October 21, 2020
What to expect in Washington (October 21)
The Washington Post reported Senate Majority Leader Mitch McConnell (R-KY) as telling his members that he advised the White House not to strike a deal with House Speaker Nancy Pelosi (D-CA) on coronavirus relief and stimulus prior to the election, as Republicans continue to cite concerns about the deficit and interfering with the confirmation of Judge Barrett. Leader McConnell told members during the regular Tuesday policy lunch that Speaker Pelosi "is not negotiating in good faith with Treasury Secretary Steven Mnuchin, and that any deal they reach could disrupt the Senate's plans to confirm Amy Coney Barrett to the Supreme Court next week," the report said.
Nonetheless, White House Chief of Staff Mark Meadows said on Fox Business that he is optimistic about reaching a deal by Friday morning. "We do share one goal and that is hopefully to get some kind of deal in the next 48 hours or so. From here I'll actually leave to go have discussions with some of our Senate colleagues on the Republican side as well as some [Pelosi] staff members as it relates to insurance provisions and how to best make sure that those that have lost insurance during this … pandemic, that we can actually provide help."
A spokesman for Speaker Pelosi projected some optimism yesterday (Tuesday), tweeting, in part, after she spoke with Secretary Mnuchin: "Their conversation provided more clarity and common ground as they move closer to an agreement. Today's deadline enabled the Speaker and Secretary to see that decisions could be reached and language could be exchanged, demonstrating that both sides are serious about finding a compromise. On several open questions, the Speaker and the Secretary called for the committee chairs to work to resolve differences about funding levels and language."
On Bloomberg, Speaker Pelosi downplayed yesterday's deadline, saying, like Meadows, that the end of the week is now being eyed. "I would think we need to have stimulus by the end of next week. In order for that to do it, we'd have to have our legislation all written by the end of this week. Then you have all of your procedural 72 hours review for the world to see and then it would come to the Floor and then the Senate has different procedures. This is really to have it for Election Day. … We could still continue the negotiation. It might not be finished by Election Day."
Some language was reportedly being exchanged by tax-writing committees, with Democrats apparently willing to address provisions including the Employee Retention Tax Credit, the Work Opportunity Tax Credit (WOTC), the Safe and Healthy Workplace reopening tax credit proposal, 'mobile workforce'-type state and local tax certainty, and FSA flexibility. Still an issue is low-income tax credits, Speaker Pelosi said: "We want a Child Tax Credit for the poorest kids in America. They want to retain … a net operating loss benefit for the wealthiest people in our country. And we are saying, 'How do we reconcile that?'"
Senator McConnell has said in recent days that any Pelosi-Mnuchin deal would be considered by the Senate, but not whether it would be brought up for a vote prior to the election. "If a presidentially supported bill clears the House, at some point we'll bring it to the floor," he said October 20.
A Paycheck Protection Program (PPP) proposal that would have reopened the program, extending it through the end of the year and increasing its lending authority, did not advance in the Senate yesterday after a vote on a motion to table. The tabling motion, while it did not move the underlying PPP legislation any closer to passage, was seen as a way for Senate Republicans to place themselves on the record as supporting an extension of the PPP while under tight time restrictions limiting what they can do on the floor.
Senator McConnell has also teed up a revised HEALS Act (the roughly $500 billion package blocked by Democrats September 10), with changes including those affecting nonprofits, for a vote today (Wednesday) that is also expected to be blocked by Democrats.
The election is less than two weeks away. President Trump tweeted this morning: "Remember, BIDEN is going to raise your taxes at a level never seen before. This will not only be very costly for you, it will destroy our economy, which is coming back very rapidly." In Pennsylvania yesterday, the President said, "we're rounding the turn of the pandemic" and "normal life will finally resume and next year will be the greatest economic year in the history of our country."
A USA Today/Suffolk University poll released October 21 showed Democratic presidential nominee and former VP Joe Biden leading President Trump 49%-42% among likely voters in Pennsylvania.
A New York Times (NYT)/Siena College poll of Georgia showed President Trump and Biden tied at 45%-45%. In the Senate race, the poll showed Senator David Perdue (R-GA) tied with Democrat Jon Ossoff 43%-43%. In the Senate special election, Democrat Rev. Raphael Warnock leads with 32%, followed by Senator Kelly Loeffler (R-GA) at 23%, and Rep. Doug Collins (R-GA) at 17%. "The special election for U.S. Senate is all but certain to go to a January runoff, with no candidate even near 50%," the NYT reported. In both the regular and special election, if no candidate gets 50% or more of the vote, a runoff between the top two vote-getters will be held on January 5, 2021.
President Trump is scheduled to deliver remarks in North Carolina today. Democratic VP candidate Senator Kamala Harris (D-CA) is slated to campaign in Georgia on Friday.
On Friday, October 23 (at 12:00 p.m. ET), is the EY Webcast, "Tax in the time of COVID-19." 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) US economy, elections and tax policy; (ii) Breaking developments; and (iii) What's happening at the IRS. Register for this Thought Center Webcast.