UPDATE (3/26/20) – The bill was unanimously passed by the Senate on March 25, 2020. A House vote is expected on March 27, 2020.
It appears that the Senate is prepared to vote this afternoon on the largest peacetime stimulus package in the history of the United States with the hope of warding off a recession due to the Novel Coronavirus (COVID-19) pandemic. The House of Representatives is currently in recess, and Speaker Nancy Pelosi (D-CA) is seeking to pass the bill through unanimous consent (a procedure usually used only for small, uncontroversial measures) in order to avoid bringing members back to Washington, DC. It is uncertain whether this will be possible, because any individual member can block such a move. The House may also be able to approve the package by voice vote rather than roll call vote.
In any case, once the bill is approved by the House, it is expected to be immediately signed by the President when the package arrives at his desk. At a total cost exceeding $2 trillion, the proposal offers significant economic relief for both individuals as well as businesses.
Though the finishing touches of the agreement are still being finalized, the stimulus package includes $250 billion for direct payments to individuals and families, $250 billion for expanded unemployment benefits, and $850 billion in loans for small and large businesses negatively impacted by the pandemic. The bill will also include $150 billion in assistance for state and local governments and $100 billion to provide hospitals and health care providers with additional resources as the virus spreads.
It is, without question, an incredibly robust proposal.
The plan reportedly includes the much discussed $1,200 in direct payments to individuals that would apply equally to workers with incomes up to $75,000. The payments would begin to reduce as income climbs, and for those earning more than $99,000, the payments would be zero. Couples would get $2,400, subject to a $150,000 cap and would phase out completely at $198,000. Under the bill, families would also receive an additional $500 payment for each child.
The bill increases assistance for workers who have been furloughed or have had wages and hours reduced as the result of the Coronavirus. The final agreement significantly expands unemployment benefits to include nontraditional employees such as gig workers, furloughed employees and freelancers. It is also set to increase current unemployment assistance, raising the maximum state unemployment benefit by $600 a week for up to four months. The bill will also extend unemployment insurance by 13 weeks, and allow workers to maintain their full salaries if they were out of work because of COVID-19.
Small Business Support
The bill contains an allocation of $350 billion for loans to small businesses that have been forced to close or significantly reduce operations as a result of the pandemic. This provision is intended to encourage these companies to keep employees on their payrolls during the standstill.
For qualifying companies with fewer than 500 employees, the proposal includes up to $10 million of forgivable small business loans.
Finally, businesses that maintain payroll would be eligible for assistance for costs such as mortgage interest, rent and utilities.
The package’s emergency aid plan is intended to help keep businesses afloat during the pandemic and speed the economic recovery after the crisis has passed.
It includes $500 billion in aid for corporations, including a substantial allocation for airlines. Additionally, $500 billion is set aside to bail out distressed businesses. The provision calls for supervision of the fund by an inspector general and a 5-person panel appointed by Congress. Companies that accept money are banned from stock buybacks for the length of the government assistance, plus an additional year. Additionally, Trump family businesses, or those of other senior government officials, cannot receive loan money under the program.
Public Health Funding
The bill provides more than $100 billion in assistance to hospitals. Additional funds are provided for the Centers for Disease Control and Prevention, public transportation agencies, food stamps, child nutrition and other health care-related programs.
The proposed legislation also provides about $150 billion in stimulus funds for state and local governments to help boost their budgets in anticipation of significant drop offs in tax revenues.
As the details related to the final bill start to come into focus, Grossman Yanak & Ford LLP will continue to post updates on important provisions of the law affecting our clients, contacts and friends. In the interim, should you have questions or comments, please contact Bob Grossman or Don Johnston at 412-338-9300.