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BPAA Federal Policy Update - October 30, 2020

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COVID-19 and Federal Update:

  • Mnuchin Faults Pelosi Over Stimulus as Blame Game Heats Up;Trump Promises Stimulus Package ‘Immediately’ After ElectionOn Friday, before departing the Midwest, President Trump said there will be a “tremendous stimulus package immediately after the election.” On Thursday, Treasury Secretary Steven Mnuchin accused House Speaker Nancy Pelosi of pulling a “political stunt” and holding up a new stimulus bill by refusing to offer compromises, in an escalation of acrimonious finger-pointing over stalled virus-relief negotiations. “Your ALL OR NOTHING approach is hurting hard-working Americans who need help NOW,” Mnuchin said in a response to a letter from the speaker earlier Thursday that demanded responses on seven critical areas of continuing differences. The Treasury secretary said that the administration had already come back to Pelosi on her demand for a national Covid-19 testing strategy. On the other areas Pelosi cited as sticking points -- including aid to state and local authorities -- Mnuchin said she had “refused to compromise. The seven areas Pelosi listed in her letter are a national virus testing-and-tracing program; funding for state and local governments; school safety measures; child-care funding; tax credits for working families; unemployment insurance; and workplace protections and liability issues. “We don’t expect them all to be in our favor” when the White House does respond, Pelosi said in a Bloomberg TV interview.
    • The two negotiators last spoke on Monday, as the clock ran down on the potential for a pre-election deal.The two sides have grown closer in dollar terms on a stimulus, with Mnuchin having offered $1.9 trillion for stimulus and the speaker seeking $2.4 trillion, though the increasingly critical language bodes ill for a deal. President Donald Trump Thursday repeated his accusation that Pelosi is stalling before the election and his top economic adviser, Larry Kudlow, said on Fox News, “Our team now believes that the speaker has no intention of compromising on key issues."

       
  • Fed Again Eases Terms for Main Street Lending ProgramThe Federal Reserve announced Friday its latest round of changes to boost participation in its $600 billion lending effort targeting small and midsize businesses amid difficulty by Congress and the White House in reaching agreement on a new round of relief measures. The Main Street Lending Program, which is jointly run with the Treasury Department, has seen muted demand from borrowers and banks and is designed to encourage more lending to businesses that were in a solid financial condition before the coronavirus pandemic hit this year. Under the program, the Fed will purchase 95% of eligible loans made by banks. Friday’s changes reduced, for the third time, the minimum loan amount under the program—to $100,000, from $250,000. The loan amounts had earlier been lowered from $1 million to $500,000 and then from $500,000 to $250,000. The changes also revamped the fees banks can charge borrowers to encourage greater production of smaller loans. For loans below $250,000, the Fed will waive the 1 percentage point fee it collects, and it will allow banks to double to 2 percentage points the fees it charges borrowers to make these smaller loans.Read more at the Wall Street Journal. 

     
  • US economy records record GDP gains after historic COVID-19 dropThe U.S. economy grew at a record 33.1 percent annualized rate in the third quarter, swiftly recovering some of the deep losses driven by the onset of the coronavirus pandemic, according to data released Thursday by the Commerce Department. The seasonally adjusted rate of growth, an advance estimate from the department, means that if the pace of economic growth between July and September spanned 12 months, the U.S. economy would have increased in size by roughly a third. On a non-annualized basis, the economy grew by 7.4 percent in the third quarter.
    • Economists had widely expected gross domestic product (GDP) to rebound at an unprecedented rate in the third quarter as the U.S. began to dig itself out of the coronavirus recession. The U.S. added 3.8 million jobs between July and September and saw sharp increases in consumer spending, particularly on personal goods household products. The U.S. trade deficit in goods, which typically detracts from GDP, also narrowed in September as exporters began to send more products abroad.Read more at the Hill. 
       

 

Political News

  • Bloomberg Government reports, Trump Plans 14 Rallies in Three Days as He Seeks to Close Gap Trump will rally in four Pennsylvania towns tomorrow; in Michigan, Iowa, North Carolina, Georgia and Florida on Sunday; and again in North Carolina, Pennsylvania and twice in Michigan on Monday, as well as in Wisconsin, according to a schedule his campaign issued today.Trump trails Biden by roughly 7.8 points on average in national polls, according to RealClearPolitics, but the race is tighter or in some cases effectively tied in polls of the states Trump is targeting with his final rallies. The president has leaned strongly on his trademark raucous rallies to close the gap with Biden since recovering from Covid-19 earlier this month. His campaign has badly lagged Biden in fundraising since August, allowing Biden to blanket the airwaves in battleground states with television ads.
    • Biden will travel to Iowa, Minnesota and Wisconsin today, and is planning to spend all day Monday in Pennsylvania, along with his running mate Kamala Harris. The Keystone State is regarded by both campaigns as the likeliest to decide a close election, and the former vice president holds only a 3.6 percentage point lead there on average, according to RealClearPolitics.
    • Biden doesn’t hold large campaign events because of the pandemic. Trump has faced criticism from state and local officials and public health authorities for gathering thousands of his supporters to the rallies, largely without any public health precautions. “We’re doing a lot of traveling. We’ll be doing a lot of rallies. We have some big ones,” Trump told reporters before leaving for a three-rally swing in the upper Midwest.
    • On election night, Trump will likely stay at the White House instead of attending a party at his namesake hotel in Washington, according to a person familiar with his plans. Trump was slated to appear at the Trump International Hotel but those arrangements are now in flux, according to four people familiar with the situation, who asked not to be named to discuss plans not yet public.
  • Politico reports, A lot of Democrats are excited about a Senate map that’s expanded deep into Republican territory:Alaska, South Carolina and Kansas. But the battle for Senate control is still mostly where we thought it would be six months ago.
    • Maine, Iowa and North Carolina are where the tipping points are. If Democrats sweep or take two out of three, Chuck Schumer is almost certain to be majority leader provided Joe Biden defeats President Donald Trump. But if Democrats falter in those battlegrounds, it’s gonna be a good night for Mitch McConnell.
    • Three races are widely considered out of reach: The Democrats expect to beat GOP senators in Colorado and Arizona, and the Republicans are confident they will beat Doug Jones in Alabama. McConnell currently controls 53 seats, so to get to 50 Schumer would need at least two more races to break his way as well as hold Michigan. And there is ample evidence that could happen. But Maine, Iowa and North Carolina simply aren’t gimmes.
      • Susan Collins is probably the underdog in Maine, but a raft of late money and talk of private polls showing the race is tied mean both parties think it’s competitive. Most polls have shown Democratic challenger Sara Gideon up by 4 or 5 points, but forecasters are rating the race a toss-up. The state uses ranked-choice voting if no one gets to 50 percent — and that looks like a real possibility. That’s likely to benefit Gideon, said Dan Shea, head of Colby College’s government department who works on the college’s polls.
      • In North CarolinaThom Tillis looked nearly done 45 days ago, until his Democratic opponent Cal Cunningham copped to an affair with a veteran. Tillis went on the attack and Cunningham is far less visible than he was before. The race has tightened significantly since, with Cunningham leading the RealClearPolitics polling average by just 1.6 points.
      • Joni Ernst’s Iowa was one of Trump’s strongest battlegrounds in 2016, and Democrat Theresa Greenfield hasn’t put her away. Ernst outpaced expectations significantly in her 2014 debut. Greenfield’s up by a couple points, according to RCP averages. This race isn’t over. So while looking at whether Lindsey Graham survives in South Carolina, or whether Jon Ossoff can oust David Perdue without a runoff in Georgia, or if an anti-Trump wave could crash into Alaska Republican Dan Sullivan is certainly a fun way to spend your weekend, the Big Three is where the battle for control is probably going to be decided.
  • 5 numbers that show why 2020 was never going to be an easy year for Cory Gardner in ColoradoSix years ago, Cory Gardner and John Hickenlooper appeared on the same ballot. In the U.S. Senate race, Gardner — then a congressman — upset a Democratic incumbent senator in a strong Republican year. In the governor’s race, Hickenlooper beat back a GOP challenger to win his second term. Plenty of similarities exist between the 2014 election and now as the candidates meet head to head. Health care is at the center of the debate. A disease outbreak — then Ebola, now coronavirus — drew headlines. And the incumbent is fighting for his political life. But what’s less visible: Colorado’s political foundation has shifted significantly. More than a quarter million voters switched political parties. And more than a half million new voters registered in the state, a new Colorado Sun analysis shows. REad more at the Colorado Sun. 
  • Wisconsin Republican Party says hackers stole $2.3 million Hackers have stolen $2.3 million from the Wisconsin Republican Party’s account that was being used to help reelect President Donald Trump in the key battleground state, the party’s chairman told The Associated Press on Thursday. The party noticed the suspicious activity on Oct. 22 and contacted the FBI on Friday, said Republican Party Chairman Andrew Hitt. Hitt said the FBI is investigating. FBI spokesman Brett Banner said that, per policy, “the FBI is not permitted to confirm or deny an investigation.” The Wisconsin Department of Justice, which has a center focused on cyber crime able to assist if requested, has not been asked to investigate, said spokeswoman Rebecca Ballweg. Read more at AP News. 

Tax News

  • Extenders: House Ways and Means ranking member Kevin Brady (R-Texas) told reporters that he was keen on Congress finalizing a “smart Covid package” during the lame-duck session of Congress. He also said wanted to provide certainty for temporary tax and healthcare provisions, known as extenders. “We’ve already reached out and are having discussions with Chairman Neal and Democratic leaders on how we might resolve some of those temporary health and tax provisions,” he said. More than 30 provisions are scheduled to expire at the end of 2020.

     
  • Joe Biden’s 67 Percent Tax on Wealth Last December, when Joe Biden released the details of his $3 trillion+ tax plan, The Washington Post reported that the presidential candidate rejected calls for a new “wealth” tax on millionaires and billionaires. That was then, this is now. Biden may have rejected a Bernie Sanders-style wealth tax, but as our updated analysis of Biden’s plan indicates, the Democratic nominee is proposing other ways of taxing wealth without explicitly labeling his policies a wealth tax. Instead of taxing wealth on an annual basis, as was advocated by Sen. Sanders (I-VT) and Sen. Elizabeth Warren (D-MA), Biden would tax wealth at death—by as much as 67 percent. Biden is proposing two major tax increases on accumulated wealth. First, he would tax unrealized capital gains at death for taxpayers with incomes above $400,000. For a (deceased) taxpayer who earned more than $400,000 but less than $1 million, this would subject those unrealized gains to the current capital gains rate of 20 percent, plus the 3.8 percent Net Investment Income Tax (NIIT), for a total of 23.8 percent. This is before the assets might be subject to the estate tax (more on that below).Read more at the Tax Foundation. 

 

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