The White House won’t update its budget and economic projections this summer. Since the 1970s, the president has released a “mid-session” budget update in July or August, reflecting changes in unemployment, inflation and economic growth. Not this year. The White House will suspend the review, asserting that sharing projections in tumultuous economic times would be “misleading.” Former CBO director and GOP White House economic aide Doug Holtz-Eakin offers another reason: “It gets them off the hook for having to say what the economic outlook looks like” which is widely understood to be grim.
Speaking of indicators… Another 2.1 million more people filed for unemployment benefits last week, which brings the total of claims to over 40 million since the coronavirus pandemic hit in the middle of March. Claims may reflect new layoffs as well as states working through backlogged applications for benefits. One bit of good news: Some who filed claims earlier have returned to work. Still, the Commerce Department reports that gross domestic product fell 5 percent in the first quarter of the year.
The House votes to increase paycheck protection flexibility. Lawmakers voted overwhelmingly to give businesses more time and flexibility to use the CARES Act’s paycheck protection funds. Small businesses would be able to use the loans for up to 24 weeks. They also could spend up to 40 percent of proceeds on non–wage costs such as rent and utilities, rather than just 25 percent. The Senate has yet to act on the measure.
Treasury will set aside $10 billion for loans for disadvantaged communities. The funds come from the same Paycheck Protection Program. The $10 billion will fund loans made by community development financial institutions. Many are nonprofits, work in poor communities, and often provide capital to minority-owned businesses that otherwise could not get loans.
Congress can’t fall out of love with tax deductions. TPC’s Howard Gleckman says lawmakers are falling back into bad habits by creating or expanding a number of individual income tax deductions in the guide of COVID-19 relief. The CARES and HEROES acts include at least four, plus the House-passed HEROES bill suspends the cap on state and local tax (SALT) deductions for two years.
Should wealth taxes fund pandemic relief and recovery? TPC’s Janet Holtzblatt concludes, “When the bills come due for the costs of COVID-19 relief programs. …don’t be surprised if wealth taxes are in the mix. They may not raise as much money as their advocates claim, but they will raise a lot of money at a time when federal budget deficits will reach levels unseen since World War II.”
A COVID-19-fueled debt-to-GDP ratio? This is not your grandfather’s debt problem. TPC’s Gene Steuerle, writing for The Washington Post, notes that current debt is set to exceed 106 percent of GDP by 2023 and head upward from there. To solve that problem, he argues that “Republicans need to agree that tax rates must be set high enough to cover spending in good times, while Democrats must agree to schedule significantly less automatic future growth in spending. That leaves to future Congresses both sustainable budgets and enough slack to address future problems.”
For the first time: Taxpayers will be able to amend their returns electronically. The IRS announced yesterday that later this summer taxpayers will be able to electronically file their Form 1040-X amended individual income tax returns. Currently, taxpayers must mail the form to the IRS.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].
