Pressure continued for Republicans to come to the negotiating table on a next coronavirus response bill despite improving unemployment figures and signals from GOP leaders that additional action can wait until mid-summer. Major newspapers noted that the compound crises of the coronavirus and protests and the issues underlying them are scrambling the political forecast five months before the elections. Police reform proposals are expected to be unveiled today by House Democrats, who have already submitted a $3 trillion opening bid toward a next bipartisan coronavirus bill.

Next COVID bill - The top editorial in Sunday’s Washington Post pushed back against assertions from some economic advisers to the President that surprisingly positive unemployment figures Friday – employment rose by 2.5 million in May, and the unemployment rate declined to 13.3% – obviated the need for urgent coronavirus economic stimulus. The editorial acknowledged the House-passed HEROES Act is “is politically unfeasible,” but said the parties should come together on a measure focused on the priorities of:

• an extension of unemployment insurance benefits that removes negative work incentives;
• continued support for small- and medium-sized businesses;
• testing, contact tracing and other public health measures; and
• funds for state and local governments “that have hemorrhaged tax revenue.” 

(Note, there was a “misclassification error” described in Friday’s Bureau of Labor Statistics report without which “the overall unemployment rate would have been about 3 percentage points higher than reported.”)

Among those who say that Friday’s jobs report should temper expectations for a stimulus bill is Senate Finance Committee Chairman Chuck Grassley (R-IA), whose committee will hold a hearing on unemployment benefits tomorrow. NBC News reported Grassley spokesman Michael Zona as saying, “The jobs report underscores why Congress should take a thoughtful approach and not rush to pass expensive legislation paid for with more debt before gaining a better understanding of the economic condition of the country.”

Stephen Moore, a Heritage Foundation economist and previous Trump adviser, was among the first to say that the jobs report signals that no additional stimulus is necessary beyond the trillions already spent. National Economic Council Director Larry Kudlow said on Fox News Friday he thinks negotiations on a next bill will “resume after the July 4 holiday weekend” and “we need to move from rescue assistance to more long-term economic growth incentives.” He cited the President’s calls for payroll and capital gains relief, as well as “tax breaks for restaurants, entertainment, athletic contests, sports contests … [and] tourism.”

As he did on Friday in celebrating the positive economic news, President Trump continued to say the Administration’s actions are responsible for the nation’s improvement, tweeting yesterday, “I built the greatest economy in the World, the best the U.S. has ever had. I am doing it again!”

Politico this morning published a story, “Democrats prepare to push clean energy in recovery packages,” that cited members as saying House Ways and Means Committee Chairman Richard Neal (D-MA) has expressed his intention to extend renewable energy tax credits in legislation moving through the chamber. A spokesperson for the committee said Neal is “intent on moving legislation related to green energy and efficiency in tandem with the Congress’ efforts on infrastructure,” and that the effort would begin with a discussion draft of clean energy tax credits.

Compound crises & politics - A column in the Saturday Wall Street Journal said events in recent days, on top of those in recent months, have scrambled the issue agenda and made the attitudes voters will have in November difficult to predict. “The traditional issues of the economy and health care may return to the fore—and Mr. Trump tried to put the economy there by cheering new job gains Friday—but they seemed a long way off this week,” it said.

A Washington Post story posted last evening on election messages in the face of dual crises said “Trump’s campaign will be in uncharted territory, no matter the message, as he faces a summer filled with double-digit unemployment, protests and other societal factors beyond his control, allies say.”

A New York Times story over the weekend said President Trump’s re-election bid currently doesn’t have support from Former President George W. Bush, his Secretary of State Colin Powell, and Senator Mitt Romney (R-UT).

EY Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker updated through June 4 is available here.

This week’s EY tax COVID-19 Webcasts:

• Tuesday, June 9. Domestic tax quarterly webcast series: A focus on state tax matters, 4:00 p.m. ET. The state tax edition of this quarterly webcast series provides you with information on major tax law changes in the 50 states and District of Columbia, as well as current state and local tax topics of interest. Also planned for this edition is a discussion on state responses to COVID-19 and the CARES Act. Register.
• Friday, June 12. 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. This week’s panelists will explore: (i) what’s happening in Congress and with the economy; (ii) what’s new with the states; (iii) IRS developments – what’s open(ing); and (iv) any breaking developments. Register

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