Pot Taxes Giving States a Revenue High

Dems Face a ‘Make or Break Moment’ for Their Agenda

Congress is back from its Easter recess this week, with lawmakers set to pick up a number of fights left unresolved before the break. As the days before the midterm elections dwindle, these weeks leading up to Memorial Day are likely to determine whether Democrats have any realistic chance of passing major portions of their agenda this year.

Among the issues they’ll look to address: a stalled package of additional pandemic funding and their package of climate change programs, social spending and tax reform.

Covid funding: A group of senators reached a bipartisan deal earlier this month to provide another $10 billion to fight the coronavirus, but that legislation got delayed after Republicans insisted on a vote on an amendment prohibiting the administration from ending Title 42, a Trump-era immigration policy that allows for the expulsion of migrants at the border and limits the ability of migrants to seek asylum. A number of Democrats have joined in expressing concern about lifting Title 42, leaving party leaders in a bind: If they allow the vote on the amendment, it would likely pass the Senate, which would imperil the whole package in the Democratic-controlled House. If they don’t allow the amendment vote, the Covid funding that the White House has said is urgently needed could stall out.

Another round of aid to Ukraine could also hang in the balance, as Senate Majority Leader Chuck Schumer said earlier this month that he intends to push a bipartisan appropriations package combining that aid with global pandemic and food insecurity funding.

Dems’ social spending and climate plan: The White House has reportedly resumed talks with Sen. Joe Manchin (D-WV) on the climate, social spending and tax plan formerly known as the Build Back Better Act. Democrats still hope to salvage portions of what had been a roughly $2 trillion package — and they know their time to pass some version of the plan is running out.

“My sense is this is a make or break moment,” Sen. Chris Van Hollen (D-MD) told The Washington Post about the Democrats’ social spending plan. “This will be the moment people have to look at each other, eyeball to eyeball, and make a determination of whether we’ll move forward.”

Of course, previous “make or break” moments for the package wound up in the direction of “break.” Will this time be different? It all depends on how desperate Democrats are to show voters they can get something done — and whether that desperation outweighs any lingering intraparty differences that might again derail a bill. “Basically this is going to be the Manchin bill,” Edward Hild, a lobbyist who previously served as chief of staff to Sen. Lisa Murkowski (R-AK), told The Wall Street Journal. “Everybody knows.”

Manchin, by the way, has seen a 16-percentage-point increase in his approval rating among West Virginia voters over the course of Biden’s presidency, according to a new Morning Consult poll. That’s the largest increase for any senator. “Manchin’s increased popularity is driven primarily by Republican voters: 69% now approve of his job performance, doubling his rating from the first quarter of last year, when 35% approved,” Morning Consult’s Eli Yokley writes. “Most of that improvement has come since the third quarter of 2021 — before he killed the Democrats’ ‘Build Back Better’ domestic policy legislation.”

What else is on the docket: As inflation continues to top voters’ concerns, the Senate will look to confirm four of President Joe Biden’s nominees to the Federal Reserve, including another term for current Chair Jerome Powell. The House and Senate will also begin talks to reconcile different versions of legislation seeking to boost U.S. manufacturing and improve competitiveness with China. And lawmakers will look to push legislation lowering the cost of insulin.

Ukraine Requests Billions More in Economic Aid From U.S.

Ukraine is asking for $5 billion per month in international aid in April, May and June, with at least $2 billion of that coming from the U.S., The Washington Post reported Monday.

Amid meetings with U.S. officials, Ukrainian Finance Minister Sergii Marchenko said the money would be used in part to address the immediate humanitarian crisis caused by Russia’s invasion of its southern neighbor, and that additional requests for aid would be forthcoming once the country turns its efforts toward rebuilding. “We need to cover this gap right now to attract the necessary finance and win this war,” Marchenko told the Post.

Treasury Secretary Janet Yellen said last week that the Biden administration was working on a new aid package for Ukraine. “We’ve got to find ways to meet Ukraine’s needs. And on our part, it will involve going back to Congress with a supplemental request,” Yellen said. In addition to roughly $4 billion in military assistance, the U.S. has provided about $1 billion in economic to Ukraine since Russia invaded Ukraine in February, with another $500 million made available last week.

Number of the Day: 101

New data from analytics company Quorum shows that lawmakers have mentioned inflation nearly 10,000 times since the beginning of the year, but Republicans have hammered the issue much more than Democrats, using the word nearly eight times as often, according to The Hill. “The ten Republicans who have used the term most frequently have mentioned it an average of 101 times in statements since January, the data shows, while the top ten Democrats have mentioned it only 32 times,” The Hill’s Tobias Burns reports.

Pot Taxes Giving Some States a Revenue High

Taxes on the sale of marijuana are now producing more revenue than taxes on alcohol in the 11 states that legalized commerce in the drug, according to an analysis by the Institute on Taxation and Economic Policy.

Marijuana taxes in those states grew by a third to nearly $3 billion in 2021, ITEP found, while taxes on alcohol sales and liquor store profits came to about $2.5 billion.

California led the pack overall, with $832 million in pot tax revenues, or about twice what the state earned from alcohol. But Colorado saw the largest differential, with its nearly $400 million in pot taxes representing roughly seven times its take from alcohol.

If present trends hold, in the next few years cannabis taxes could surpass tobacco taxes, which have been the largest so-called sin tax on the books (see the ITEP chart below). “This is still a small part of state budgets, but it’s a very quickly growing area,” ITEP’s Carl Davis told The Hill. “There aren’t many revenue sources that grow year over year. This has been a several-year trend now. The early states, what you see is revenue start low and grow very, very quickly.”

• Democrats' Last, Best Chance to Legislate Before the Midterms Starts Now – Theodoric Meyer and Jacqueline Alemany, Washington Post
• American Voters Haven’t Been Afraid Like This in a Long Time – Mark Penn, New York Times
• Team Biden Believed Their Own Hype — and That Has Cost Them – Perry Bacon Jr., Washington Post
• An Army of Coders Takes on the Time Tax – Annie Lowrey, Atlantic
• Prioritize Permanent UI Improvements Over Trigger-Based Improvements – Will Raderman, People’s Policy Project
• Biden’s Proposals Would Fix a Tax Code that Coddles Billionaires – Steve Wamhoff, Institute on Taxation and Economic Policy
• How Biden Can Halt the U.S. Postal Service’s Gas-Guzzling Plan – Mekedas Belayneh, New Republic
• Commodities Traders Shouldn’t Need a Taxpayer Bailout – Bloomberg Editors
• Where the Fed Went Wrong on Inflation – Sebastian Mallaby, Washington Post
• No Matter How You Feel About Masks, You Should Be Alarmed by This Judge’s Decision – Lawrence Gostin and Duncan Hosie, New York Times
• Why Nasal Sprays Are Poised to Be the Next Weapon for Fighting Covid – Tim Loh, Bloomberg Businessweek