Fall Congressional OutlookAugust 4, 2021
Assuming the Senate completes its work on the bipartisan infrastructure package soon, the Senate is not scheduled to return from August recess break until Sept. 13, and the House is slated to follow one week later on Sept. 20. Upon their return, both chambers will have a lot to do before the end of the year.
Debit Limit: The Bipartisan Budget Act of 2019 suspended the debt limit through July 31, 2021. On August 1, the Treasury Department began using so-called “extraordinary measures” to keep the ceiling from being breached, but Treasury warned there are “some scenarios” in which they may only last until mid-to-late September. The Congressional Budget Office (CBO) estimates that extraordinary measures will be exhausted sometime in the first quarter of the next fiscal year, in October or November. Congressional leaders haven’t yet begun serious negotiations about how to address the debt limit ahead of a potential default.
Funding the Government / Appropriations: An omnibus combined with the COVID relief package, which funds the government for the rest of FY 2021, was signed into law in late December and is set to expire on September 30, unless Congress acts.
COVID-Related Paid Sick Leave: The Families First Act required small employer’s and governments to offer two weeks of paid sick leave and an additional 10 weeks of paid family and medical leave for employees who are unable to work due to COVID. Private sector employers were reimbursed via payroll tax credits. The December COVID relief and omnibus package extended the tax credits (not the requirement) through March, and the American Rescue Plan modified and further extended them through the end of September. This policy is separate from the paid family leave originally enacted in 2017 that currently expires at the end of 2025.
Increased Unemployment Compensation Benefits: The CARES Act provided an additional $600 per week to recipients of unemployment insurance or Pandemic Unemployment Assistance. The December COVID relief and omnibus package extended benefits at a level of $300 per week into March, and the American Rescue Plan further extended them through September 6.
Pandemic Unemployment Assistance Program: The CARES Act created temporary Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs that provide an additional 13 weeks of benefits and expand who is eligible, among other changes. The December COVID relief and omnibus package extended PUA and PEUC into the spring. The American Rescue Plan further extended the programs through early September, until the 6th.
Surface Transportation Authorization Expires: The 2015 Fixing America’s Surface Transportation (FAST) Act authorized roughly $280 billion over five years and extended highway and transit programs through FY 2020. These programs have since been extended through the September 2020 CR, until September 30, which also provided a transfer of general revenues to the Highway Trust Fund. In addition, the Congressional Budget Office estimated in September 2020 that the Highway Trust Fund will be exhausted in 2021, but recent general revenue transfers will keep the HTF solvent until 2022.
Payroll Tax Deferral: An August executive order allowed employers to defer paying the employee portion of Social Security taxes for September through December, with the amount to be repaid between January and April 2021. The December COVID relief and omnibus package extends the repayment period through the end of the year.
Emergency Injury Disaster Loans Advance Grants: The December COVID relief and omnibus package included year-long extensions of Emergency EIDL grants of up to $10,000 per business. This is set to expire on December 31.
Employee Retention Credit: Affected employers can receive a refundable payroll tax credit for up to $10,000 of wages per employee. The December COVID relief and omnibus package extended the credit through June and modified it by allowing businesses with PPP loans to qualify, and the American Rescue Plan enacted in March modified and further extended the credit through the end of the year.
Enhanced Child Tax Credit: The American Rescue Plan enacted in March temporarily increased the child tax credit to $3,000 for children 6 and older and $3,600 for children under the age of 6 and provided for periodic advance payments of the refundable portion of the credit. These enhancements expire at the end of 2021.
Enhanced Child and Dependent Care Tax Credit: The American Rescue Plan enacted in March temporarily increased the maximum rate for the credit for employment-related child and dependent care expenses to 50 percent, from 35 percent, and modified the phase-out to allow more families to use it. It increases the income level at which the credit rate begins to phase down to $125,000, from $15,000, and increases the limitations on care expenses to $8,000, from $3,000, for one individual and to $16,000, from $6,000, for multiple individuals.
Tax Extenders: Several tax extenders were either made permanent or extended for five years under the December COVID relief and omnibus package. Approximately 20 extenders, however, will expire again at the end of the year, including some that benefit individuals, alternative energy, and other businesses.
These are just some of the issues Congress will have to address when they return in the fall. Congress may be compelled to act on each of these dates or enact short-term extensions to move the deadlines to buy time for later action.