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July 1, 2020

What to expect in Washington (July 1)

In a surprise move, the Senate June 30 passed by unanimous consent (UC) a bill (S. 4116) put forward by Sen. Ben Cardin (D-MD) to extend for five weeks until August 8 the deadline for applying for a loan from the SBA's Paycheck Protection Program (PPP). The program's window for applying for loans expired overnight (the deadline was June 30), but more than $130 billion remains available for lending. "We picked August 8 because that's the end of the next work period. And we certainly hope by then we're going to have the next stimulus package signed by the President … " Senator Cardin said. The House would need to pass the bill. Democrats have unsuccessfully requested UC to pass other narrow coronavirus relief legislation this week.

Health care — During a Senate HELP Committee hearing yesterday, NIH's Dr. Anthony Fauci raised alarms over the coronavirus spikes, saying the US is going in the wrong direction and we need to do something about it, and if you look at what is going on and people congregating without masks, "We are going to continue to be in a lot of trouble." He said new infections could rise from around 40,000 daily now to 100,000. Dr. Fauci did project some optimism in saying he is cautiously optimistic we will know of the efficacy of vaccines by winter and have doses available by early next year

The top editorial in today's Washington Post calls for "a colossal effort, a Manhattan Project, to fight the virus, and we don't have it. Experts have identified the best strategy: test, to find out who is sick; trace, to find out who may be sick; and isolate those who are suffering. Personal habits must accompany this: wearing face masks, hand washing, physical distancing and avoiding crowds in enclosed spaces."

Infrastructure — The House is on track to approve today the $1.5 trillion Moving Forward Act (H.R. 2) infrastructure bill, the basis of which is a nearly $500 billion/5 years highway funding package plus Ways & Means provisions on bonds and renewable energy. Several amendments were adopted yesterday. "The legislation promotes investment in clean energy technologies; incentivizes the 'greening of the fleet;' and rewards renewable energy projects engaging in responsible labor practices that prioritize workers' rights and wellbeing," Ways and Means Committee Chairman Richard Neal (D-MA) said on the floor. The Senate has no immediate plans to address infrastructure.

House Democrats separately unveiled "Solving the Climate Crisis: The Congressional Action Plan for a Clean Energy Economy and a Healthy and Just America."

Tax — During aSenate Finance Committee hearing June 30, Senator John Thune (R-SD) highlighted bipartisan legislation he introduced with Senator Sherrod Brown (D-OH), the Remote and Mobile Workforce Relief Act (S. 3995), that addresses the possible tax complications that remote workers could face as a result of the pandemic, including state withholding and nexus issues. "I would hope that we could make some progress on addressing that and provide certainty and clarity for a lot of these employees who are crossing state lines, in many cases to provide assistance to help us defeat the coronavirus. So, I'm hoping that that legislation can ride on whatever the next CARES package is," he said.

Consistent with comments from other officials, OECD Secretary-General Angel Gurría said today a BEPS 2.0 multilateral tax deal to stave off unilateral digital services taxes will likely have to wait until after the November 3 US election. "Everybody has the other eye to the U.S. election. Not just for tax purposes … but for a host of reasons," Gurría said in a Politico interview. He said in a speech to delegates that the U.S. "has not pulled out of the negotiations," and "the presence of the U.S. delegation here today, notwithstanding the U.S. request for a delay on pillar one, confirms their ongoing engagement in this important work."

Coronavirus — Yesterday, top Senate Democrats introduced the Coronavirus Child Care and Education Relief Act (CCCERA) highlighted by $50 billion for a Child Care Stabilization Fund, to ensure childcare providers can stay open, etc., and $345 billion for the Education Stabilization Fund.

Democrats including Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced the Jobs for Economic Recovery Act to provide funding for states, tribes and local governments to create or expand employment programs through a new Social Security Act jobs program, which would finance six months of wages for public, private or nonprofit jobs. It would fund state programs at a matching rate determined by economic conditions and the state's Federal Medical Assistance Percentage rate, and when the unemployment rate is above 7%, there will be a dollar-for-dollar federal match.

During a House Financial Services Committee hearing yesterday, Fed Chairman Jerome Powell said the economic path forward "is extraordinarily uncertain and will depend in large part on our success in containing the virus" and "a full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities."

Presumptive Democratic presidential nominee Joe Biden yesterday criticized President Trump's handling of the pandemic and laid out how he would do things differently. "We won't be able to solve the economic crisis without a rigorous public health approach," he said.

Trade — Ways and Means Committee Ranking Member Kevin Brady (R-TX) released a statement marking the U.S.-Mexico-Canada (USMCA) Agreement's entry into force today, saying in part, "the real work now begins. Lawmakers and the Administration must ensure Mexico and Canada live up to their commitments, and we must be ready enforce our rights when they are not."

Publication note: What to Expect in Washington will next be published on Monday, July 6.

The global EY Tax COVID-19 Response Tracker updated through June 25 is available here.


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