How Pelosi Could Squash Centrist Democrats’ Rebellion

Speaker of the House Nancy Pelosi holds her weekly news conference with Capitol Hill reporters in Washington
GABRIELLE CROCKETT
By Yuval Rosenberg

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.

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