On Dec. 1, lawmakers released competing COVID-19 relief proposals, restarting negotiations which have been stalled for months. As COVID-19 case rates sharply increase nationwide, several programs enacted under the CARES Act, including the Paycheck Protection Program, enhanced unemployment, and various tax provisions such as the Employee Retention Tax Credit (ERTC) are set to expire Dec. 31. While this puts increasing pressure on lawmakers to reach a deal before they adjourn for the winter state work period, a deal currently remains elusive as lawmakers remain far apart on key issues.
Below is a brief overview of both proposals:
Bipartisan, Bicameral Proposal
Overview: On Tuesday, Dec. 1, a bipartisan group of Senators and Representatives released their latest proposal for emergency COVID-19 relief. The proposal was spearheaded by Sens. Joe Manchin (D-WV) and Susan Collins (R-ME), and supported by Problem Solvers Caucus leadership—Reps. Josh Gottheimer (D-NJ), Tom Reed (R-NY), Dusty Johnson (R-SD), Dean Phillips (D-MN), Abigail Spanberger (D-VA), and Fred Upton (R-MI)—as well as Sens. Mark Warner (D-VA), Lisa Murkowski (R-AK), Jeanne Shaheen (D-NH), Mitt Romney (R-UT), Angus King (I-ME), and Bill Cassidy (R-LA).
The proposal, which is seen by Democratic members in particular as a “down payment,” would allocate a total of $908 billion, intended to last from the time the bill is passed through March 31, around the time many public health experts expect widespread distribution of a vaccine to be underway. While the full bill text has not yet been made public, members have announced a framework and topline funding levels. In addition to the following, the proposal would also provide short-term federal protection from COVID-19 related lawsuits with the purpose of giving states time to develop their own response.
Summary of Framework
Issue
|
Proposed Funding
|
| State, Local and Tribal Governments |
$160 billion |
| Additional Unemployment Insurance (UI) |
$180 billion |
| Support for small businesses including Paycheck Protection Program (PPP), EIDL, restaurants, stages, and deductibility |
$288 billion |
| Community Development Financial Institution (CDFI) / Minority Depository Institution (MDI) Community Lender Support |
$12 billion |
| Transportation (Airlines, Airports, Buses, Transit and Amtrak) |
$45 billion |
| Vaccine Development and Distribution & Testing and Tracing |
$16 billion |
| Healthcare Provider Relief Fund |
$35 billion |
| Education |
$82 billion |
| Student Loans |
$4 billion |
| Housing Assistance (Rental) |
$25 billion |
| Nutrition/Agriculture |
$26 billion |
| U.S. Postal Service |
$10 billion |
| Child Care |
$10 billion |
| Broadband |
$10 billion |
| Opioid Treatment |
$5 billion |
Tax: While legislative text has not yet been released, the proposal seems to exclude tax priorities for both individuals and businesses. The proposal seems to eliminate Economic Impact Payment (EIP) for individuals, does not extend the Employee Retention Tax Credit (ERTC), does not modify the Net Operating Loss (NOL) carrybacks, and does not contain other tax provisions.
Political Reception: This proposal has received mixed reviews from members across the political spectrum. Sen. John Thune (R-SD), for example, said more money for state and local governments is a nonstarter for many GOP members. He added, however, that there is a lot of agreement on PPP funding, vaccines and schools, and potentially a path forward. While not optimistic, Sen. Roy Blunt (R-MO) said this proposal would do a lot more good if it is passed now than a more robust $2 trillion package in March, and encouraged members to step up. On the Democratic side, Sen. Chris Coons (D-DE) said he did not sign on to the proposal to avoid sending a signal that President-elect Joe Biden is already on board, though he did not address his own personal support for or against the measure. Senate Majority Leader Mitch McConnell (R-KY) also circulated his own narrower proposal (described below) among Senate Republicans and has not indicated support for the bipartisan measure. Similarly, House Speaker Nancy Pelosi has been silent on the proposal, but has continued to state that additional relief funding is long overdue and must be passed in this lame duck session.
Senate GOP Proposal
Overview: Shortly after the release of the bipartisan proposal, Senate Majority Leader Mitch McConnell (R-KY) released a new plan reflecting Senate GOP priorities and a deal that President Donald Trump might be able to support. There is no official price tag for the new GOP offer.
Summary of Framework (tax provisions in blue):
Provision + Cost
(if provided)
|
Description
|
| Liability Protection |
Provides liability protection for schools, businesses, and other organizations. |
| Unemployment Insurance |
One-month extension of the Pandemic Unemployment Assistance program that provides state unemployment benefits to those that are not traditionally eligible to apply (e.g., gig workers). The program would subsequently be phased out over two months and no new claimants would be allowed into the program.
One-month extension of the Pandemic Emergency Unemployment Compensation program that provided an extra 13 week of unemployment insurance to those who exhausted regular unemployment benefits. The program would subsequently be phased out over two months and no new claimants would be allowed into the program.
No extension for the Federal Pandemic Unemployment Compensation program that expired July 31 and provided a $600 federal supplement to unemployed workers. Unlike previous GOP bills, this version does not contain a smaller extension of this program.
|
| Paycheck Protection Program ($317.7 billion) |
Establishes a second round of PPP loans for eligible businesses and defines eligibility as small businesses that meet the applicable SBA revenue size standard, have no more than 300 employees, and demonstrate at least a 25% reduction in gross revenues between comparison quarters in 2019 and 2020. The maximum loan size is $2 million and it maintains the 60/40 cost allocation for payroll and non-payroll costs to receive full PPP forgiveness.
Establishes a second round of PPP loans for eligible businesses and defines eligibility as small businesses that meet the applicable SBA revenue size standard, have no more than 300 employees, and demonstrate at least a 25% reduction in gross revenues between comparison quarters in 2019 and 2020. The maximum loan size is $2 million and it maintains the 60/40 cost allocation for payroll and non-payroll costs to receive full PPP forgiveness.
|
| Support for Venues ($15 billion) |
Establishes a grant program for shuttered live venues and theaters that have experienced significant losses |
| Postal Service ($10 billion) |
Loan to the post office if the USPS cash balance drops to $8 billion |
| Education Support |
Two years of tax credits for contributions to scholarship-granting organizations based on the School Choice Now Act.
Enhancements to Sec. 529 accounts to allow for parents of K-12 students at public, private, or religious schools to use plan funds for expenses such as books and online materials. This provision would expire in two years.
Provides $15 billion in child care stabilization funding.
Provides $105 billion in funding for K-12
|
| Revenue Changes |
The CARES Act included a new $300 above-the-line deduction for charitable contributions that taxpayers can claim for 2020. This bill increases the amount to $600 for individuals and $1,200 for those filing a joint return.
Provides 100% deduction for business meals based on the Supporting America’s Restaurant Workers Act.
|
| Critical Minerals |
Includes a proposal to make the US less dependent on China and other unstable, unreliable and hostile regimes for critical minerals |
| Pandemic Response |
Provides funding for pandemic preparation and various strategic stockpiles. |
Tax: While legislative text has not yet been released, the proposal seems to exclude several tax priorities from the CARES Act that benefited businesses, including the Employee Retention Tax Credit (ERTC). Additionally, it does not include Economic Impact Payment (EIP) for individuals. Instead, the provision introduces deductibility of business meals to help restaurants, an expansion of an above-the-line charitable deduction program, and educational assistance tax benefits.
Political Reception: Democrats maintain that the Senate GOP offer is not workable and will not garner Democratic support.
COVID-19 negotiations remain fluid, and whether or not a package will pass remains to be determined.
On Dec. 1, lawmakers released competing COVID-19 relief proposals, restarting negotiations which have been stalled for months. As COVID-19 case rates sharply increase nationwide, several programs enacted under the CARES Act, including the Paycheck Protection Program, enhanced unemployment, and various tax provisions such as the Employee Retention Tax Credit (ERTC) are set to expire Dec. 31. While this puts increasing pressure on lawmakers to reach a deal before they adjourn for the winter state work period, a deal currently remains elusive as lawmakers remain far apart on key issues.
Below is a brief overview of both proposals:
Bipartisan, Bicameral Proposal
Overview: On Tuesday, Dec. 1, a bipartisan group of Senators and Representatives released their latest proposal for emergency COVID-19 relief. The proposal was spearheaded by Sens. Joe Manchin (D-WV) and Susan Collins (R-ME), and supported by Problem Solvers Caucus leadership—Reps. Josh Gottheimer (D-NJ), Tom Reed (R-NY), Dusty Johnson (R-SD), Dean Phillips (D-MN), Abigail Spanberger (D-VA), and Fred Upton (R-MI)—as well as Sens. Mark Warner (D-VA), Lisa Murkowski (R-AK), Jeanne Shaheen (D-NH), Mitt Romney (R-UT), Angus King (I-ME), and Bill Cassidy (R-LA).
The proposal, which is seen by Democratic members in particular as a “down payment,” would allocate a total of $908 billion, intended to last from the time the bill is passed through March 31, around the time many public health experts expect widespread distribution of a vaccine to be underway. While the full bill text has not yet been made public, members have announced a framework and topline funding levels. In addition to the following, the proposal would also provide short-term federal protection from COVID-19 related lawsuits with the purpose of giving states time to develop their own response.
Summary of Framework
Issue
|
Proposed Funding
|
| State, Local and Tribal Governments |
$160 billion |
| Additional Unemployment Insurance (UI) |
$180 billion |
| Support for small businesses including Paycheck Protection Program (PPP), EIDL, restaurants, stages, and deductibility |
$288 billion |
| Community Development Financial Institution (CDFI) / Minority Depository Institution (MDI) Community Lender Support |
$12 billion |
| Transportation (Airlines, Airports, Buses, Transit and Amtrak) |
$45 billion |
| Vaccine Development and Distribution & Testing and Tracing |
$16 billion |
| Healthcare Provider Relief Fund |
$35 billion |
| Education |
$82 billion |
| Student Loans |
$4 billion |
| Housing Assistance (Rental) |
$25 billion |
| Nutrition/Agriculture |
$26 billion |
| U.S. Postal Service |
$10 billion |
| Child Care |
$10 billion |
| Broadband |
$10 billion |
| Opioid Treatment |
$5 billion |
Tax: While legislative text has not yet been released, the proposal seems to exclude tax priorities for both individuals and businesses. The proposal seems to eliminate Economic Impact Payment (EIP) for individuals, does not extend the Employee Retention Tax Credit (ERTC), does not modify the Net Operating Loss (NOL) carrybacks, and does not contain other tax provisions.
Political Reception: This proposal has received mixed reviews from members across the political spectrum. Sen. John Thune (R-SD), for example, said more money for state and local governments is a nonstarter for many GOP members. He added, however, that there is a lot of agreement on PPP funding, vaccines and schools, and potentially a path forward. While not optimistic, Sen. Roy Blunt (R-MO) said this proposal would do a lot more good if it is passed now than a more robust $2 trillion package in March, and encouraged members to step up. On the Democratic side, Sen. Chris Coons (D-DE) said he did not sign on to the proposal to avoid sending a signal that President-elect Joe Biden is already on board, though he did not address his own personal support for or against the measure. Senate Majority Leader Mitch McConnell (R-KY) also circulated his own narrower proposal (described below) among Senate Republicans and has not indicated support for the bipartisan measure. Similarly, House Speaker Nancy Pelosi has been silent on the proposal, but has continued to state that additional relief funding is long overdue and must be passed in this lame duck session.
Senate GOP Proposal
Overview: Shortly after the release of the bipartisan proposal, Senate Majority Leader Mitch McConnell (R-KY) released a new plan reflecting Senate GOP priorities and a deal that President Donald Trump might be able to support. There is no official price tag for the new GOP offer.
Summary of Framework (tax provisions in blue):
Provision + Cost
(if provided)
|
Description
|
| Liability Protection |
Provides liability protection for schools, businesses, and other organizations. |
| Unemployment Insurance |
One-month extension of the Pandemic Unemployment Assistance program that provides state unemployment benefits to those that are not traditionally eligible to apply (e.g., gig workers). The program would subsequently be phased out over two months and no new claimants would be allowed into the program.
One-month extension of the Pandemic Emergency Unemployment Compensation program that provided an extra 13 week of unemployment insurance to those who exhausted regular unemployment benefits. The program would subsequently be phased out over two months and no new claimants would be allowed into the program.
No extension for the Federal Pandemic Unemployment Compensation program that expired July 31 and provided a $600 federal supplement to unemployed workers. Unlike previous GOP bills, this version does not contain a smaller extension of this program.
|
| Paycheck Protection Program ($317.7 billion) |
Establishes a second round of PPP loans for eligible businesses and defines eligibility as small businesses that meet the applicable SBA revenue size standard, have no more than 300 employees, and demonstrate at least a 25% reduction in gross revenues between comparison quarters in 2019 and 2020. The maximum loan size is $2 million and it maintains the 60/40 cost allocation for payroll and non-payroll costs to receive full PPP forgiveness.
Establishes a second round of PPP loans for eligible businesses and defines eligibility as small businesses that meet the applicable SBA revenue size standard, have no more than 300 employees, and demonstrate at least a 25% reduction in gross revenues between comparison quarters in 2019 and 2020. The maximum loan size is $2 million and it maintains the 60/40 cost allocation for payroll and non-payroll costs to receive full PPP forgiveness.
|
| Support for Venues ($15 billion) |
Establishes a grant program for shuttered live venues and theaters that have experienced significant losses |
| Postal Service ($10 billion) |
Loan to the post office if the USPS cash balance drops to $8 billion |
| Education Support |
Two years of tax credits for contributions to scholarship-granting organizations based on the School Choice Now Act.
Enhancements to Sec. 529 accounts to allow for parents of K-12 students at public, private, or religious schools to use plan funds for expenses such as books and online materials. This provision would expire in two years.
Provides $15 billion in child care stabilization funding.
Provides $105 billion in funding for K-12
|
| Revenue Changes |
The CARES Act included a new $300 above-the-line deduction for charitable contributions that taxpayers can claim for 2020. This bill increases the amount to $600 for individuals and $1,200 for those filing a joint return.
Provides 100% deduction for business meals based on the Supporting America’s Restaurant Workers Act.
|
| Critical Minerals |
Includes a proposal to make the US less dependent on China and other unstable, unreliable and hostile regimes for critical minerals |
| Pandemic Response |
Provides funding for pandemic preparation and various strategic stockpiles. |
Tax: While legislative text has not yet been released, the proposal seems to exclude several tax priorities from the CARES Act that benefited businesses, including the Employee Retention Tax Credit (ERTC). Additionally, it does not include Economic Impact Payment (EIP) for individuals. Instead, the provision introduces deductibility of business meals to help restaurants, an expansion of an above-the-line charitable deduction program, and educational assistance tax benefits.
Political Reception: Democrats maintain that the Senate GOP offer is not workable and will not garner Democratic support.
COVID-19 negotiations remain fluid, and whether or not a package will pass remains to be determined.