May 26, 2020 What to expect in Washington | Coronavirus response (May 26) The House reconvenes May 27, but the Senate is out, meaning the next bipartisan coronavirus response bill probably won't begin to come together this week, but ideas continued to be rolled out over the Memorial Day weekend. Asked on CNN's State of the Union May 24 about the prospects for additional direct payments, White House advisor Kevin Hassett said, "I think, depending on the state of the economy, it's something that I guess we would consider. But, right now, it looks like the economy's picking up at a very rapid rate, in which case we could potentially move on to other things that the president has mentioned, like the payroll tax cut and potentially even a capital gains holiday." Host Dana Bash noted that "Vice President Mike Pence says that negotiations for another stimulus bill are actively under way." Hassett additionally said the economy is very close to an inflection point in terms of business activity and probably about a month away in terms of employment and that there could still be double-digit unemployment on election day in November because "you're going to be starting at a number in the 20s and working your way down." The Wall Street Journal May 26 cited an Administration official as saying the White House has been in discussions with Senator Rob Portman (R-OH), a Finance Committee member, over a proposal for a temporary $450/week bonus to encourage employees to return to work, as an alternative to expanded unemployment benefits, which Republican leaders have vowed not to extend. Another Wall Street Journal story discusses the House HEROES bill's expansion of the employee retention credit, bipartisan interest in the issue, and another credit expansion proposal by Senate Finance Committee member Mark Warner (D-VA). A New York Times editorial over the weekend noted some Senate Republicans beyond Cory Gardner (R-CO), whose call for action in the chamber was previously reported, don't want to wait much longer for Congress to pass a next bill. "I think June doesn't need to come and go without a phase four," said Senator Roger Wicker (R-MS), referring to the next round of aid. The editorial said, "Lawmakers need to start thinking beyond the near term. One obvious way to drive economic recovery while looking to the future: a major infrastructure package. Shoring up roads and bridges, updating lead-riddled water systems, investing in broadband and renewable energy — the United States has a nearly limitless number of projects that need to be addressed." An editorial in the May 24 Washington Post said if the virus lingers with no breakthrough in vaccines or therapies, "diagnostic testing will be critical to our ability to manage lives, jobs, schools and health. Yet we still lack a federal strategy to get there." While President Trump "eschewed an overarching federal response to the testing challenge" — which continued in a subsequent Administration report on the issue that largely left testing responsibilities to the states — "it is not too late to consider a Manhattan Project-size national effort on diagnostic testing," the Washington Post said. The House agenda for this week includes Foreign Intelligence Surveillance Act (FISA) reauthorization legislation as well as a bill (H.R. 6886) to make changes to the CARES Act Paycheck Protection Program (PPP). Politico reported that the coronavirus response effort has jumbled the House agenda, including action on appropriations bills that leaders wanted to have completed in June, and "It's the start of a monthslong slog of spending and policy fights." Politico also reported over the weekend that Senate Appropriations Committee Chairman Richard Shelby (R-AL) met with President Trump on spending bills last week and that a rift over Veterans Administration spending has opened up between Shelby and House Republican leader Kevin McCarthy (R-CA). The Hill newspaper reported over the weekend on efforts to prepare for House remote voting, with "a race on for members to secure proxies, who are limited to representing 10 colleagues each." A May 25 Bloomberg article discusses speculation about tax increases, including wealth taxes, to pay for the coronavirus response in Europe, an issue that has also been raised in the US press. "Switzerland's Social Democrats want higher income taxes, and the U.K. media is also awash with speculation about potential tax increases," it said. Implementation The Administration May 24 submitted to Congress its "COVID-19 Strategic Testing Plan," which it was required to draft under a provision of the "Phase 3.5" pandemic response bill that the President signed into law on April 24. The report's goals mostly take the form of broad recommendations, such as that states test at least 2% of their population in May and June and bring their test positivity rates below 10%, which the report says will be adequate to "assure broad coverage of the population." The report says individual states will be responsible for developing and implementing their testing and reopening plans. Democratic congressional leaders released a statement saying the plan confirms that the administration's strategy is "to reject responsibility and dump the burden onto the states." Late May 22, Small Business Administration interim final rules related to the PPP were released (loan forgiveness rule and loan review procedures and related borrower and lender responsibilities). The rules outline procedures for borrowers to calculate costs eligible for loan forgiveness in the PPP; how the SBA will review individual loans for forgiveness; and details of the loan forgiveness process for lenders. EY Alerts and other resources are here. The global EY Tax COVID-19 Response Tracker has been updated through May 21. EY Webcasts this week include:
———————————————
| |||||
| |||||
