November 18, 2020
What to expect in Washington (November 18)
House Speaker Nancy Pelosi (D-CA) and Senate Democratic leader Chuck Schumer (D-NY) called on Senate Majority Leader Mitch McConnell (R-KY) to negotiate with them this week on a bipartisan coronavirus relief bill. "Millions of unemployed Americans and those facing eviction and hunger demand action from their leaders. The time to act is upon us like never before," they said. "The COVID-19 pandemic and economic recession will not end without our help. It is essential that this bill have sufficient funding and delivers meaningful relief to the many Americans who are suffering."
The terms of the negotiations within Congress haven't changed for months. Senate Republicans support between $500 billion-$650 billion, and Democrats want at least $2 trillion. Press stories this week have focused on CARES Act provisions that expire by the end of the year, including: Pandemic Emergency Unemployment Compensation, which provides an extra 13 weeks of benefits, beyond the standard 26 in most states; Pandemic Unemployment Assistance, which extends benefits to gig workers and others who don't qualify for UI; suspension of aviation excise taxes; the eviction moratorium; the Employee Retention Tax Credit (ERTC); an expanded deduction for charitable contributions; and suspension of student debt payments.
On the ERTC, Politico Morning Tax reported: "A congressional aide following the situation noted that the incentive is a quarterly tax credit, which means that businesses wouldn't be able to claim it again until March anyway — conceivably giving Congress plenty of time to get it extended or even expanded. Still, 'businesses will likely fire workers they would otherwise retain in active or furloughed status' if the gridlock continues, the aide added. 'And they won't hire new workers they would otherwise hire if the ERTC were in place.'"
A Century Foundation study considered "a cutoff of nearly all federal unemployment benefits by year's end looming on the horizon," and estimated that "12 million workers will be on one of the two main CARES Act programs — PUA and PEUC — when funding expires on December 26."
President-elect Joe Biden doesn't appear poised to imminently broker a compromise after firmly siding with Democrats during remarks on the economy November 16: "Right now Congress should come together and pass a COVID relief package like the HEROES Act that the House passed six months ago. Once we shut down the virus and deliver economic relief to workers and businesses, then we can start to build back better than before." He outlined the Build Back Better plan from his campaign, highlighting features of:
President-elect Biden November 17 announced staff picks including Jen O'Malley Dillon as deputy chief of staff and Rep. Cedric Richmond (D-LA), a Ways & Means member and congressional baseball game standout, as senior adviser and director of the White House Office of Public Engagement.
A November 18 Wall Street Journal story on prospects for a child tax credit expansion said "even if Republicans hold the Senate, lawmakers see a possible deal, either in a near-term economic-relief law or a bipartisan tax agreement," with one path being to pair the issue with extensions of expiring business-tax provisions under the Tax Cuts & Jobs Act such as those addressing the limitation on the deduction of interest expense, amortization of R&D expense, and bonus depreciation. "Lots of the Republican tax-bill goodies expire between the end of '21 and 2025," said Sen. Mark Warner (D., Va.). "There's an obvious trade of making some of those permanent if you do [the earned-income tax credit] and child tax credit."
The New York Times discussed intraparty tensions between progressives and moderates in the House, where "Democrats are likely to control around 222 seats, effectively allowing no more than a few of their members to defect on any given vote." Some propose rule changes to limit procedural options for Republicans, including Rep. Stephanie Murphy (D-FL), a Ways and Means member and a leader of the Blue Dog coalition of fiscally-responsible moderates, who said, "With Joe Biden in the White House, the primary focus and priority should be to get some wins for the American people by signing legislation into law."
House Republicans reelected their leadership team on Tuesday. Democratic leadership elections are today (Wednesday).
On Tuesday, the Senate did not invoke cloture on the nomination of Judy Shelton to be a member of Board of Governors of the Federal Reserve System by a vote of 47-50. (Due to absentees, the Majority Leader switched his vote to 'no' in order to enter a motion to reconsider the cloture vote at a later date.) Vice President-elect Kamala Harris (D-CA) was present to vote against the nomination, but Senators Chuck Grassley (R-IA) and Rick Scott (R-FL) were quarantining because of coronavirus exposure. (Senator Grassley later announced he tested positive.) Senator Lamar Alexander (R-TN) was absent, but he has announced his opposition to Shelton's nomination.
On Friday, November 20, 2020 at 12:00 PM Eastern Standard Time is the EY Webcast, "Tax in the time of COVID-19: post-election outlook." The coronavirus (COVID-19) and the resulting economic crisis — all occurring in an election year — have made reacting to tax and trade developments more complicated and more difficult. After election day, what might be on the horizon for tax policy, tax legislation and any further economic stimulus? To determine what information your company needs to know now, join our panelists for the next in our series of conversations about operating the tax function in this time of COVID-19. Register