The Senate voted 50-49 to begin debate on the FY2021 budget resolution intended to enable Democrats to employ the budget reconciliation process for President Biden's $1.9 trillion COVID/stimulus plan. The House and Senate are planning to pass the same FY2021 resolution this week, clearing the way for the stimulus bill to pass the Senate with 50 votes plus the tie-breaking vote of the Vice President, rather than be subject to the 60-vote threshold required to overcome a filibuster. The House will consider the resolution today (Wednesday).

Both the House and Senate versions call for committees to report recommendations back to the respective budget committees by February 16. The Senate resolution has reconciliation instructions for $1.9 trillion, and the House about $2.1 trillion, though the excess above the stimulus bill target is attributable to overlapping jurisdictional factors. The amount of deficit increasing recommendations per committee is roughly as follows.

In floor remarks, Senate Majority Leader Chuck Schumer (D-NY) suggested there is room for bipartisan input despite reconciliation being pursued because Republican support for a bill of the magnitude proposed by President Biden has not materialized. "There will be a bipartisan open amendment process on the budget resolution this week," he said, perhaps alluding to the "vote-a-rama" post-debate series of consecutive roll call votes on amendments. The Wall Street Journal reported that Senate Republican leader Mitch McConnell (R-KY) met with a group of GOP senators yesterday on reconciliation strategy.

Democrats are poised to hold together their 50 members for reconciliation and have Vice President Harris break the tie. The Hill newspaper reported Senator Joe Manchin (D-WV) as saying he will vote in favor of the budget resolution but nonetheless wants the final bill to be targeted. "I will only support proposals that will get us through and end the pain of this pandemic," he said. Manchin also said he does not support a minimum wage increase to $15/hour, saying he wants something closer to $11/hour.

Still, Manchin said on Fox News that Republicans would have input. "It has to make sense. If it's out of the realm of what makes sense, we've built too much trust up to allow this to fall apart. So, they can count on me to make sure I do everything to make sure this is done bipartisan," he said.

The meeting between President Biden and a group of 10 Senate Republicans on stimulus Monday night hasn't put the two sides closer to a bipartisan deal. Both Senator Schumer and White House Press Secretary Jen Psaki said President Biden, during a Democratic call yesterday, pushed for a large stimulus package and suggested the Senate GOP plan is inadequate. The two plans are compared briefly below.

Tax

Some House and Senate Democrats including Rep. Lloyd Doggett (D-TX) and Senators Sheldon Whitehouse (D-RI) and Sherrod Brown (D-OH) reprised their call to roll back CARES Act net operating loss (NOL) provisions:

• Repealing section 2304 of the CARES Act, which removed a limit that prevented owners of pass-through businesses from using active business losses to offset nonbusiness income in excess of $500,000, such as capital gains income
• Limiting the ability to carryback losses to businesses experiencing losses during the pandemic by allowing only losses from 2020 and 2019 to be carried back

Senate

Democrats announced committee assignments, including adding Senator Elizabeth Warren (D-MA) to the Senate Finance Committee. She tweeted: "My first order of business on the @SenateFinance Committee — the committee that leads tax and revenue policy in the Senate — will be to introduce legislation for a #WealthTax on fortunes above $50 million. It is time to make the ultra-rich pay their fair share."

Treasury

Kimberly Clausing joined the Treasury Department as deputy assistant secretary for tax analysis. A UCLA press release noted: she will lead the Office of Tax Analysis; her research has studied the taxation of multinational firms and she has published numerous articles in this area; and she has been a nonresident senior fellow at the Center for American Progress and has testified before congressional tax committees. In a paper a year ago, Clausing proposed increasing the corporate tax rate, changing the global intangible low-taxed income (GILTI) minimum tax, and repealing the foreign-derived intangible income (FDII) deduction.

Itai Ginberg has been appointed Deputy Assistant Secretary for Multilateral Tax Office of Tax Policy. Grinberg previously served in the Office of International Tax Counsel at the Department of the Treasury and as Counsel to the President's Advisory Panel on Federal Tax Reform in 2005.

Both Clausing and Grinberg testified before the Finance Committee just before enactment of the Tax Cuts & Jobs Act.

Rebecca Kysar has been appointed Counselor to the Assistant Secretary, Office of Tax Policy, after serving on the Biden-Harris Presidential Transition as an ad hoc advisor to the tax policy and Treasury agency review teams. She testified at a House Ways & Means Committee hearing on corporate taxes a year ago.

Tom West has been appointed Deputy Assistant Secretary for Domestic Business Tax, Office of Tax Policy.

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.

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