Democratic lawmakers want a bipartisan framework that includes Paycheck Protection Program deductibility as the starting point in a new round of coronavirus relief negotiations.
In a joint statement December 2, House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Charles E. Schumer, D-N.Y., said that “in the spirit of compromise,” a framework released the previous day should be used as common ground to negotiate a comprehensive relief bill.
The $908 billion proposal was released by a group of bipartisan, bicameral lawmakers seeking to find a compromise and pass a bill before the end of the year.
The proposal would also give state, local, and tribal governments $160 billion and provide an additional $180 billion in unemployment insurance. It would add another $288 billion to the PPP and allow businesses to draw a second loan from the government program if they qualify.
Details of the framework have not yet been made public, but it would make some expenses paid for with the forgivable PPP loans deductible.
Senate Finance Committee member John Cornyn, R-Texas, who introduced a PPP deductibility bill (S. 3612), was confident that his provision would make it into a relief package. “I don’t know of any real opposition among lawmakers, so I would think it is a noncontroversial issue,” he told Tax Notes.
The main hurdle during negotiations over PPP deductibility has been Treasury’s stance against making those expenses deductible, which it argues would allow businesses to double dip by claiming a deduction for expenses paid for with a forgivable loan.
Despite Treasury’s opposition, Cornyn has reason to be optimistic. His measure has the backing of Finance Committee Chair Chuck Grassley, R-Iowa, and ranking member Ron Wyden, D-Ore., as well as House Ways and Means Committee Chair Richard E. Neal, D-Mass. It was also included in the Health and Economic Recovery Omnibus Emergency Solutions Act (H.R. 925) passed by the House in October.
The other problem lawmakers face is that they need to find consensus on an omnibus spending package before December 11 to fund the government. Senate Majority Leader Mitch McConnell, R-Ky., said that any relief measure or other proposals would have to ride along on the must-pass bill.
Senate Appropriations Committee Chair Richard C. Shelby, R-Ala., told reporters that Congress will likely have to pass a continuing resolution to fund the government through December 18 because it appears unlikely that lawmakers will cobble together a package that appeases both sides before the December 11 deadline.
Along with the relief package, lawmakers typically approve extending a slate of temporary tax credits for various industries. Lawmakers said those were part of the discussions, but Cornyn said he is unsure whether there would be enough legislative bandwidth to include them in a final bill. “We usually get them done, even if it's retroactive,” he said, referring to a possible extension next year.