First 100: Delays for Two Key Nominees of Color

Plus, one Congressional Review Act resolution will get introduced today.

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It’s March 23, 2021 and welcome to First 100. You can sign up to have First 100 delivered to your email by clicking here.

The Chief

The Biden administration is readying a $3 trillion, multi-bill package as its next big legislative effort. The first installment, an infrastructure package, would include clean energy (think electric vehicle charging stations), broadband and 5G deployment, plus energy-efficient housing, along with more traditional infrastructure concerns like roads and bridges, ports and the electric grid, and intercity rail. Add in workforce training and that’s about half the package. The second part is more of a family and care infrastructure bill, featuring universal pre-kindergarten and free community college with investments in schools and facilities, potentially a national paid leave program as well as child care assistance, and extensions of the two big anti-poverty measures of the American Rescue Plan, the expanded monthly child tax credit and the improved subsidies for health insurance under the Affordable Care Act.

At least half and maybe all of it would be paid for through tax reforms and other revenue raisers, from raising the nominal corporate tax rate from 21 to 28 percent, instituting a global minimum corporate tax that factors in earnings made abroad, ending the “step up in basis” that gives wealthy heirs a break on unrealized gains on inherited stocks and real estate, equalizing capital gains tax rates and income rates for the wealthy, returning the top marginal tax rate to 39.6 percent, and even allowing Medicare to negotiate prescription drug prices with pharmaceutical companies.

Obviously a ton of things have to be figured out in this package. The left wants more spending, noting that Joe Manchin blessed a $4 trillion figure as long as it has offsets. The nature and size of the revenue offsets, the scope of the infrastructure spending and what areas get what piece of that pie, and the dispensation of earmarks for specific projects will all need to be worked out. And we have no idea yet how this will get passed: Republicans aren’t voting for anything with a tax increase, and probably won’t go along with a ruse where the things they can vote for go through regular order and the things they can’t go through reconciliation.

But the point I want to make right now is that the general outline is done. And it was done without a director or even deputy director of the Office of Management and Budget. That tells you something about what that position will look like.

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It happens to be the 11th anniversary of the Affordable Care Act, and rightly or wrongly, one of the chief architects of that bill was the White House budget director, Peter Orszag. You may remember “bend the cost curve” as the most memorable slogan in the health care debate. In that part of the Obama presidency, OMB was a central player. When Orszag left that changed. It was the difference between a maker of policy and an implementer of policy. Implementation is hugely important, especially in that position, which coordinates with all federal agencies on spending. But if OMB was envisioned as a policymaking job under Biden, the Build Back Better agenda wouldn’t be taking shape right this second.

It’s beyond clear now that Shalanda Young is going to run OMB. She’s going to be confirmed as the top deputy at OMB this week and will be named acting director. Ann O’Leary, one of her top rivals for the position, withdrew from consideration, and Gene Sperling was given another job managing the ARP. There are a couple Asian American names being floated—a former HUD deputy named Nani Coloretti is the main one—but Young is likely to stay in place. And Biden’s reportedly in no hurry to formalize that.

He’s also been holding off on naming a head of the Office of the Comptroller of the Currency (OCC), even as other key regulators like Securities and Exchange Commission chair nominee Gary Gensler near confirmation. Michael Barr was taken out of the running for OCC a couple weeks ago, and his main competition was seen as UC-Irvine law professor Mehrsa Baradaran (a Prospect board member). There’s also talk about Manny Alvarez, a former CFPB official who now runs the California Department of Financial Protection and Innovation.

Barr was dumped because of too-close ties to financial technology companies; Alvarez worked as general counsel for a fintech. The progressives who support Baradaran are not going to be satiated by a non-white nominee who draws similar concerns about this key element of the OCC’s portfolio (right now it’s doling out special bank charters to fintech firms that may pre-empt state consumer protection laws). Alvarez managed to get the NAACP to back him, but the sources I’m hearing from are split on whether the administration is really looking for someone besides Baradaran, or whether Alvarez is pushing his own candidacy more than anyone pushing for him. Alvarez’s office at DFPI didn’t respond to a request for comment.

In both the cases of Baradaran and Young, the Biden team seems to be responding to uncertainty with delay. The cabinet was a priority, and with Marty Walsh’s Labor Secretary confirmation yesterday, it’s virtually complete.

Delay only helps the banking industry, in the case of Baradaran, take down someone who could hold them to account. In the case of Young, it only marginalizes her further while key decisions are being made about the direction of policy. The delay is unnecessary, and contains real risk (see our story about Wells Fargo’s disgraced ex-CEO demanding a multi-million-dollar payout, and how OCC can stop it). If the White House has a different idea for these positions, it should come to that decision and see how it plays. But delay is a bad option here.

CRA Update

Yesterday I noted that Congressional Democrats and the Biden administration have been disinterested in a powerful, majority-vote tool to nullify regulations called the Congressional Review Act. No resolutions repealing certain Trump-era regulations had been introduced, with just a couple weeks until the deadline.

I’m told that one CRA resolution will be introduced today. Sen. Patty Murray (D-WA) will seek to repeal the Equal Employment Opportunity Commission’s “conciliation” rule, which you can read here in the Federal Register. As Bryce Covert explained in The Nation, conciliation is a mandatory pre-litigation process between the EEOC and an employer to work out an agreement on a claim of employer discrimination. The new rule narrows the process and makes it secret rather than open to all parties, like lawyers for the victim. It also makes conciliation less likely to succeed, forcing employees into costly and uncertain lawsuits and giving employers access to the legal basis before the case begins.

The rule was finalized in January, putting it within the scope of CRA review. Trump’s EEOC attempted to label it “not a major rule” to evade CRA, but that doesn’t have legal force, and Murray’s introducing the resolution today. It’s good that something’s happening, and because so much of the process was tied up in whether resolutions can pass, anything introduced is somewhat likely to advance. But there’s a lot more work to be done, and one resolution won’t appease those who want Congress to take action to block bad rules.

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Day 63.

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