Facing a hard holiday deadline and the threat of a federal government shutdown, House and Senate negotiators were able to accomplish in six days what they had been unable to do for more than six months: reach a compromise on a COVID-19 stimulus package that all sides wanted and agreed was long past due.
Although a final version of the legislation has not yet been disseminated, legislative leaders announced on Sunday (Dec. 20) that they had reached a deal and would call for a vote, perhaps as soon as later Monday (Dec. 21).
“More help is on the way,” Senate Majority Leader Mitch McConnell (R-Ky.) said in a late-night address to colleagues. “As our citizens continue battling this coronavirus pandemic this holiday season, they will not be fighting alone.”
Senate Democratic Leader Chuck Schumer (D-NY) added that “while this bill is far from perfect, it is a strong shot in the arm to help American families weather the storm.”
The $900 billion financial injection is designed to help struggling individuals, hurting businesses and the ailing U.S. economy. However, it’s about 60 percent smaller than the $2.2 trillion CARES Act that Congress passed in March.
Key Spending Areas
Among scores of different provisions within the new bill, the single largest component – accounting for nearly one-third of the total – is $275 billion of additional Paycheck Protection Program (PPP) funding earmarked for small businesses.
Aside from more PPP loans, the new package also includes a three-month extension of a $300-per-week increase in unemployment benefits. The original $600 per week of enhanced benefits expired in July, but President Donald Trump extended half of that amount by executive order through Dec. 31.
Direct one-time payments of $600 per person to income-qualified adults and each minor dependent are also in the new bill. As with an earlier $1,200 stimulus payment to most Americans, these would once again be paid to individuals earning less than $75,000 a year or couples making less than $150,000.
The bill also includes about $80 billion for schools, $40 billion for transportation agencies, $25 billion for rent and utility assistance and a 30-day extension of a nationwide eviction moratorium until Jan. 31. Additionally, the measure includes $20 billion for coronavirus vaccinations.
However, what the bill doesn’t include is any additional aid to state and local governments. Their budgets and tax receipts have been hit hard by the pandemic – but unlike the federal government, they’re mostly barred from running deficits. Republicans had mostly opposed such a bailout.
The measure also excluded explicit COVID-19 liability protection for businesses and other institutions, which had been a key Republican demand, but which many Democrats had opposed. Lawmakers expect to deal with the issue in separate legislation.
The Fine Print
As is typical with giant federal omnibus spending bills such as this one, the final package will likely also contain numerous special-interest benefits that have little to do with the crisis at hand. These are often unknown, and unread by lawmakers who are facing a 1,000+ page bill that requires a near-instantaneous vote.
For example, there’s presently some question and concern surrounding the tax treatment of PPP benefits that businesses used to cover expenses that would normally be deductible. Tax attorney and Forbes contributor Alan Gassman pointed out that there’s also some question over what constitutes a PPP “eligible entity” in Round 2, and whether businesses that didn’t qualify for the program the first time can try again this time.
Other observers have pointed out that the new stimulus bill includes more than $1.4 billion for additional border-wall construction, as well as a corporate meal expenditure deduction purportedly aimed at helping the beleaguered restaurant industry.
But such issues aside, stimulus money could be flowing soon.
Assuming that the House and Senate pass the compromise plan and Trump signs it into law, U.S. Treasury Secretary Mnuchin has previously said his agency would be ready to start making disbursements in about a week.
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