Phase Four Stimulus StalledAugust 5, 2020
While talks over the next coronavirus relief package continue to remain at a standstill, daily meetings among negotiators have netted a couple signs of progress. First, on a new round of $1,200 stimulus checks and then on an extension of the Paycheck Protection Program (PPP) small business loan program. Yet, both parties remain far apart on three crucial issues: how to extend the enhanced $600 federal unemployment benefits using unspent money already appropriated by Congress, a delay on the collection of federal payroll taxes, and reinstituting an expired eviction moratorium.
Negotiations between House Speaker Nancy Pelosi (D-Calif.), Senate Minority Leader Chuck Schumer (D-N.Y.), White House Chief of Staff Mark Meadows and Treasury Secretary Steve Mnuchin will likely carry over into next week, with votes unlikely until the end of the week. Some Senate Republicans up for election in November are pressing Senate Majority Leader Mitch McConnell (R-Ky.) for the chamber to stay in session until some agreement is reached.
The two sides are struggling with this round of negotiations for a series of reasons, including the price and timing. Speaker Pelosi has said she would settle for a $3.4 trillion bill, whereas Republicans are closer to a $1 trillion proposal. On state and local aid, the GOP wants to grant more spending flexibility, whereas Democrats want to provide as much as $1 trillion in new funding. On unemployment insurance, Democrats are pushing for $600 per week in extra benefits, but the GOP wants a lower number, though they have been somewhat divided over what that formula should look like. As we inch closer to Election Day, some lawmakers have recognized that this bill could be the last package considered before November, resulting in lawmakers in both parties trying to include other priorities into the bill, which further bogs down the process.
The PPP, which offers forgivable loans for small businesses willing to maintain their payroll, is scheduled to expire at midnight on Saturday unless lawmakers keep it alive. With the clock ticking, Senate Small Business Chairman Marco Rubio (R-Fla.) and Sen. Susan Collins (R-Maine) unveiled two amendments for the next coronavirus relief package that would keep the program open through the end of the year, allow borrowers to apply for a second round of loans and make available a new long-term loan option to help businesses weather the COVID-19 crisis.
Specifically, the first amendment would extend the program through Dec. 31, allow businesses that have already tapped the program to apply for second loans, establish a simplified forgiveness process for smaller loans, and expand allowable expenditures to include things such as worker protective equipment.
The second round of loans would be available to businesses with 300 or fewer employees that can show a 35 percent revenue decline. The revenue test is a new compromise from the senators, after they initially proposed a 50 percent revenue loss test that business groups—including NSBA and other senators said was too high.
NSBA is pleased to see some improvements made through the amendment, in our letter to the senators, we recommended they include businesses that demonstrate a20-30 percent reductions in gross revenues to participate in this second wave of funding, making it much more effective across the diverse sectors and the various sizes who continue to need the help. We further suggested they provide even greater flexibility for the smallest companies. We state the smallest companies often need more flexibility to spend on all normal business expenses (rent, software, equipment, suppliers, and vendors) not just the ones currently defined. Instead, forgivable expenses should be defined by “normal & routine” business expenses (such as the EIDL loan) for these firms.
The second proposed amendment, mirrors the comprehensive proposal that Rubio released last week with Collins, including the creation of the new long-term loan program. It would also appropriate an additional $10 million for the Minority Business Development Agency.
Sens. Rubio and Collins offered the amendments for inclusion in placeholder legislation that Majority Leader McConnell has set in motion for consideration on the Senate floor in case there is a deal on a more expansive economic aid bill. It is unclear how McConnell will proceed with amendment votes, though. While Rubio’s proposals are in line with measures that have bipartisan support, Democrats have said they do not want to pass piecemeal legislation. It is unclear if Democrats would vote for the amendments if they made it to the floor, despite joining with Republicans on earlier legislation to boost funding for the PPP and extend its expiration date.