October 22, 2020
What to expect in Washington (October22)
The Washington Post October 22 suggested Democratic presidential nominee and former VP Joe Biden would likely not include tax increases in any stimulus measure but would use them as offsets for policy priorities: "Biden is not likely to pursue tax hikes as part of short-term stimulus programs designed to help the nation's economic recovery, according to two people familiar with the campaign's thinking. However, the former vice president would likely aim to include his tax increases if Congress approves his proposed permanent spending plans, such as expansions in child care, health care or education, these people said. The people, who spoke on the condition of anonymity to share internal deliberations, stressed that planning was fluid and subject to changes based on economic conditions, as well as the makeup of Congress should Biden win. A Biden campaign aide confirmed that his commitment to paying for spending priorities did not include short-term stimulus measures."
House Democratic leaders and the Trump administration are both projecting optimism over a bipartisan deal on coronavirus relief and stimulus legislation, and downplaying the potential for Senate Republicans to play spoiler in blocking enactment of such a bill, saying a deal could be struck before the election even if it has to be approved in a lame-duck session. House Speaker Nancy Pelosi (D-CA) said on MSNBC: "I'm pretty happy. I think we have a prospect for an agreement. … I'm optimistic, because, even with what Mitch McConnell says, we don't want to do it before the election, but let's keep working, so that we can do it after the election. We want it before. But, again, I want people to know, help is on the way. It will be bigger, it will be better, it will be safer, and it will be retroactive."
Echoing comments from White House Chief of Staff Mark Meadows, White House Communications Director Alyssa Farah said October 21 the Trump administration is committed to getting a stimulus package and that there could be "some movement in the next 48 hours," Bloomberg reported. She said, "I think this is the best we've felt about it to date." White House economic adviser Larry Kudlow said on CNBC Wednesday that negotiators were "running out of time, at least between now and the election" and that wrapping up work on a relief package in a lame-duck session, after the election but before the next administration begins, "could be a possibility," the Wall Street Journal reported.
Still, President Trump, who has been at times pushing for large deal, tweeted October 21: "Just don't see any way Nancy Pelosi and Cryin' Chuck Schumer will be willing to do what is right for our great American workers, or our wonderful USA itself, on Stimulus. Their primary focus is BAILING OUT poorly run (and high crime) Democrat cities and states … … Should take care of our people."
The October 21 Senate vote on the revised Republican HEALS Act, with changes including those affecting nonprofits, played out much like it did on the previous version September 10 — blocked by Democrats but drawing the support of most Republicans. The vote was 51-44. The $500 billion bill is much smaller than the nearly $2 trillion offered by the Administration so far, and there are still questions of whether Republicans would back a much larger deal.
Roll Call reported, "House Democrats are offering several concessions to Republicans on pandemic-related tax items, including a temporary fix to the thorny problem of how teleworkers and others who work in multiple states during the pandemic should be taxed."
Tonight is the second and final debate between President Trump and former VP Biden. White House adviser Kudlow said on Fox Business of the President, "I think he's going to lay out the case that Mr. Biden's tax hikes will decimate the economy, and I think he'll make the case for his own tax and regulatory reductions, which gave us a strong prosperity cycle. Incidentally, talk about middle class. Middle income — median income families gained $6,500 over the first three years. … If you roll back President Trump's tax cuts, they're going to lose the $6,500."
President Trump tweeted October 21: "The Radical Biden-Harris Agenda is projected to slash the typical American's income by $6,500 per year. They will raise TAXES by $4 TRILLION DOLLARS — triggering a mass exodus of jobs out of America and into foreign countries."
A New York Times (NYT)/Siena College poll showed Biden leading President Trump 46%-43% among likely voters in Iowa. In the Senate race, Joni Ernst (R-IA) is leading 45%-44% over Democrat Theresa Greenfield.
A Quinnipiac University poll of Texas showed President Trump and Biden tied 47%-47%.
Former President Barack Obama campaigned for Biden in Philadelphia and said of the GOP alternative for his signature health plan, "It's been 'coming in two weeks' for the last 10 years. Where is it? Where is this great plan to replace Obamacare? They've had 10 years to do it. … They don't have one," NBC reported.
FiveThirtyEight reported this morning, "Democrats have a 72% chance of controlling the White House, House of Representatives and Senate … It would be the first time they've had a political 'trifecta' since the first two years of the Obama administration."
The New York Times, reporting on prospects for reelection, said "The clearest road for Mr. Trump is to hold one of the three states he snatched from Democrats in 2016 — Pennsylvania, Michigan or Wisconsin — as well as the rest of his winning electoral map, including Arizona and Florida, where Mr. Biden is now competitive. Polls indicate that is a daunting task, but not an impossible one."
Trafalgar Group chief pollster Robert Cahaly, who correctly predicted Trump wins in key battleground states in 2016, said on Fox News he thinks the President will hold Florida, Ohio, North Carolina and Georgia and be reelected despite running even or worse with Biden in those states because of some "hidden" Trump voters who don't like to participate in polls. "I see the president winning with a minimum [electoral vote count in the] high 270s and possibly going up significantly higher based on just how big this undercurrent is," he said.
Now under review by the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA): a final rule, "Exception From Passive Income Under Section 1297 for Certain Foreign Insurance Companies [TCJA];" and proposed rule, "Exception to Passive Income Characterization of Certain Insurance Companies With Respect to Passive Foreign Investment Companies [TCJA]."
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.