Overnight, Congressional leaders and the White House finally reached agreement on the COVID #3 economic stimulus package – at least 99.9% of an agreement.
Unemployment Insurance and Tax Summary
Unemployment Insurance provisions are being challenged by a few Republican Senators (Sens. Lindsay Graham (R-SC), Tim Scott (R-SC), Rick Scott (R-FL), and Ben Sasse (R-NE)).
The four Republican Senators who objected to the unemployment insurance provisions were allowed to offer an amendment, The Sasse Amendment, addressing their concerns.
The Sasse amendment failed by a vote of 48-48, short of the 60 votes needed to pass the amendment.
The Senate then moved to final passage of H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act aka COVID #3). The Senate passed the bill by a vote of 96-0.
The bill now goes to the House for a vote on Friday.
The House has announced its intent to pass the bill by voice vote, which avoids Members traveling back to Washington.
House Committee Chairs held conference calls with members discussing relevant sections of COVID #3 to their committees.
Although House Speaker Nancy Pelosi (D-CA) sounded pleased with the bipartisan agreement reached in the Senate on COVID #3, she did not fully endorse the plan saying House Democrats will review the provisions and determine a course of action.
Speaker Pelosi still wants to ultimately pass COVID #3 by a unanimous consent vote to avoid bringing members back to DC.
As I reported yesterday, it only takes one member to object for a unanimous consent vote to fail. Multiple members, including Alexandria Ocasio-Cortez (D-NY), have already voiced concerns with the bill.
To quell issues within his caucus, Majority Leader Steny Hoyer (D-MD) said Congress would take up at least one more economic stimulus package (COVID #4), where members can include whatever they wanted, but did not get in COVID #3.
The White House said President Trump will sign this package into law. Keep in mind that this is the third aid package to deal with the crisis.
What is New in the Package?
$150 billion for state and local governments
- Not included in any previous iteration, this money would create a Coronavirus Relief fund for state, local, and tribal governments to deal with anticipated budget shortfalls due to expenses for responding to the virus, and a decline in tax revenue.
$130 billion for hospitals and the healthcare system
- Democrats secured an additional $55 billion towards their “Marshall Plan” for the healthcare system, a priority for Minority Leader Chuck Schumer (D-NY). This money would go to hospitals, Medicare and Medicaid enrolled providers, and not-for-profit entities, among others, combating the virus to cover increasing costs as the number of cases soars.
$16 billion to replenish the Strategic National Stockpile
- These funds, which are included in the $130 billion for the health system, would replenish national stockpile supplies of pharmaceuticals, personal protective equipment, and other medical supplies to be distributed around the country to hospitals and healthcare entities facing shortages.
$260 billion for expanding Unemployment Insurance benefits
- A sticking point for Democrats, they were able to secure 4 months of increased unemployment benefits offered through existing state-based unemployment systems.
$45 billion for FEMA’s Disaster Relief Fund
- This money would provide financial assistance to state and local governments, as well as private nonprofits providing critical and essential services.
$30 billion in emergency education funding
- This money would provide emergency support to school systems and higher education institutions to help them remain functional and effective in remote learning.
- This bill also would eliminate income tax on student loan repayment assistance by an employer.
Tweaks to loan program administered through the Exchange Stabilization Fund
- Democrats secured direct payroll payments to the airline industry, which will keep airline workers paid and prevent layoffs.
- Required real-time public reporting of all actions taken by Treasury to administer the fund.
- Prohibition on businesses controlled by the President, Vice President, Members of Congress, and heads of Executive Departments getting loans or investments from Treasury programs like the ESF.
Top Line Summary of Main Provisions of COVID-3
Small Business Loans: $377 billion, up from $349, is allocated in small business loans for the use of maintaining payroll, providing paid leave, rent and mortgage payments, and utility payments. Loans remain capped at $10 million and would be completely forgiven if they are used for the permitted items previously listed. Democrats secured two additional provisions for small business listed below:
- $10 billion for SBA emergency grants of up to $10,000 to provide immediate relief for small business operating costs.
- $17 billion for SBA to cover 6 months of payments for small businesses with existing SBA loans.
One-time tax rebates: Direct payments, starting at $1200 for individuals, $2400 for joint filers, and $500 for children, would be made to all taxpayers who meet the income eligibility thresholds. Eligibility is capped at $100,000 for individuals, $200,000 for joint filers, and the rebate check value starts to phase out income above $75,000 for individuals and $150,000 for joint filers. Lower-income households would get the same $1200 credit regardless of tax liability, and rebates will be based on 2019 tax returns if those have been filed.
Enhanced Unemployment Insurance: Increased funding for state-based unemployment insurance systems would offer an additional $600 in benefits a week for 16 weeks, up from 12, for those who lose jobs as a result of the outbreak. The updated bill also includes an additional 13 weeks of available benefits following the exhaustion of state unemployment compensation.
Creation of the Exchange Stabilization Fund (ESF): Allocates $500 billion to a new credit facility run through the Treasury that would offer collateralized loans and loan guarantees to hard-hit industries. Airlines will now receive only $29 billion in loans, down from $58 billion in previous iterations. All the funds doled out through the ESF would come in the form of loans, not grants. The bill bans stock buybacks for any corporation that accepts government loans during the term of their assistance plus one year. Any company that accepts federal money will also face a two-year limit on executive pay raises. Finally, an inspector general and a congressional committee will provide oversight on the Fund.
Supplemental Appropriations: A growing section of COVID-3, these appropriations include:
- $150 billion for state and local governments
- $130 billion for hospitals, the healthcare system and public health
- $45 billion for FEMA’s Disaster Relief Fund
- $30 billion in emergency education funding
- $25 billion in emergency funding for public transit agencies
- $10 billion for the Indian Health Services
Pharmaceutical Industry Provisions: Extends funding for key health programs through Nov. 30, delaying a perceived deadline on “surprise” medical billing and drug pricing legislation until the lame-duck session of Congress later this year. The bill also includes over-the-counter drug reform provisions.
The White House Coronavirus Task Force just concluded its daily briefing. Treasury Secretary Steve Mnuchin made two noteworthy statements:
- SBA loans – Goal is for the Treasury Department to issue regulations to all FDIC banks by next Friday for making same day loans to businesses.
- Checks to individuals – goal is to have checks to individuals in next three weeks. For people who get refunds or pay taxes electronically, the IRS has your bank account info and will use that info to distribute money. Checks in mail may take longer, not sure.
As with all legislation, federal agencies are responsible for implementing programs created in legislation, and that will be the case in this situation with SBA, Treasury Dept. and IRS developing more information about the loans created in this legislation.
