Congress and White House Try Again for a COVID-19 Relief Legislation

Earlier this week, House Democrats released a slimmed-down $2.2 trillion legislative package. A possible vote could occur later this week on this new package. However, Senate Republicans are on record not wanting to spend $1 trillion for relief efforts, so it is unclear whether a deal can be reached.

The House bill includes a significant increase in Medicaid FMAP spending for home and community-based services, which was also part of the House’s relief package passed in May.

Bipartisan lawmakers have pushed for another round of economic stimulus for months, but they have remained far apart on the amount seen as necessary to combat the pandemic. Lawmakers have been split on the level of weekly unemployment assistance and aid to provide states and cities.

The updated House Democrat proposal includes funds for restaurants, airlines, child care centers, and performance venues hit hard by the pandemic as well as funding for the postal service, which Democrats have said is needed before Election Day. The new bill would include another round of direct checks to Americans, and it would renew the $600 in supplemental unemployment aid that expired in July.

The package would also extend the Paycheck Protection Program, which expired on Aug. 8, leaving more than $130 billion in funding unused.

The bill seeks $436 billion to help state, local, territorial and tribal governments avoid layoffs as they cope with budget shortfalls. That’s down from nearly $916 billion requested in May. Republicans have resisted state and local “bailouts,” while proposing to let already appropriated money be used more flexibly to make up for revenue shortfalls.

Among other cutbacks:

• Democrats pared their initial requests for hospitals and other health care providers and housing rental assistance by about $50 billion each.
• Aid to homeowners would be cut from $75 billion to $21 billion.
• An effort to temporarily lift a $10,000 cap on state and local tax deductions would be pared back from two years to one.
• Direct tax rebates to households would be scaled back by cutting the amount distributed to children and adult dependents to $500, although a three-person cap on the number of eligible dependents was removed.
• Child tax credits would be made refundable as in the May legislation, but Democrats now would limit the per-child benefit to $2,000, rather than $3,000 in the May bill, or $3,600 for children under age 6.
• The Paycheck Protection Program, which offers forgivable loans to small businesses that keep workers on the payroll, would lose $146 billion in previously appropriated money that went unspent. That money would be repurposed for other programs in the bill, such as $50 billion in grants to small businesses.
• A proposal to award hazard pay to front line workers would be scrapped to save $190 billion.

The bill includes $28 billion for a vaccine, including $20 billion for its procurement, $7 billion for its distribution, and $1 billion for a public awareness campaign. In addition, $2 billion is set aside to provide more personal protective equipment for all industries significantly affected by the pandemic.
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The package also includes a measure expanding a tax credit for employee retention that was created in March and has drawn bipartisan support. The program is aimed at keeping workers on payrolls and helping businesses stay afloat by giving employers enough money to cover a percentage of their wages and benefits, plus a tax credit for fixed expenses like rent.

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