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DC Tax Flash: Congress Rushes to Avoid Government Shutdown

Tax Alert

With a bipartisan deal on another virus relief bill seemingly out of reach, Congress is looking to finish work on a continuing resolution (CR) to keep the government funded into December, if not longer. Republicans reportedly want a temporary extension to mid-December, whereas Democrats prefer an extension well into 2021.

A final bipartisan agreement on the CR could be announced soon. The House Rules Committee is planning to consider the legislation on Monday in advance of a floor vote. To avoid a government shutdown, Congress needs to get a final CR to the President by midnight on September 30, 2020, which marks the end of Fiscal Year 2020.

Congressional leaders and the White House have all agreed in principle to avoid confrontations that could trigger a funding lapse next month. Even still, disagreements remain over certain details, including farming support and certain Census Bureau deadlines.

Partisan differences are far wider in the moribund negotiations on a broad coronavirus relief package. Hope of progress was sparked earlier this week by a proposal issued by the Problem Solver's Caucus, a bipartisan group of 50 House lawmakers. The group's proposed framework would direct new (and redirect unspent) resources to the following:

  • Testing and healthcare ($100B)
  • Direct assistance to individuals and families ($316B)
  • Unemployment assistance ($120B)
  • Small business and non-profit support ($290B)
  • School and child dare ($145B)
  • State and local aid ($500.3B)
  • Election support ($400M)
  • Broadband, agriculture, USPS, and Census ($52B)
  • Worker and liability protections
  • Automatic boosters and reducers

On tax policy, the framework includes $1,200 direct payments to taxpayers, more funding and reforms for the Paycheck Protection Program, and a $50 billion targeted expansion of the Employee Retention Credit.  

The plan has failed to sway House party leaders, however, as Ways and Means Committee Chairman Richard Neal (D-MA) and many other Democratic Chairmen quickly dismissed it as inadequate

In remarks yesterday, Senate Finance Committee Chairman Charles Grassley (R-IA) said there was no chance of reaching a deal on virus relief before the election, "unless Pelosi needs something," he said. He also threw cold water on the president's call for a virus relief package in the range of $1.5 trillion. He seriously questioned if a proposal of that size could win even a majority of Republicans in the Senate.


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