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White House Concedes on More Tax Credits, PPP Money

Posted on Oct. 15, 2020

The Trump administration has offered to further extend the Paycheck Protection Program and tax credits to encourage hiring during negotiations with House Democrats, but that makes the relief legislation no more likely to pass Congress ahead of the election. 

“At this point” it will be difficult to come to an agreement before the election, Treasury Secretary Steven Mnuchin said at the Milken Institute on October 14. Despite continued negotiations between the White Houseand Democrats led by House Speaker Nancy Pelosi, D-Calif., no agreement has been reached on the size and priorities of the package. 

But Mnuchin told reporters later in the day that the White House is proposing to increase its offer on the refundable child tax credit from $500 to $1,000, and he said more money would be allocated to the PPP.

The small business loan program created under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) still has $130 billion in unused funds that lawmakers want to repurpose for another round of PPP loans.

Drew Hammill, Pelosi’s deputy chief of staff, said a point of contention has been Democrats’ insistence on a strategic testing plan to reopen the economy safely.

But Mnuchin criticized Pelosi’s all-or-nothing approach, saying he wants to see some money inserted into the economy.

“We're continuing to negotiate a comprehensive bill, but we want to put money into the economy now,” Mnuchin said at the Milken Institute. He said they would be able to immediately inject the $300 billion left over from the CARES Act that could be repurposed if Congress approves.

Blaming Pelosi

Pelosi has come under increasing pressure from her own caucus to strike a deal with the White House. The administration has increased its $1.6 trillion offer by a further $200 billion, but that remains short of the $2.4 trillion proposed in the updated Health and Economic Recovery Omnibus Emergency Solutions Act passed by the House on October 1.

Rep. Ro Khanna, D-Calif., a progressive member of the party, urged Pelosi to find a way to help struggling people and businesses. His plea was firmly rejected by Pelosi, who has repeatedly said there are major policy differences between the two sides. 

Pelosi and Mnuchin have clashed over Democrats’ push to make the child tax credit fully refundable, as well as their effort to trim the length of time over which a business can carry back net operating losses. Democrats also want to limit the business loss amount of noncorporate taxpayers, which allows taxpayers to fully deduct business losses without limitation.

According to new estimates from the Joint Committee on Taxation released October 14, the updates to the child tax credit, which would provide up to $2,000 to qualifying households, would cost $27.8 billion over 10 years, while changes to the NOL rule and business loss limitation rule would save the government $254.1 billion. 

Asked whether Pelosi is reluctant to accept a deal because it could be a victory for Trump, Mnuchin said it was “definitely part of the reality.” 

Other Republicans agreed. “This underscores her desire not to help anyone before the November election,” House Ways and Means ranking member Kevin Brady, R-Texas, told reporters.

But it remains to be seen whether any deal struck between Pelosi and the White House will gain approval among Senate and House Republicans. Brady said House Republicans haven’t been privy to the details of the deal.

“House Republicans are going to review that proposal when it’s completed and fully laid out for us,” Brady said. 

Brady added that there is support for a more targeted approach, as previously laid out by Senate Republicans. Several Senate Republicans have publicly rejected the idea of Congress spending another trillion dollars on a relief package. 

Senate PPP Vote Scheduled

Senate Majority Leader Mitch McConnell, R-Ky., said lawmakers will vote on another relief package on October 19 that will include repurposing PPP funds and extending the program to businesses for another round of loans.

“The American people need Democrats to stop blocking bipartisan funding and let us replenish the PPP before more Americans lose their jobs needlessly,” McConnell said in an October 13 statement. 

McConnell, however, didn't lay out what else the package would entail. Senate Republicans already tried approving a targeted bill (S. 178) earlier this year but were unable to get votes from Democrats. The bill would have extended the PPP and increased the deduction for charitable contributions, among other provisions. 

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