“Puerto Rico received approval from a federal judge on Tuesday to leave bankruptcy under the largest public sector debt restructuring deal in the history of the United States, nearly five years after the financially strapped territory declared that it could not repay its creditors,” the New York Times reports.

“Millions of families this weekend will stop receiving monthly child tax payments for the first time in months after Congress failed to pass an extension of the expanded credit,” The Hill reports.

Washington Post: “More than 220 House Democrats requested more than 2,000 projects for their districts, while 108 House Republicans — a majority of their caucus — requested more than 700 projects, according to the committee.”

“More than 60 senators have secured earmarks in their appropriations bills, including 16 Republicans, according to the Senate committee.”

“Americans visited the IRS’s website to learn the status of their tax refunds more than 630 million times in 2021, a staggering number that reflects deep frustration with the speed and efficiency of the tax collection agency,” the Washington Post reports.

“Treasury Department officials on Monday said that the Internal Revenue Service will face ‘enormous challenges’ during this year’s tax filing season, warning of delays to refunds and other taxpayer services,” the Washington Post reports.

“The IRS closed last filing season with more than 35 million unprocessed returns — a fourfold increase from the last year before the pandemic. As the backlog increased, the IRS also failed to respond to the enormous increase in calls for assistance.”

There were fewer than 15,000 IRS employees available to handle more than 240 million calls in the first half of last year — one person for every 16,000 calls.

“The third tax-filing season during the coronavirus pandemic is set to begin soon with more delays, uncertainty and frustration likely for taxpayers and tax preparers,” the Wall Street Journal reports.

“There will be some signs of business as usual. The individual tax deadline will return to its usual mid-April date for the first time since 2019, and the Internal Revenue Service says it has been steadily reducing its backlog of 2020 returns and other lingering paperwork.”

“Even so, the agency is still contending with piles of work from the messy 2020 tax year while facing new challenges, including the prospect of retroactive legislation and pandemic-era tax-law changes that will require extra attention from taxpayers.”

The New York Times looks at the qualified small business stock exemption, which allows the mega-wealthy to avoid paying taxes.

“The story of the tax break is in many ways the story of U.S. tax policy writ large. Congress enacts a loophole-laden law whose benefits skew toward the ultrarich. Lobbyists defeat efforts to rein it in. Then creative tax specialists at law, accounting and Wall Street firms transform it into something far more generous than what lawmakers had contemplated.”

Playbook: “It took them a while, but Democrats have finally dealt with most of the tricky debt and spending issues that prevented them fully focusing on the Biden legislative agenda.”

“The Senate passed a debt limit increase of $2.5 trillion Tuesday afternoon, and the House followed suit just after midnight. Congress should be freed from addressing the issue again until 2023.”

“A final vote on the long-stalled NDAA is likely in the Senate today. Congress has funded the government through mid-February. It shouldn’t exactly get a big pat on the back for doing the basics, but the three issues were all cleared with some degree of bipartisanship and less brinkmanship and drama than expected.”

“Senate Democrats on Tuesday approved a measure to raise the debt ceiling by $2.5 trillion, taking the first step toward staving off a potential default and deferring the high-stakes fiscal fight until after the 2022 election,” the Washington Post reports.

“The vote comes less than a week after lawmakers struck an unusual bipartisan deal that allows Democrats to adopt the increase, and Republicans to oppose it, without putting the country at risk of missing a critical December 15 deadline. House lawmakers are expected to follow suit Tuesday evening.”

Axios: “This is also a huge victory for Democratic leaders, given most in the Capitol expected the process to be brutal and messy.”

“Sen. Joe Manchin (D-WV) is telling colleagues the expanded child tax credit is both the most underpriced item — and biggest inflation-driver — in President Biden’s $1.75 trillion Build Back Better plan,” Axios reports.

“While Manchin’s concern over the CTC could trigger elimination of a program Democrats believe is crucial to address child poverty, it’s also an indication he’s engaging with the White House about how to reduce the plan’s price tag to a level he can support.”

Said Manchin to CNN: “Whatever Congress is considering, we should do it within the limits of what we can afford.”

“Congressional Democrats will move to raise the debt ceiling Tuesday, one day before the Dec. 15 deadline that Treasury Secretary Janet Yellen warned could mark the start of the first-ever U.S. default,” CNBC reports.

Washington Post: “Conservative lawmakers, anticipating the GOP retaking one or both congressional majorities in next year’s midterm elections, are already calling for and strategizing around a coming fiscal clash in 2023, where they insist of using the threat of federal default to place new curbs on government spending and reduce the $28 trillion national debt.”

“What they are envisioning is, at a minimum, a return to the brinkmanship seen after the last time a Democratic president confronted a new Republican majority, in 2011. It already threatens to become the dominant domestic political clash ahead of the 2024 presidential election.”

“Democrats are hoping a year-end cliff with 35 million families on the line can finally shake a deal loose on President Joe Biden’s marquee bill,” Politico reports.

“Preserving the party’s expanded child tax credit, which delivers monthly checks to most families with children, has been a central tenet of Biden’s social safety net bill from the start. But months of grueling negotiations have forced Democrats right up against the Dec. 31 deadline that could blot out one of their biggest political wins this year.”

Jonathan Bernstein: “The good news is that Congress has come up with a solution both parties can live with to raise the limit, and lawmakers cut the deal well before the latest deadline. So the markets won’t be roiled by the possibility of a debt-limit breach, let alone an actual economy-destroying default. Hurrah.”

“The bad news? The debt limit, the stupidest law in the nation, survives, and Congress will need to deal with it again, probably in 2023. It’s a bomb left unexploded, and it certainly could go off one of these days.”