Negotiations Continue Over the Next Federal COVID-19 Relief Package


Last week, U.S. Senate Republicans and the White House continued to negotiate their next COVID-19 relief package to counter the House Democrats’ $3.5 trillion COVID-19 response bill aka “the HEROS Act” which passed in May.

Senate Majority Leader Mitch McConnell (R-KY) is now expected to release a set of bills next Monday known as CARES II which is likely to cost approximately $1 trillion.

Republican intraparty division over how to tackle the current federal unemployment benefits, set to expire in eight days, is one of the last remaining hurdles to overcome.

As reported previously by PMAA, the next COVID-19 Relief Package is expected to include reasonable COVID-19 liability coverage, state and local government funding, direct payments to middle/low income households, PPP modifications and a reduced amount of an expanded federal weekly unemployment benefit.

— COVID-19 Liability Coverage: Senate Majority Leader Mitch McConnell (R-KY) has conditioned any further COVID-19 relief package must include reasonable liability protections which would provide safe harbor provisions for businesses that meet safety guidelines as well as making it easier to force lawsuits into federal courts, and imposing caps on the damages that can be awarded.

— State and Local Funding: State and local governments received around $150 billion through the CARES Act to pay for unbudgeted expenses tied to COVID-19. There is a big push from state and local governments for hundreds of billions more, along with the ability to make up for lost revenue. Republicans argue there are still billions of dollars left in the pipeline from the original CARES Act that states and local governments have been unable to access due to rigid guidelines. The McConnell CARES II approach is likely to provide flexibility to allow state and local governments to now access those funds, along with robust new money for K-12 schools and colleges, tied to plans for reopening educational institutions this autumn – but no significant new infusion of cash for state and local governments.

— Direct Payments to Taxpayers: It is expected that an additional round of direct payments to individuals and households will be included in the next COVID-19 response package while omitting the payroll tax reduction favored by President Trump. The Senate Republican package is also likely to include “pro-growth” provisions to support the resurgence of the US economy, with an emphasis on domestic manufacturing and research and development.

— Unemployment Benefits: The most controversial part of the next COVID-19 response package revolves around whether to extend the additional $600 weekly federal unemployment benefit payments established under The CARES Act law. The House Democrats “Heroes Act” bill would extend the additional $600 per week payment through Jan. 31, 2021. McConnell has made it clear that the additional $600 weekly payment is a non-starter. It is likely that federal unemployment benefit will be extended but not at the $600 figure.

— Paycheck Protection Program (PPP) Modifications: It is expected that some PPP modifications will be included in the next COVID-19 relief package such as streamlined loan forgiveness for small PPP loans under $150k. Additionally, a second round of PPP loans for businesses under 300 workers or within the SBA size threshold for their industry who can demonstrate 50 percent lost revenue compared with a reference period could also be included.

Bottom Line

It is safe to say that there will likely be another COVID-19 relief package by early August. Stay tuned.

TAP HERE for all articles in July 27 EXPRESS Update