Congress Remains Focused on COVID-19 Pandemic Relief
Congress remains almost exclusively focused on COVID-19 pandemic relief. The Senate is back on a limited schedule and the House was back for a one-day vote on May 15. It is not yet clear when regular business will resume.
On May 15, the House of Representatives passed H.R. 6600, Phase V of its response to the COVID-19 pandemic along near strict party lines. The legislation, called the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), would cost around $3 trillion if signed into law. It would focus on assistance to state and local governments, hazard pay for essential workers on the front lines of the crisis, forgiving large amounts of student loan debts, more direct payments to individuals, and more. However, the bill is very partisan with only 14 Democrats voting against and only one Republican voting in favor.
On May 21, Senate Majority Leader Mitch McConnell said there was no way the House bill would pass the Senate, and he suggested that spending would need to shrink significantly – to around $1 trillion.
The 1,800-page House bill would be the most expensive of the five legislative pandemic responses to have been passed since the beginning of March. Before this legislation, federal spending for the response to the pandemic totaled near $3 trillion, a little over 10% of America’s entire GDP. The CARES Act (Phase III), that was signed into law on March 27, was the most comprehensive and expensive program, costing $2.2 trillion. The CARES Act provided hundreds of billions of dollars in funding for checks to individual Americans, supplemental federal unemployment benefits, relief to distressed industries, funding to hospitals and more. The legislation also established the Paycheck Protection Program to aid small businesses in the form of loans that would be forgivable if the businesses kept most of their employees on the payroll. The PPP was initially funded at $350 billion, and Phase IV added an additional $310 billion to that fund once it ran out.
As passed, the House legislation would provide the following:
• $900 billion to provide assistance to state and local governments: $500 billion would assist state governments to manage the fiscal damages of the crisis, while $375 billion would be allocated to local governments, $20 billion would be sent to tribal governments, and $20 billion would aid U.S. territories.
• $200 billion in hazard pay for frontline workers: The legislation would establish a “Heroes Fund” that would provide grants for those who apply of up to $10,000 for lower-income workers and $5,000 for essential workers who are already highly compensated.
• $100 billion in emergency assistance to renters and homeowners: The legislation would provide this assistance to help homeowners avoid foreclosure and renters to avoid eviction.
• $1,200 per person direct payments to individuals: Like Phase III, the legislation would provide $1,200 to every individual earning under $75,000 but would also include $1,200 for every child in a family up to $6,000 (Phase III only included $500 per child).
• $75 billion for COVID-19 testing, contact tracing and isolation mechanisms including ensuring that all Americans could get free COVID-19 testing.
• $600-a-week unemployment benefits extension: The boost in unemployment benefits established in the CARES Act would be extended until January 2021.
• $10,000 student loan debt forgiveness: The legislation would extend the forbearance of collecting interest on student debt and provide $10,000 in student debt relief in monthly installments until September 2021.
• $3.6 billion in election security grants: Would allocate funding to states, so they can plan and prepare for the 2020 general election and make tabulating the results more secure.
The legislation notably does not include any new funding for the PPP. However, it does change the formula for how the loans are required to be spent for them to be forgivable – requiring 75% of the loan to be spent on payroll while the remaining 25% could be spent on utilities and rent.
Each of the four previous COVID-19 bills had support from Republicans, who in the tradition of getting legislation adopted would accede to the need for legislation and set their own marker just as the Democrats did the same. Compromises usually took place between the Democratic and Republican leaders of the House and Senate along with Treasury Secretary Mnuchin, who spoke for the White House. In contrast, Republican opposition to this bill is intense, with Congressional Republicans calling it a “wish list” for Democrats and “a parade of absurdities.” The Republicans focused on provisions they claim would make some undocumented immigrants eligible for a $1,200 direct payment, $25 billion of funding for the U.S. Postal Service, and funding for vote-by-mail and same-time voter registration as among things that should not be funded.
Nonetheless, there remains broad agreement that more will have to be done to address the damage to the economy caused by the pandemic. Over the next few weeks, the Senate Republican majority is expected to create its own version of legislation that will undoubtedly contain many of the same spending priorities as the House bill, but at lower levels.
Republicans have been saying that an important priority for the U.S. is to get people back to work and school and resume normal life patterns. McConnell has said that one of the key conditions that he will insist on are liability protections for businesses and other entities that resume operations when COVID-19 has diminished. According to McConnell, “my red line going forward on this bill is we need to provide protection, litigation protection, for those who have been on the front lines. We can't pass another bill unless we have liability protection.”
The Senate is not expected to act on another COVID-19 bill until June. Leader McConnell has repeatedly said that Congress should “pause” and consider the debt that has already been incurred before adopting another spending bill. In the end, the Senate will pass its own version of a legislation and then likely iron out the differences with the House of Representatives in conference reconciling the two bills.