Chris Kearney | NSWA Vice President, Governmental Affairs
The Senate will return to Washington on Monday, November 9th, and the House of Representatives (“House”) will return on November 16th to begin the final legislative days of the outgoing 116th Congress – also referred to as a “lame duck session.” Congress is expected to adjourn by December 18th. With this schedule, the Senate will be in session for 24 legislative days and the House for 13 legislative days. With limited workdays, there is a narrow timeframe for Congress to pass several important pieces of legislation, including final FY 2021 appropriations bills, another COVID relief package, the Water Resources Development Act, the FY 2021 National Defense Authorization Act, and more. Congress may tackle some of the following issues before wrapping up this session.
FY 2021 Appropriations
To date, Congress has not enacted any of the 12 annual appropriations bills. The House passed 10 of 12 spending bills in July through two spending packages; however, the Senate has not advanced any of its bills through the appropriations committee. On October 1st, Congress passed and President Trump signed into law a Continuing Resolution (CR), P.L. 116-159, extending government funding at current FY 2020 levels through December 11th.
H.R. 7608: The House’s four-bill spending package that covers Agriculture-FDA, Interior-Environment, Military Construction-VA, and State and Foreign Operations spending. The House passed this package by a 224-189 vote on July 24th with no Republican support. Senate Republicans disagreed with the legislation’s plan to offer amendments to include in the bill additional coronavirus relief and policing and law enforcement policies. President Trump threatened to veto the spending package.
H.R. 7617: The House’s six-bill appropriations package includes Commerce-Justice-Science, Defense, Energy and Water, Financial Services, Labor-HHS-Education, and Transportation-HUD spending. H.R. 7617 passed by a 217-197 vote on July 31st without any Republican support. This bill includes a few major policy provisions, such as a requirement for local governments to institute policing policy changes, including a chokehold ban; and an additional $210 billion in emergency spending on top of regular appropriations. Senate Republicans opposed the additional coronavirus response funding and policing measures included in the bill. The White House also threatened to veto this measure, criticizing the emergency spending and policing policy riders.
Lame Duck Outlook: House and Senate disagreements over both the spending numbers and policy provisions will require considerable negotiation between Congressional leaders in order to reach a compromised final spending package and one that will be signed into law by the President. It is expected that the current ongoing negotiations over the next coronavirus relief package will take priority over passing FY 2021 appropriations bills. In turn, there is a significant likelihood that Congress will pass another CR to fund the federal agencies into 2021.
The election results will directly impact ongoing discussions and negotiations related to the next coronavirus relief package, but exactly how so remains unclear.
So far this year, Congress has passed three major coronavirus relief packages: (1) the “Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020” (P.L. 116-123), which was signed into law on March 6th; (2) the “Families First Coronavirus Response Act” (P.L. 116-127), which was signed into law on March 18th; and the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” (P.L. 116-136), which was signed into law on March 27th. Since March, numerous proposals have been introduced and considered in both the House and Senate, but months of negotiation between Congressional leaders and the White House has yet to result in a fourth coronavirus relief package, despite all parties agreeing that another relief package is needed.
Lame Duck Outlook: Right now, it is unclear if Congress will be able to approve another coronavirus relief package before the end of the year. The elections themselves slowed down negotiations between Congressional leaders and the White House, but in the days leading up to Election Day, it seemed several major issues were already hindering the ongoing negotiations. On October 29th, House Speaker Nancy Pelosi (D CA), who has been leading the negotiations on behalf of Congressional Democrats, sent a letter to the White House’s principal relief package negotiator, Treasury Secretary Steven Mnuchin, stating that Congress is still awaiting draft legislative language and/or responses on several issues “of critical importance,” including testing, tracing and treatment, state and local funding, schools, child care, earned income and child tax credits, unemployment insurance, OSHA, and liability. In response, Treasury Secretary Mnuchin expressed that the White House has been negotiating in good faith on these provisions, but said the Speaker has “refused to compromise” on many of these major items, including additional funding for state and local governments.
On November 4th, Senate Majority Leader Mitch McConnell (R-KY) said he wanted to pass a coronavirus relief package by the end of the year, but he maintained that the House-passed HEROES Act (H.R. 6800) (including the slimmed-down “2.0” version totaling $2.2 trillion passed on October 1) is too costly and includes too many provisions that are not directly related to the pandemic. Many Congressional Republicans have expressed concern only with the HEROES Act and HEROES 2.0 but also with the most recent proposal from the White House, which totaled approximately $1.8 trillion. House Speaker Pelosi and Congressional Democrats remain committed to approving another package by the end of the year, as does the White House, but it is unclear if all sides will be able to come to an agreement on both cost and policy in short order, especially as many election outcomes are still unclear.
S. 2657: Introduced by Senators Lisa Murkowski (R-AK) and Joe Manchin (D-WV), the “Advanced Geothermal Innovation Leadership Act of 2019” includes over fifty energy efficiency, cybersecurity, and climate-oriented measures that have bipartisan Senate support. The measure would revamp U.S. energy policy for the first time in roughly a dozen years and includes a bill (S. 1602) to launch energy storage demonstration projects introduced by Sen. Susan Collins (R-ME).
The energy bill, which enjoys broad bipartisan support in Senate was brought to the floor in March of this year, but progress stalled over an amendment to curb hydrofluorocarbons (HFCs) that have an outsized impact in warming the planet. Negotiations have continued between Sens. John Kennedy (R-LA) and Tom Carper (D-DE), the amendment’s authors, and Sen. John Barrasso (R-WY), who opposes it. Differences remain.
There is no House companion to the Senate energy package, though House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) was reported to be considering a series of energy and climate measures.
Lame Duck Outlook: While the Senate legislation has broad bipartisan support, the outlook appears dim for any major energy and climate legislation in the lame duck.
During the lame duck session, Congress will need to address tax extenders and include them in any finalized appropriations package or separate extender legislation. These individual and business entity tax breaks are typically extended for one or two years instead of on a permanent basis and many of them are expiring at the end of this year. Popular individual tax extenders include the deduction for private mortgage insurance (PMI) and the above-the-line deduction for tuition and fees. Popular business tax extenders include the recovery or expensing of business income investments and incentives for empowerment zone investments. The Continuing FurtherConsolidated Appropriations Act of 2020, which was signed into law in December 2019, extended almost three dozen regularly expiring provisions, many retroactively to 2018.
The following is a list of expiring tax extenders for 2020 based on several sources, including the Congressional Research Service (CRS):
Individual Tax Provisions
- The exclusion from income of the discharge of indebtedness on a principal residence
- The ability to treat mortgage insurance premiums as qualified residence interest
- The 7.5% of AGI limitation on the itemized deduction for medical expenses
- The above-the-line deduction for qualified tuition and related expenses
- Credit for health insurance costs of certain low-income individuals
Special Business Investment (Cost Recovery) Provisions
- Special expensing rules for certain film, television, and live theatrical productions:
- Accelerated depreciation for property:
- Seven-year recovery period for motorsports entertainment complexes;
- Three-year depreciation for racehorses two years or younger; and
- Accelerated depreciation for business property on an Indian reservation
Economic Development Provisions
- Empowerment zone tax incentives
- New Markets Tax Credit (subject to carryover of excess allocations through 2025)
- American Samoa economic development credit
Other Business-Related Provision
- Indian employment tax credit
- Mine rescue team training credit
- Employer tax credit for paid family and medical leave
- Work opportunity tax credit
- Look-through treatment of payments between related controlled foreign corporations
- Provisions modifying excise taxes on wine, beer, and distilled spirits
Energy Tax Incentives
- Credit for nonbusiness energy property
- Energy efficient commercial building deduction
- Credit for constructing new energy efficient homes
- Credits for fuel cell motor vehicles and two-wheel plug-in electric vehicles
- Credit for alternative fuel vehicle refueling property
- Credit for second generation biofuel production
- Credit for production of Indian coal
- Beginning of construction date for renewable power facilities eligible for the electricity production credit or investment credit
- Look-through rule for controlled foreign corporations
Lame Duck Outlook: Rallying Congressional support for specific tax break provisions can be a difficult proposition. Nevertheless, there has been traditional bipartisan support for extending many of the provisions listed above. That effort will likely be tagged onto FY 2021 appropriations or COVID relief during the lame duck.