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An additional $25 billion in U.S. Postal Service funding and $3.6 billion to enable mail-in voting called for by Democrats is becoming another piece of the puzzle surrounding a possible next coronavirus relief bill as President Trump, long opposed to mail-in voting over the potential for fraud, said on Fox Business August 13, "If we don't make a deal, that means they don't get the money. That means they can't have universal mail-in voting. They just can't have it." The President later said during his regular news conference that he is not threatening to veto a bill that includes USPS funding and that it is just one element of a very big potential deal. The issue became a flashpoint as coronavirus talks are stalled, the election is on the horizon, and underfunding the mail raised concerns about people receiving timely deliveries of prescription drugs.

During her regular news conference, House Speaker Nancy Pelosi (D-CA) said postal funding is not the biggest sticking point in the coronavirus relief bill talks and brought a chart to highlight differences in the two sides on issues like food funding, testing & tracing, evictions, and safe schools. Administration and congressional Democratic negotiators haven't met for a week and have traded blame for not reaching a deal; Treasury Secretary Steven Mnuchin has called for a deal on some overlapping priorities of around $1 trillion, and Democrats want a broader deal at $2 trillion.

What is clearly still a major area of disagreement is state and local funding: the Administration has offered $150 billion, and Democrats want at least $875 billion. Speaker Pelosi said yesterday of states, "When they don't have the resources because they have spent money on the coronavirus, or they have revenue lost because of coronavirus, without an infusion of cash, they will be furloughing or firing people. … They will go on Unemployment Insurance. So, what are we saving there?"

The Wall Street Journal this morning reported on some House members' views on the issue, saying "Finding a compromise on the issue will likely come down to deciding how long the money should last. Rep. Tom Reed (R., N.Y.), a leader of the bipartisan Problem Solvers Caucus, supports offering $500 billion to state and local governments — but doesn't want the aid to last beyond the immediate future. … Rep. Dean Phillips (D., Minn.), who faces re-election in a competitive district this fall, said that Democrats should narrow the time-frame for the state and local aid to move toward reaching an agreement."

Timing

Speaker Pelosi also signaled that she would be away from Washington next week, at least on Wednesday when she is slated to speak during the Democratic National Convention being held virtually. "I'll be doing it live from California and we're so excited," she said. Also leaving town is the Senate, which gave up the first week of the August recess this week for at least some leaders to stay in session waiting on the outcome of bipartisan negotiations that didn't really materialize. If that continues to be the case, the Senate won't return until September 8, the House September 14. Members are still on 24-hours' notice for votes should an agreement on coronavirus legislation be reached.

Tax

Regarding the President's payroll tax deferral memorandum, Reuters reported National Economic Council Director Larry Kudlow as saying a "technical change" will be issued to clarify that the relief applies to the self-employed. Also, while President Trump said he would be "terminating" the payroll tax if reelected, White House press secretary Kayleigh McEnany was quoted saying he meant only "that he wants a permanent forgiveness of the deferral."

Taxes continue to be a major election issue, with President Trump continuing to warn that Joe Biden and Senator Kamala Harris (D-CA) will enact big tax increases. "They want to tax $4 trillion, it's going to be the biggest tax increase in history by far," the President said on Fox Business yesterday. "They're big taxers. It's just something that won't work. We'll have — you will see a depression the likes of which you have never seen. You'll have to go back to 1929, I guess it doesn't get too much worse than that."

While Biden's economic team has been somewhat of a mystery, the AP yesterday reported that former Fed chair Janet Yellen is involved and that the team of advisers who briefed Joe Biden and Senator Kamala Harris (D-CA) yesterday on the economic fallout from the coronavirus included:

• Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities who advised Biden during the Obama administration
• Heather Boushey, head of the Washington Center for Equitable Growth
• Harvard economics professor Raj Chetty
• Lisa Cook, a professor in the Department of Economics and International Relations at Michigan State University
• Biden policy adviser Jake Sullivan, who also advised the 2016 Clinton campaign

Election

Biden continued to draw distinctions over the President's handling of the virus, calling for a broader mask mandate. "Every single American should be wearing a mask when they're outside for the next three months, at a minimum," he said yesterday in Wilmington, Delaware. "Every governor should mandate mandatory mask-wearing."

President Trump hit back by saying Biden "wants to shut down our economy, close our schools, and grind society to a halt. And he wants it done by a federal decree. This would lead to a crippling, long-lasting depression." The President said the virus will be defeated "not by hiding in our basements," but "through a common-sense mitigation effort, shielding those at highest risk and unleashing America's medical and scientific genius."

Health

On PBS NewsHour yesterday, NIH Dr. Anthony Fauci continued to say we are not where we need to be with the virus, and: "if you do five or so fundamental things, not only do you prevent the surges, but, when the surges occur, you bring it down. Uniform and universal wearing of masks. Physical social distancing. Avoiding crowds. Outdoor things always better than indoor things. And wash hands as often as you possibly can. An addendum to that is, we should stay away from bars and, in those places that can, close the bars. Those are hot spots of transmission. Unfortunately, that is what we saw in some of the states that surged. We have got to cut that out."

A Washington Post op-ed calling for Congress to stay in session focused on the Suppress COVID-19 Act (S. 4458) "to invest $50 billion in testing and contact tracing with the goal of achieving suppression of covid-19 cases to near-zero" and send money to states, including a bonus pool for those that form compacts to "collaborate on scaled-up regional purchasing and investment in testing innovation."

On Monday, August 17, at 1 p.m., there is an EY Webcast on the impact of the IRC Section 163(j) regulations on real estate and partnerships. Register for this event.

Publication note: "What to Expect in Washington" won't be published while Congress is away, but Alerts will be issued as events warrant.

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