Health experts warned of the persistence of the coronavirus and limitations of mitigation efforts, as the weeks wear on, and the continued presence of the virus in the Capital region remained a concern as the Senate returns to session May 4. President Trump focused on the economic response in meeting with advisers at Camp David over the weekend, following which he said a payroll tax cut is a must-have for a next bill. The Administration continued to tap the brakes on a follow-on response package but did provide some additional details on tax proposals they want included and may roll out later this week.

Former FDA Commissioner Scott Gottlieb said on CBS's Face the Nation that "while mitigation didn't fail, I think it's fair to say that it didn't work as well as we expected." He warned of the potential for a "slow simmer through this summer" in terms of cases, which could escalate in the fall. "That's the concern, that if we don't snuff this out more, and you have this slow burn of infection, it can ignite at any time."

Regarding testing, in a Wall Street Journal op-ed, Gottlieb called for "doubling down on screening and isolating sick people to slow the spread as much as possible" and "better diagnostic tests to make screening for Covid-19 inexpensive and routine." A Washington Post story over the weekend reported President Trump as being frustrated over the issue, saying, "We have no message on testing," according to a senior administration official. The article also quoted former HHS Secretary Kathleen Sebelius as saying, "We wasted two months denying it. We're now wasting another two months by just dithering around," adding that the Administration "seems to have washed their hands of it and said [to governors], we're out of it. You're on your own. Figure it out."

The Senate is back with an expected near-term focus on nominations beginning with a vote at 5:30 p.m. May 4 on the nomination for the Nuclear Regulatory Commission IG, and some members have suggested they will remain away from the Capitol for at least this first week back when the chamber is not expected to consider legislation related to the virus. Senate Majority Leader Mitch McConnell (R-KY) and House Speaker Nancy Pelosi (D-CA) declined the Administration's offer to make rapid tests available to members, saying they should instead be directed to the front lines of the crisis. Speaker Pelosi is planning to reconvene the House next week, though that is not certain at this point.

In a Fox News Town Hall at the Lincoln Memorial, President Trump said, "we're not doing anything unless we get a payroll tax cut" on the employee side. He also continued to focus on infrastructure, saying, "Now we have a time, we have a period of time when we can get infrastructure done by both parties." Democrats support infrastructure investment, but Speaker Pelosi has said it may not make it into the next package.

The President's comments are the latest 'must-have' demands for moving forward with additional legislation. Senator McConnell said April 28, "We can't pass another bill unless we have liability protection," referring to the aim shared by the White House to prevent coronavirus-related lawsuits against employers. Speaker Pelosi said April 24 there "will not be a bill without state and local" funding.

On CNN's State of the Union, National Economic Council Director Larry Kudlow said, "There may well be additional legislation. There's kind of a pause period right now." In terms of ideas for the next bill, Kudlow said: "We'd like to see some significant deductions for — you know, tax deductions for business, entertainment, going to sports athletic events. We're trying so hard to help everybody open up. We're looking at people being able to write off if you have new expenses in any area, whether you're inventing vaccines, or whether you're redoing your factories or office buildings to help on the COVID-19 medical side best practices. We'd like to see that completely expensed."

Politico reported May 3, "The Trump White House is preparing a proposal for tax and regulatory changes to boost the economy that it tentatively plans to release at the end of this week." In addition to a worker payroll tax cut and expanded expensing, the Administration is reportedly looking at creating a new tax credit to incentivize companies to return manufacturing to the United States, and an additional stimulus check, which Democrats have also expressed interest in.

EY Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker has been updated through April 30.

EY Webcasts this week include:

• Tuesday, May 5. Tax in a disrupted market: Update on major foreign tax developments, 12:00 p.m. ET. This sixth webcast in the series will cover tax-related COVID-19 stimulus measures around the globe and other key recent foreign tax legislative developments and proposals. The panelists will discuss areas of risk and concern, as well as opportunities that multinational enterprises should be considering. Register.
• Friday, May 8. Tax in the Time of COVID-19, 12:00 p.m. ET. Events like the spread of the coronavirus (COVID-19) have made reacting to trade disputes and continued implementation of the Tax Cuts and Jobs Act much more difficult. To determine what information your company needs to know now, join our panelists for a series of conversations about operating the tax function in this time of National Emergency created by the COVID-19 virus. Registration information is forthcoming.

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