The Senate is out this week and the conclusion of the impeachment trial puts full attention on President Biden's $1.9 trillion COVID relief package, which is being teed up for a House vote probably next week. The President is holding a CNN Town Hall tonight in Milwaukee and is expected to continue to make the case for the package and discuss his broader agenda. Looking forward, there are signs Democrats may hold back on tax increases in the next-phase infrastructure-plus package to try to build bipartisan support.

While the Biden COVID package enjoys support among some Republicans outside of Washington, it has not won the backing of the GOP in Congress. "We have many Republican mayors, we have Republican governors … There is just one place that we don't have anybody who has signed on yet and that is in the United States Congress," said White House engagement director Cedric Richmond, a former congressman, on CNN yesterday. "We are still working every day to see if we can earn Republican support for the plan, but what we won't do is slow down and not meet the needs of the American people by just waiting."

Senate Minority Leader Mitch McConnell (R-KY) said opposition to the $1.9 trillion plan is seen as helping unify the party following the impeachment trial. "I don't think many Republicans are going to be for very many of the things that are coming out of this administration," he said in the Wall Street Journal (WSJ). Punchbowl News reported today that some House Republican members may vote for the bill, but GOP leadership is comfortable opposing it, citing the high cost overall and of the state and local funding portion. Democrats think members voting against direct payments and UI benefits will pay at the polls.

The House Budget Committee is expected to assemble this week the committee-passed elements of the COVID reconciliation bill — including the $900 billion-plus package approved on a party-line basis by the Ways & Means Committee February 11 — though it hasn't yet been scheduled. Once passed by the House, likely the week of February 22, the bill could bypass Senate committees and go straight to the floor, which some Republicans are unhappy about. In a February 12 letter to Majority Leader Chuck Schumer (D-NY) and McConnell, some ranking members called for committees to assemble Senate bills through regular order.

A focus of the upcoming Senate consideration will be whether the minimum wage increase to $15/hour in the House bill can survive in the Senate. It may not have enough support after Senator Kyrsten Sinema (D-AZ) said last week the provision is not a budget item and not appropriate for reconciliation. Another WSJ story said, "Senate rules require that measures passed under it must have budgetary effects that aren't merely incidental to the policy aims. It isn't clear that raising the minimum wage will be considered permissible. The nonpartisan parliamentarian of the Senate determines which measures are eligible to pass under reconciliation." In a February 15 letter to Budget Committee Chairman Bernie Sanders (I-VT), who's making a case for the provision, the CBO said the wage hike encompasses a broader range of behavioral effects and affects a broader range of budget functions than provisions to nullify the ACA individual mandate and allow ANWR drilling included in the TCJA, which passed under reconciliation.

A New York Times story on Democrats' willingness to look past economic concerns with a large bill said, "No one better embodies the sudden break from decades of worry over inflation — in Washington and elite circles of economics — than Janet L. Yellen, the former Federal Reserve chair and current Treasury secretary. Ms. Yellen spent the bulk of her career fighting in a war against inflation that economists have been waging for more than a half century. But at a time when the American economy remains 10 million jobs short of its pre-pandemic levels, and millions of people face hunger and eviction, she appears to be ready to move on."

White House — The President met with governors and mayors February 12 regarding the COVID plan, which includes $350 billion in state and local funding, and Maryland Gov. Larry Hogan (R) said he told Biden it's "good for his agenda over the next four years if he started out by getting some Republicans on board … "

The Administration may try to cultivate bipartisan support for the Build Back Better infrastructure-plus plan, which Biden will detail in an address to Congress sometime in the next several weeks, by refraining from major tax increases. The New York Times cited House Ways & Means Chairman Richard Neal (D-MA) as saying "there could be" tax increases in the bill, and reported: "Biden proposed tax increases to pay for those plans during the campaign, but in recent days, some of his economic aides have hinted privately that some or all of the infrastructure package could be deficit financed." (On timing, White House Press Secretary Jen Psaki has said the speech detailing Build Back Better may wait until consideration of the COVID relief bill is completed, and the FY2022 budget was delayed by lack of cooperation from the previous administration.)

Today, the White House announced extension/expansion of forbearance and foreclosure relief programs.

On Friday, February 19, is the EY Webcast, Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments (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. To determine what information your company needs to know now, join our panelists for a series of conversations about operating the tax function in this time of National Emergency created by the COVID-19 virus. 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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