As a part of The Giving Institute’s effort to keep members informed with helpful information during the COVID-19 pandemic, we will share occasional updates on legislation that may affect our member firms. The following update comes from Sara Barba and her colleagues at Urban Swirski.
Congress returns this week, and Senate Majority Leader Mitch McConnell (R-KY) is readying the Senate’s version of the next COVID relief bill to share with lawmakers as early as tomorrow. A key sticking point for the House – they passed their version of the bill earlier this month – is extending the $600/week federal unemployment benefit which is set to expire on July 31.
As for other issues, there’s some overlap in the two parties’ priorities, and negotiators appear open to trade-offs in the next bill.
McConnell Speaks on Next Relief Bill and Timing
The Majority Leader said any bill that passes the Senate would need liability protections, and The Hill reports Republicans are seeking five years of COVID protections, retroactive to December 2019, which would apply to businesses, schools, hospitals and nonprofits. McConnell added that the bill would include funding to reopen schools and a focus on protecting and creating jobs.
McConnell said he expects the next relief bill to come “to a head” within three weeks once they return. Currently, the House is scheduled to adjourn for recess on August 3, two weeks into McConnell’s timeline, but House Speaker Nancy Pelosi (D-CA) said the chamber would delay or cancel their August recess to pass the bill. The Senate is scheduled to adjourn for recess on August 10, imposing a deadline for Congress given a recent promise from McConnell that the Senate would stay on schedule. The first of the conventions convenes on August 17 so that’s the hard deadline for Congress to pass this next relief bill.
Efforts to Expand Universal Charitable Deduction
As you may recall, the CARES Act that passed in March included a temporary $300 universal charitable deduction for taxpayers who don’t itemize. Since then, a bipartisan group of senators and House members have introduced a bill known as the Universal Giving Pandemic Response Act, which would expand the temporary universal deduction to one-third of the standard deduction (about $4,000 for individuals and $8,000 for married couples), and would make it available on both 2019 and 2020 tax returns.
The sponsors of the bill – Sens. Lankford (R-OK), Coons (D-DE), Scott (R-SC), Klobuchar (D-MN), Lee (R-UT), Shaheen (D-NH), and Reps. Walker (R-NC) and Pappas (D-NH) – are pushing the bill to be included in the next round of COVID relief legislation, which is expected to pass as soon as early August. However, the Senate Finance Committee has pushed back on the bill, requesting concessions on compliance requirements to prevent waste, fraud and abuse, and the charitable sector has not yet rallied around a compromise. So, as of now it’s not likely to be included, but that could change during the negotiation process.
The draft proposal for the bill has yet to be released, so stay tuned.
Update on Unemployment Benefits
On Wednesday, House Speaker Nancy Pelosi (D-CA) signaled she is flexible on the level of enhanced unemployment benefits included in the next package, so long as additional direct payments are included. Despite Pelosi’s comments, most Democratic lawmakers are dug in on extending the full $600/week add-on created in the CARES Act. The Washington Post reports both the administration and Republicans are considering a compromise on this issue that would extend the benefits at a lower level, between $200 to $400/week. As you may recall, Treasury Secretary Mnuchin previously said the administration opposes extending benefits if recipients would receive more than 100% of their previous wage.
Trump Administration Comments on Next Package
On Monday, President Trump’s Economic Adviser Larry Kudlow outlined what the administration wants included in the next relief package. Kudlow echoed Republican calls for additional, targeted stimulus checks and a reform to the enhanced unemployment benefits. Kudlow also mentioned a modest return-to-work bonus, a proposal championed by Sen.
Rob Portman (R-OH), and an extension of the Paycheck Protection Program (PPP), which is set to stop taking new loan applications on August 8.
Kudlow’s pro-growth priorities include a capital gains and payroll tax holiday. Although the administration has repeatedly voiced support for those growth initiatives, their calls have not been echoed by Republicans on Capitol Hill and are not expected to be incorporated in the forthcoming GOP draft. However, Politico reports President Trump has signaled to House Republicans that he will not sign a new COVID relief bill if it does not include a payroll tax cut.
Minority Leader Schumer Asking for SALT Cap Repeal
On Tuesday, Senate Minority Leader Chuck Schumer (D-NY) urged Majority Leader McConnell to repeal the cap on the state and local tax (SALT) deduction in the next relief bill. Schumer added that rolling back the cap is a top priority for Senate Democrats in the next package. A rollback of the SALT deduction cap was included in the House-passed HEROES Act but is unlikely to make it into the next bill with strong Republican opposition. If Democrats win control of the Senate in November, Schumer vowed he would eliminate the cap “forever” as majority leader.
Incentives to Reopen
The Washington Post reports the Trump Administration and Republicans are developing plans to encourage schools to reopen by attaching incentives or conditions to new aid as part of the next relief package. Republican officials are reportedly considering between $50 billion to $100 billion for elementary and secondary schools and $20 billion to $30 billion for higher education institutions. Any proposal that conditions aid for schools on reopening will likely be met with strong opposition from Democrats concerned about the public health implications. Conversely, Senate Democrats have put forward a proposal that allocates $345 billion to universities and K-12 schools to orchestrate their reopening or help them adapt to remote learning.
Republicans are also looking into tax incentives to encourage businesses to reopen safely. On Thursday, House Ways and Means Committee members Tom Rice (R-SC) and David Schweikert (R-AZ) introduced two pieces of legislation that would give businesses refundable payroll tax credits to cover costs associated with providing a safe workplace, including costs incurred from providing personal protective equipment for employees, extra cleaning, workplace reconfiguration, and employee COVID testing.
Oversight on the Next Bill
Lawmakers could push for increased oversight on programs in the next package following hiccups in enacting the CARES Act. Stimulus checks sent to deceased individuals and PPP loans to large companies captured headlines, but Congress has run into major issues implementing the oversight mechanisms included in the CARES Act. On Thursday, the Blue Dog Democrat Coalition called for stronger oversight on coronavirus spending.
The Pandemic Accountability Response Committee has still not received spending data, and the special inspector general for pandemic recovery’s (SIGPR) office still faces staffing issues. In light of these challenges, a greater focus could be placed on oversight before lawmakers agree to spend more than $1 trillion of taxpayer money.
