Tax News Update    Email this document    Print this document  

October 7, 2020

What to expect in Washington (October 7)

Following a call with Senate Majority Leader Mitch McConnell (R-KY) and House Republican leader Kevin McCarthy (R-CA) October 6 on additional coronavirus relief/stimulus legislation, President Trump tweeted: "Nancy Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19. We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. I am rejecting their … request, and looking to the future of our Country. I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business. I have asked … Mitch McConnell not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court … ."

Treasury Secretary Steven Mnuchin reportedly later confirmed to House Speaker Nancy Pelosi (D-CA) that the Administration was pulling out of negotiations. The two sides had been continuing to negotiate the size and details of a potential next package, and talks had picked up over the past week. In a statement, Speaker Pelosi said, in part: "President Trump showed his true colors: putting himself first at the expense of the country, with the full complicity of the GOP Members of Congress. Walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus, as is required by the Heroes Act. He shows his contempt for science, his disdain for our heroes — in health care, first responders, sanitation, transportation, food workers, teachers … and others — and he refuses to put money in workers' pockets." She again juxtaposed the CARES Act net operating loss (NOL) and excess business loss provisions with Republicans' unwillingness to agree to expansions of the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC).

The Washington Post reported Senator McConnell as saying, "I think his view was that they were not going to produce a result and we needed to concentrate on what's achievable," and as privately telling the President that "Pelosi was stringing him along and no deal she cut with Mnuchin would command broad GOP support to pass in the Senate." The report also said outside advisers Art Laffer and Stephen Moore have argued against a COVID relief/stimulus package.

Some Senate Republicans expressed dismay at the President ending the talks. Senator Susan Collins (R-ME) released a statement saying, "Waiting until after the election to reach an agreement on the next Covid-19 relief package is a huge mistake." Senator Rob Portman (R-OH) tweeted: "We need another, targeted #COVID19 relief bill now to help families & #smallbiz that are hurting and give the economy a shot in the arm. Let's not throw in the towel, instead let's find that reasonable compromise, not $2.4trillion with non-COVID provisions."

In later tweets, President Trump called for action on discrete parts of the overall coronavirus package being discussed; Speaker Pelosi traditionally opposed a piecemeal approach but has said Congress would provide relief against airline furloughs one way or another, either through a standalone bill or a broader bill. In separate tweets, the President said:

  • "The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!"
  • "If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?"

In remarks at the National Association for Business Economics Virtual Annual Meeting October 6, Fed Chairman Jerome Powell warned the economic outlook remains highly uncertain, dependent on controlling the spread and effects of the virus; and the rapid initial gains from reopening may transition to a "longer than expected slog" back to full recovery as some segments struggle with the pandemic's continued fallout. "The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods," he said.

Business Roundtable issued a statement saying in part: "We are deeply troubled by the sudden halt of negotiations. Millions of American workers, families and businesses are suffering from the economic and health impacts of the COVID-19 pandemic and need the support of their government."

Tonight (Wednesday) is the debate between Vice President Pence and Democratic Vice Presidential nominee Senator Kamala Harris (D-CA) at the University of Utah, Salt Lake City, UT.

New this morning: the Cook Political Report has moved Senator Lindsey Graham's (R-SC) Senate race against Democrat Jaime Harrison from Lean Republican to Toss Up. A report noted the amount of money Harrison has raised and spent in the campaign, GOP ads tying him to Democratic congressional leaders, and that Senator Graham is Judiciary Committee Chairman and will play a major role in Supreme Court nomination hearings for Judge Amy Coney Barrett that begin next week.

This Friday, October 9 (at 12:00 p.m. ET), is the EY Webcast, "Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments." The coronavirus (COVID-19) and the resulting economic crisis have made reacting to tax and trade developments more complicated and more difficult. Panelists will provide updates on: (i) the US legislative and economic landscape; (ii) breaking developments — federal and state; and (iii) what's happening at the IRS. Register for this thought Center Webcast.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Ray Beeman (
   • Gary Gasper (
   • Heather Meade (
   • Kurt Ritterpusch (