November 30, 2020
What to Expect in Washington (November 30)
The Senate is back today. The House will return to session on Wednesday, December 2, and leaders have stated that the chamber "may complete legislative business early the week of December 7th." Lawmakers face a December 11 deadline for extending government funding. Top House and Senate appropriators have reached agreement on spending levels for the dozen annual appropriations bill set to move as an omnibus, but it is unclear whether and what other items like additional coronavirus spending and tax extenders could be attached. How swiftly a year-end bill can come together and what it will look like is currently uncertain. As the Hill newspaper pointed out, there is also controversy with the National Defense Authorization Act.
The outlook for the 2021 agenda will remain uncertain throughout the remainder of the year, hinging on control of the Senate, which won't be known until two January 5 Georgia runoffs are decided. The November 29 Washington Post reported that an organizing resolution for committee ratios and leadership could remain on hold until runoff results are known, leaving current committee makeups in place until then. Some committees will lack chairmen due to current leaders retiring, including the Health, Education, Labor & Pensions Committee. Also, "Even if Democrats win both Georgia seats, the Biden Cabinet confirmation process will begin with Republicans in charge. Tradition dictates that the Senate start processing Cabinet nominees in early January to tee up several to be confirmed in the afternoon a few hours after the new president is inaugurated."
Senator David Perdue's (R-GA) term will end January 3, and he could be reelected in the runoff; Senator Kelly Loeffler (R-GA), as an appointee to fill a seat with a term that doesn't expire until 2022, will remain in office pending the outcome of the special election runoff.
Nominations — President-elect Joe Biden this morning announced additional economic team nominations, including that of Neera Tanden of the Center for American Progress, a former Hillary Clinton and Obama adviser who contributed to the development of the Affordable Care Act, as Office of Management and Budget director. Senate Republican aides are signaling that it will be difficult for Tanden to be confirmed. He also announced Wally Adeyemo, an international economic adviser in the Obama administration, as deputy Treasury secretary.
Congress — A New York Times story over the weekend on the potential role of Senator Susan Collins (R-ME) in bipartisan deal-making in a closely divided Senate said "with Republicans bent on blocking any policy accomplishments by a Biden administration, Ms. Collins will be under immense pressure from both sides for her pivotal vote." The story noted that Democratic moderate Senator Joe Manchin (D-WV) had already reached out to Senator Collins regarding the impasse on additional coronavirus legislation.
One obstacle to Democratic accomplishments next year will be renewed deficit and debt concerns, which were put on the back burner in recent years following a Republican focus on the issue that constrained President Obama's agenda. Given the impact of the pandemic, the FY2020 deficit totaled more than $3 trillion and federal debt held by the public was 100% of GDP. Second-ranking Senate Republican John Thune (R-SD) said in a Hill newspaper report, "I think that's kind of getting back to our DNA. … I think spending, entitlement reform, growth and the economy are all things that we're going to have to be focused on next year, and, yeah, I would expect you'll hear a lot more about that."
Climate change — One Democratic agenda focus next year will be clean energy. The Wall Street Journal (WSJ) reported on solar and wind interests wanting to "reinstate or create new tax credits that would boost their industries" among other policy proposals. An editorial in the November 29 Washington Post called for Biden to act on climate change despite "Republican resistance in Congress," but noted that corporations and some GOP luminaries have backed a fee on carbon emissions that rebates proceeds back to Americans. The editorial said if Republicans control the Senate and options are limited, "advancing federal incentives for renewables" is among items that could get "passed early on, in a covid-19 aid bill or a federal budget bill."
Health — Today, Moderna announced it plans to request an Emergency Use Authorization from the Food and Drug Administration (FDA) for its COVID-19 vaccine candidate.
An editorial in the November 30 WSJ — "Can Republicans Regroup on Health Care?" — called for the party to craft a potent political argument on the issue, and said, "Republicans have struggled to explain how a public option would exploit unlimited taxpayer financing to cannibalize competing insurers and move ever more Americans from generous employer insurance into plans that look like Medicaid."
On Friday, December 4, is the EY Webcast, "Tax in the time of COVID-19," at 12:00 p.m. ET. 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. 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. Panelists will provide updates on: (i) Elections, US economy and tax policy; (ii) What's happening at the IRS; and (iii) Breaking developments. Register.