February 1, 2021
What to expect in Washington (February 1)
Congressional Democrats and the White House are determined to go big and act fast on President Biden's $1.9 trillion COVID/stimulus plan, stating more clearly in recent days that they learned from 2009 that holding out for cooperation from Republicans resulted in a too-small stimulus and caused Affordable Care Act negotiations to drag out. Senate Majority Leader Chuck Schumer (D-NY) continued to make this point in weekend news stories, saying essentially that Democrats fully in control in Washington then had been too timid and constrained in responding to the global financial crisis. Finance Committee Chairman Ron Wyden (D-OR) was quoted in the New York Times (NYT) as saying, "I'm not going to let Republican senators stall for the sole purpose of stalling."
Senator Schumer also suggested that an overture from a group of 10 Senate Republicans for talks on a more targeted relief package wasn't immediately going to change Democratic plans, and he cited the lack of state and local funding in their proposal in saying they should go back to the drawing board. "[W]e need a bold, strong action. Now, we'd like to do that with the Republicans, but if we can't, we'll have to go forward on our own using this process, reconciliation," he said.
The Republican group released a letter to President Biden early January 31 saying, "we have developed a COVID-19 relief framework that builds on prior COVID assistance laws, all of which passed with bipartisan support," and "reflects many of your stated priorities." They asked to meet with Biden, and the meeting will take place at 5 p.m. today (Monday). More details of the proposal are forthcoming, but Senator Bill Cassidy (R-LA) said on Fox News Sunday that it calls for $1,000 direct payments with a phase out (as opposed to $1,400 called for by Biden). The group is the Republican side of the 16-member bipartisan group that has been a target of COVID talks, plus Senators Thom Tillis (R-NC) and Mike Rounds (R-SD).
White House Press Secretary Jen Psaki's statement on the invitation for the GOP group reflected the dual priorities of the Administration of both hearing from the other side but remaining focused on swift action: Biden "is grateful that Congress is prepared to begin action on the American Rescue Plan in just his second full week in office" and "[w]ith the virus posing a grave threat to the country, and economic conditions grim for so many, the need for action is urgent, and the scale of what must be done is large."
National Economic Director Brian Deese said on NBC's Meet the Press January 31, "We have to get shots in people's arms. We have to get the schools reopened so that parents can go back to work. And we need to provide direct relief to families and businesses across the country who are really struggling here. So, we need to act comprehensively and we need to act with speed, but we're going to continue to have conversations as we go forward."
The House and Senate are planning to vote on an FY2021 budget resolution this week to tee up the budget reconciliation process for the stimulus bill. C-SPAN reported that House Budget Committee Chairman John Yarmuth (D-KY) will speak to the press about the resolution this afternoon. It's unclear if weather-related delays will affect timing, though they have changed plans in Congress today: the House won't hold any votes and the Senate postponed a vote related to the nomination of Department of Homeland Security Secretary nominee Alejandro Mayorkas from Monday to Tuesday.
Questions remain about fitting the minimum wage increase to $15/hour in the Biden stimulus plan within budget reconciliation rules. "Under the so-called Byrd Rule, Democrats cannot include any measure that affects the Social Security program, increases the deficit after a certain period of time set in the budget resolution or does not change revenues or spending," another NYT article said. "The decision on whether the provision can be included in the reconciliation package lies with the Senate parliamentarian. Ms. Harris could ultimately overrule the parliamentarian — something that has not been done since 1975."
On Friday, February 5 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 have made reacting to tax and trade developments more complicated and more difficult. Panelists will provide updates on: (i) elections, US economy and tax policy; (ii) what's happening at the IRS; and (iii) breaking developments. Register.