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October 19, 2020

What to Expect in Washington (October 19)

The clock is ticking on a bipartisan coronavirus relief and stimulus bill after House Speaker Nancy Pelosi (D-CA) October 17 set a 48-hour deadline (until Tuesday) for a pre-election deal and said the Administration gutted more than half of Democrats' preferred language on testing and tracing after saying they would largely accede to it. "The 48 only relates to if we want to get it done before the election … " the Speaker said on ABC's This Week. "We're saying to them, 'we have to freeze the design on some of these things. Are we going with it or not and what is the language?' I'm optimistic because, again, we've been back and forth on all of this." She also signaled a continued dispute over low-income tax credits that Democrats have juxtaposed with GOP willingness to provide NOL and excess business loss relief in the CARES Act: "They gave a tax break to the richest people in America. We want an earned income tax credit, a child tax credit … "

"I am optimistic that we can reach agreement before the election," the Speaker told her members. "To that end, we are writing language as we negotiate the priorities, so that we are fully prepared to move forward once we reach agreement."

Senate Majority Leader Mitch McConnell (R-KY) announced October 17 that the Senate will vote on Wednesday, October 21, on a "$500B+ proposal … [to] deliver huge amounts of additional help to workers and families right now while Washington keeps arguing over the rest," including a second round of the Paycheck Protection Program (PPP), after voting on a PPP standalone bill on October 20. Senator McConnell did say, "If Speaker Pelosi ever lets the House reach a bipartisan agreement with the Administration, the Senate would of course consider it."

Senate Republicans have been split on supporting a bill of the scale discussed by the Administration and House Democrats, with some wanting to deliver ahead of the elections and others having deficit concerns. Saturday's Wall Street Journal quoted Senator Ron Johnson (R-WI) as saying, "A massive bill is a base killer. I don't think it's politically smart to be doing this for people that supported Donald Trump and a Republican Senate;" and Senator Marsha Blackburn (R-TN) as saying, "You've got enough budget hawks in the Senate, you've got enough good, solid conservatives in the Senate that you're not going to have much of an appetite for another $2.2 trillion in spending."

President Trump told reporters in Nevada October 18, "Pelosi maybe is coming along. We'll find out. … I want to do it at a bigger number than she wants. That doesn't mean all the Republicans agree with me, but I think they will in the end if she would go along, I think they would too, on stimulus. So we'll see what happens."

Election — The Michigan Court of Appeals October 16 reversed a lower court ruling that said ballots could arrive as much as 14 days late and still be counted, as long as they are postmarked the day before Election Day, following an appeal from the GOP-controlled legislature.

The October 18 Washington Post reported that President Trump's campaign is confident the President can win in states like Florida, Ohio, Arizona, North Carolina and Georgia; some officials want the President to devote more time to Pennsylvania; and others argue for more disparate travel to explore paths to victory through Nevada, Wisconsin, and Michigan.

Tax — An October 18 Wall Street Journal article on the corporate tax increase promised by Biden said changes scheduled under the Tax Cuts & Jobs Act (TCJA) for revenue purposes that "limited deductions for business interest, curbed breaks for life insurers and scheduled tighter rules for deducting research expenses … become more salient if the rate rises, and a 28% rate could leave some companies worse off than they were under the 35% rate. Life-insurance companies are already warning about the potential effect on their customers. The corporate rate is the biggest revenue source in the Biden plan, generating more than $1 trillion of the $2.8 trillion net tax increase … "

An October 18 New York Times story, "Would Biden's Tax Plan Help or Hurt a Weak Economy?," observed that "Mr. Biden and his advisers say tax increases now would accelerate growth by funding a stream of spending proposals that would help the economy, like infrastructure improvement and investments in clean energy … Mr. Trump and congressional Republicans say otherwise, arguing that tax increases of any kind threaten to derail the rebound from recession."

Politico's Morning Tax today talks about "gaming out extenders," and notes that expiring provisions include CFC look-through, as well as that "a credit that defrays the cost of health insurance would also cause more damage if it was restored retroactively, much like the alcohol excise taxes."

Infrastructure — A Washington Post October 18 report on a potential Biden opening to act on infrastructure:

  • reported that last week President "Trump blamed congressional Democrats [over inaction] and said infrastructure legislation would pass in his next administration;"
  • cited an unnamed former White House adviser as saying infrastructure had been bumped as a #1 issue by tax reform because some GOP lawmakers "had waited 30 years for this once-in-a-lifetime chance to cut taxes. They were not going to let that go;" and
  • quoted Sen. Ron Wyden (D-OR), the ranking Democrat on the Senate Finance Committee, as saying he told the White House years ago Congress had an infrastructure deal "teed up" for them and inaction on the Administration's part amounts to "legislative malpractice."


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