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Stimulus deal remains elusive as election nears

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Tax Hot Topics newsletter Lawmakers in Washington are still working toward an agreement on a second COVID-19 stimulus package, but time may be running out to strike a compromise before the election.

House Speaker Nancy Pelosi (D-Calif.) set a 48-hour deadline to reach a deal on Sunday, indicating certain aspects of the bill must be locked in for it to be written and passed in time.

Negotiations between Pelosi and Treasury Secretary Steven Mnuchin have been ongoing, and the two sides have made some progress in recent weeks. The administration recently raised its offer to $1.8 trillion, edging closer to the Democrats’ $2.2 trillion ask, and President Donald Trump has indicated he may be willing to go higher. However, the overall cost of the package is only one piece of the puzzle and fundamental differences remain in several areas, including the tax title.

Even if the administration and Democrats find compromise, the bill could face an uphill battle in the Senate. Only a handful of Republican senators have supported the administration’s $1.8 trillion proposal, although some White House officials have expressed optimism that they will ultimately back the president if a deal is reached.

Still, Majority Leader Mitch McConnell (R-Ky.), who has sought to limit the size of the bill to $1 trillion, is expected to move forward with votes on a narrow, $500 billion package this week. The package is comprised of two bills, one of which is similar to the “skinny” bill Senate Republicans attempted to pass in September. The other authorizes additional funding for the Paycheck Protection Program, which expired in August. Neither is expected to garner enough bipartisan support to pass, with Democrats still holding out for a broader package.

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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