema (AZ) “are helping allies in the House to stake out — and defend — their centrist position” and are providing advice on negotiations with the White House and congressional leadership. Both senators voted for the budget resolution but have expressed concern about the cost of the Democratic spending plan it outlines.
No Labels, a group that advocates for bipartisan legislation, is also backing the House moderates with a reported six-figure ad buy on national cable.
Pelosi reportedly referred to the House moderates’ pressure tactics as “amateur hour” on a leadership call early this week and has held fast to her plan for a vote next week on the $3.5 trillion budget resolution. “Pelosi’s plan is, essentially, to stare them down and to let them feel what it’s like to have the sensation of an entire party, and the future of that party’s agenda, bearing down on them,” Slate’s Jim Newell writes.
Pelosi also announced that the House would link consideration of the budget resolution with the bipartisan infrastructure bill — and a new version of the John Lewis Voting Rights Advancement Act, an addition that ramps up the pressure on centrists threatening to torpedo the entire package. The White House has publicly backed the speaker’s strategy, saying in a statement Tuesday that it hopes “every Democratic member supports this effort to advance these important legislative actions.”
The end game: A compromise may still be possible before the vote next week.
Newell posits that Rep. Josh Gottheimer (D-NJ), a leader of the moderate House group, is looking to leverage his vote for changes to the subsequent spending package, such as elimination of the $10,000 cap on deductibility of state and local taxes. And Axios’s Nichols writes that one possible solution to the intraparty clash may be for Pelosi to promise the centrists a vote on the infrastructure bill by the end of September: “That could give them assurances their infrastructure bill would receive a vote without having to wait for the Senate to decide on specifics of the $3.5 trillion bill that are far from complete.”
On the other hand, a compromise may not be necessary. Pelosi knows her caucus. She can afford to lose three votes, and The Intercept’s Ryan Grim and Sara Sirota suggested Wednesday that party dynamics and the speaker’s sway mean that, when all is said and done, only two of the nine Democratic renegades may end up voting no.
Either way, the standoff is set to come to a head next week.
Taliban Seizes Billions in US-Supplied Weaponry
The Taliban has seized billions of dollars’ worth of U.S.-supplied military equipment in Afghanistan following their rapid defeat of government forces in that country.
Images of Taliban fighters posing with U.S.-made supplies are circulating widely in the media, The Hill’s Rebecca Kheel reports, and include weapons ranging from M-16 rifles to armored Humvees. UH-60 Black Hawk helicopters and A-29 Super Tucano attack aircraft have also reportedly been captured.
Videos show Taliban fighters inspecting vehicles left behind by the Afghan military and opening crates of new firearms and other military equipment, including drones and night-vision goggles. “Everything that hasn't been destroyed is the Taliban's now," a U.S. official told Reuters.
A substantial stockpile: The U.S. has provided the Afghan government with an enormous supply of military equipment as part of the $83 billion it spent during the nearly 20-year course of the war to train and supply the national security forces. According to a report from the Government Accountability Office reviewed by Kheel, the U.S. supplied Afghan forces with more than 75,000 vehicles between 2003 and 2016, along with nearly 600,000 weapons, 160,000 pieces of communications equipment and more than 200 aircraft.
Some of the equipment has been lost or destroyed, but U.S. officials told Reuters that the Taliban now controls more than 2,000 armored vehicles and as many as 40 aircraft. (Afghan military pilots reportedly used about 50 aircraft to flee the country, effectively removing them from Taliban control.)
Military experts note, however, that technologically advanced equipment such as helicopters and attack aircraft would be hard to use without advanced training and skilled maintenance. “Ironically, the fact that our equipment breaks down so often is a life-saver here," an official said.
Pricey trophies: Given that some of the more advanced equipment will be hard if not impossible to use, the seizures may end up serving something other than a military purpose. “When an armed group gets their hands on American-made weaponry, it's sort of a status symbol. It's a psychological win,” Elias Yousif, deputy director of the Center for International Policy’s Security Assistance Monitor, told Kheel.
Still, there are concerns that the equipment could find its way to more advanced operators, potentially including ISIS, Russia or China.
Yousif said that the loss of the equipment should raise serious questions about U.S. strategy. “Clearly, this is an indictment of the U.S. security cooperation enterprise broadly,” he said. “It really should raise a lot of concerns about what is the wider enterprise that is going on every single day, whether that's in the Middle East, Sub-Saharan Africa, East Asia.”
White House mulls options: One military official told Reuters that the Pentagon has not ruled out airstrikes to destroy larger pieces of equipment, such as aircraft, though no decisions have been made.
Whatever happens next, the White House made it clear that it was aware of the situation. “We don't have a complete picture, obviously, of where every article of defense materials has gone, but certainly a fair amount of it has fallen into the hands of the Taliban,” White House national security adviser Jake Sullivan said earlier this week. “And obviously, we don't have a sense that they are going to readily hand it over to us at the airport.”
One Change in the Trump Tax Cuts Saved Business Owners Millions: Analysis
The tax overhaul signed into law by then-President Donald Trump in 2017 created a new way for high-income business owners to sharply reduce their taxes — and according to a new analysis by ProPublica, some have done just that.
The Republican tax law slashed the tax rate on the profits of pass-through businesses, while cutting individual income tax rates only modestly. ProPublica’s Robert Faturechi and Justin Elliott say that change “created an alluring opportunity. People who were both owners and employees of a company could make the same amount of money but change how they label it, by lowering their salaries and in turn increasing the company’s profits, which they shared in.”
Owners of pass-throughs could earn a reduction in their tax rate of more than 10 percentage points by reducing their salaries, which are taxed as ordinary income at up to 37%, plus a 3.8% Medicare levy, and instead allow more business revenue to flow into profits, which are taxed at a top rate of 29.6%.
According to Faturechi and Elliott, tax advisers were well aware of the implications of the tax law change at the time. The new law “leaves a gaping hole in the tax code,” one adviser said at a conference in 2018, adding that the goal is to “drive right through that hole” and seize big savings for clients.
Other experts warned that the loophole would be abused, and Faturechi and Elliott say that a review of IRS data shows that those “fears appear to have materialized.”
Drawing on a controversial trove of tax returns from high-income individuals, the researchers found that multiple executives slashed their incomes between 2017 and 2018, presumably to cut their tax bills. “The mysterious pay cuts played out across industries, from logistics companies to real estate firms to makers of bathtubs, and among executives of varying degrees of prominence,” they write. “The salary for one construction firm executive dropped from more than $4 million in 2017 to $105,000 in 2018.”
Executives cited by Faturechi and Elliott include Jeffrey Records, CEO of MidFirst Bank, whose income plunged from $8.6 million in 2017 to $1.8 million in 2018; Dick Uihlein, chairman of shipping supplies giant Uline, whose income dropped from $5.1 million to $2.1 million; and David MacNeil, CEO of WeatherTech, whose income fell to $47 million in 2018, down from $68 million the year before.
The tax savings for the executives were significant. According to ProPublica, WeatherTech’s MacNeil saved an estimated $8 million in the first two years the tax law was in effect.
The bottom line: “Taking an unreasonably low salary in order to avoid taxes is illegal,” the researchers point out. But the IRS has no clear standard on what a reasonable salary is, and as a result, the business owners will not likely face questions on their income shifts. “For a business owner, there’s every incentive to do this and every reason to believe you’ll get away with it,” tax law professor Karen Burke told the authors.
Numbers of the Day
1 Million: More than 1 million Covid-19 doses were administered in the past 24 hours, White House COVID-19 Data Director Cyrus Shahpar said in a tweet Thursday. It’s the first time in nearly seven weeks that vaccinations topped the seven-figure mark, and Shahpar said that the total includes 562,000 new vaccinations.
348,000: First-time filings for unemployment insurance benefits fell to a pandemic-era low of 348,000 last week, a decline of 29,000 from the previous week, the Labor Department reported Thursday. Continuing claims for unemployment insurance fell to 2.82 million, also a pandemic low. The better-than-expected report suggests that the job market continues to recover even as Covid cases have been climbing.
A programming note: We'll be back in your inboxes on Monday.
- As Biden Unilaterally Increases Food Stamp Benefits, Congress Falls Further Into Irrelevance – Henry Olsen, Washington Post
- How Pelosi Is Trying to Jam the Rebels Threatening to Tank Biden’s Agenda – Greg Sargent, Washington Post
- Queen Pelosi Is Not Amused – John Fund, National Review
- Where, Exactly, Did $800 Billion in PPP Money Go? – Timothy L. O’Brien, Bloomberg
- Trickle-Down Economics Has Failed Its Growth Mission – Noah Smith, Bloomberg
- 10 Reasons to Hate the Bipartisan 'Infrastructure' Bill – Stephen Moore, The Hill
- We Can Save Our Coasts With a $10 Billion Investment – David Helvarg and Daniel Hayden, The Hill
- The GOP Is Losing the Argument on Coronavirus Mandates – Aaron Blake, Washington Post