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Stimulus talks falter, lame duck outlook uncertain

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Tax Hot Topics newsletter Discussions over a second COVID-19 stimulus bill have appeared to hit a standstill once again, leaving the prospects of a deal in a lame duck session unclear.

House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin have been working to find a compromise since September. Although the two sides appeared to be making progress in recent weeks, a letter from Pelosi to Mnuchin sent on Thursday indicated they are still far apart in several areas, including the tax title. Mnuchin responded characterizing Pelosi’s “all or none approach” as unworkable.

Pelosi later downplayed the back-and-forth and indicated that she remains hopeful a deal will materialize in the lame duck session before the next presidential term begins. However, Senate Majority Leader Mitch McConnell (R-Ky.) does not share her outlook, suggesting a bill would not be taken up until early next year and would be “more modest” than the package Pelosi and Mnuchin have been negotiating. McConnell has long sought a narrower stimulus package costing no more than $1 trillion.

The urgency and extent to which Congress ultimately acts could depend on the scope of the crisis. Recent indicators have suggested the economy is trending toward recovery, however a “second wave” of COVID-19 has already begun to hit other countries, where governments have again imposed lockdowns.

Contacts:
Dustin Stamper
Managing Director
Washington National Tax Office
T +1 202 861 4144

Omair Taher
Manager
Washington National Tax Office
T +1 202 861 4143

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