Senate Democratic leader Chuck Schumer (D-NY), Treasury Secretary Steven Mnuchin and White House legislative affairs director Eric Ueland emerged from a late-night meeting without agreement on a congressional bill #3 to address the coronavirus crisis but expressed optimism that a deal would be reached March 24. House Speaker Nancy Pelosi (D-CA) said on CNBC this morning, "I think there is real optimism that we could get something done in the next few hours."

The Associated Press reported Secretary Mnuchin as saying the talks were expected to resume at 9:30 a.m. and that they have had the input of President Trump on the developing plan, which is expected to direct nearly $2 trillion toward response efforts. "The president is giving us direction," he said. "The president would like to have a deal, and he's hopeful we can conclude this." Senate Republicans were involved and trying to identify pitfalls that could hold up the eventual plan, Senator John Cornyn (R-TX) said in the Washington Post.

Senator Schumer said the expectation is to reach a deal on March 24 and hold a Senate vote in the evening. Members had expressed their frustrations with the situation — and, in some cases, one another — on the floor yesterday after Democrats, for the second time, refused to support a procedural motion related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The $350 billion portion of the evolving plan that would provide small business loans appeared to have broad support, but $500 billion in support for other businesses and states and cities has been a continued point of contention, with Democrats calling the proposal a "slush fund" and demanding greater transparency for the aid and, according to the Wall Street Journal, stricter conditions to encourage companies to retain workers. Stock buyback and executive compensation limitations were already said to be part of the proposal.

Oversight and restrictions are a focus for Speaker Pelosi as well, and she said of her $2.5 trillion alternative emergency relief bill introduced yesterday, "We require that any corporation that takes taxpayer dollars must protect their workers' wages and benefits — not CEO pay, stock buybacks or layoffs." The Speaker said while the Senate Republican bill "put corporations first," at the insistence of Senator Schumer, "progress has been made" and a bipartisan bill must embrace some of the values in her proposal.

The exact role of the House plan in the current landscape is uncertain: should the Senate pass their bill, it will be sent to the House for consideration, making it unclear whether the House Democratic bill will be considered by the full House. The Speaker seemed to recognize that the House could clear a bipartisan bill emerging from the other chamber and not vote on its own measure. "We'll see what the Senate does," she said, according to The Hill newspaper.

The House Democratic bill includes larger direct payments to individuals and families and strengthening of the Child Tax Credit and the Earned Income Tax Credit. It includes fewer business tax provisions than the latest version of the Senate bill but would provide for net operating loss (NOL) carrybacks from 2018, 2019 and 2020 to any of the last five years and suspend the 80% taxable income limitation for 2018, 2019 and 2020. The provision would be subject to "limitations on deductibility on excessive executive compensation and on golden parachute payments, and corporations that that have returned more than 5% of the fair market value of their stock to shareholders in the form of stock buybacks and pay dividends," according to a summary.

The latest public revision of the Senate CARES Act included business tax provisions such as rollbacks of TCJA limitations on NOLs and the business interest limitation under IRC Section 163(j), and a TCJA fix on qualified improvement property (QIP). There has been no reporting to suggest that the business tax portion of the bill was among the items holding up an agreement, but it was still under discussion and it is uncertain what exactly will be included in a final bill. As a reminder, the EY Tax COVID-19 Response Tracker, which provides a snapshot of the policy changes that have been announced in countries around the world in response to the ongoing crisis, is available, and will be updated on a regular basis here.

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