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August 6, 2020

What to expect in Washington (August 6)

Talks between Administration officials and congressional Democratic leaders over a next coronavirus bill continued yesterday (Wednesday) without an agreement and no clear indication when one will be reached. The next meeting is set for 5 p.m. today (Thursday). White House Chief of Staff Mark Meadows said that Friday is the target deadline before the President may move forward with executive orders on issues like unemployment benefits and preventing evictions (the President has also mentioned suspending payroll tax collections). Meadows was reported to have offered to set the unemployment benefits add-on at $400; Republicans have proposed $200, and Democrats are adamant about extending the expired $600 amount.

The Wall Street Journal reported that "White House and Democratic negotiators emerged frustrated from their meeting Wednesday. White House officials said Democrats were dragging their feet on talks, and Democrats countered that Republicans were thinking too small." House Speaker Nancy Pelosi (D-CA) has said Republicans must agree to additional state and local funding — which President Trump expressed doubts about this week — and the article said Senator Susan Collins (R-ME) joined Senate Democrats in calling for $500 billion.

Chief of Staff Meadows said on CNN, "We'll be back working with Speaker Pelosi and Senator Schumer tomorrow evening as we try to reach some kind of consensus. But I can tell you that has been mostly the president and Republicans that have been making the concessions and trying to finally get a deal across the finish line for those that are hurting during this unprecedented pandemic." President Trump similarly said it was Democrats' "partisan demands" that were standing in the way of an agreement and that they are primarily interested in state and local funding as a "bailout of the poorly run states." He said the Administration is exploring executive action on evictions, unemployment benefits and payroll taxes.

In a joint news conference with Speaker Pelosi yesterday, Senate Democratic leader Chuck Schumer (D-NY) said, "Our Caucuses will only support a bill that meets that crisis. To have a skinny, little bill, to say we'll just pick one or two things and do those and walk away from all the other responsibilities, when we are in a deep recession, when we are in a major health crisis, is not living up to our obligations to the American people."

Politico reported Senate Majority Leader Mitch McConnell (R-KY) as saying, "I want to get an outcome." Regarding the process by which Meadows and Treasury Secretary Steven Mnuchin keep Republican senators apprised of their efforts to cut a deal with Speaker Pelosi and Senator Schumer, Senator McConnell said, "I think the best way to get an outcome and to maximize the potential on our side — and we are divided on this — is to make sure everybody knows what's going on."

A New York Times story was one of several to highlight the fact that Senate Republicans didn't lay out their proposal until July 27. It said Senator McConnell is "up against Democratic leaders who do not see the need to give an inch on their own sweeping coronavirus relief priorities, administration negotiators who badly want a deal that boosts President Trump — even if it ends up being one that most Senate Republicans oppose — and the president himself, who has played his usual role of undercutting the talks at every turn."

A Wall Street Journal editorial warned against acceding to Democratic demands for a huge bill, saying "Mr. Trump has to make a decision. If he does another Mnuchin-Pelosi mega-deal, it will pass the Congress … " but mainly with Democratic votes. "What's the alternative? Mr. Trump can stop taking Mrs. Pelosi's dictation and make the case for his own agenda to revive the economy in the fall and into 2021," the editorial said.

A New York Times story discusses coronavirus liability protections, which Senate Republicans proposed but the White House has distanced from, as facing opposition from a number of groups, including sports leagues.

The global EY Tax COVID-19 Response Tracker has been updated through August 4.

On Friday, August 7 (at 12:00 p.m. ET) is the EY Webcast, "Tax in the time of COVID-19." 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 provide updates on: (i) the US legislative and economic landscape; (ii) breaking developments, including a look at the newly issued Section 163(j) regulations; and (iii) what's happening at the IRS. Register for this Thought Center Webcast.


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Washington Council Ernst & Young
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