$2 TRILLION IN BIPARTISAN DEAL PASSES HOUSE; A LITTLE CONTROVERSY BRINGS MANY HOUSE MEMBERS BACK TO TOWN
The $2.2 trillion
Phase 3 Stimulus bill
finally passed the House and is being sent to the President. The 880-page measure is the largest economic relief bill in U.S. history, The bill builds upon earlier versions of the CARES Act and is intended to be a third round of federal government support in the wake of the coronavirus public health crisis and associated economic fallout, succeeding the
in public health support passed two weeks ago and the
Family First Coronavirus Response ACT
. It is the product of negotiations between Democrats and Republicans for a bipartisan response to the crisis.
House leaders had hoped to pass the sweeping measure by a “voice vote” that would not require members to show up in person. Those who wanted to could come to the Capitol to speak in favor of or against the legislation.If they used a “voice vote,” members in quarantine or who simply did not want to travel would not have to do so. But Rep. Thomas Massie (R-Ky.) threatened to raise procedural objections that would require a majority of the House to be present to quash, and so on Thursday evening leadership in both parties began urging members who could do so to return to Washington in order to have the numbers to overcome whatever objection Massie might raise. For several hours after the House opened at 9 a.m. Massie sat in the back of the chamber without indicating how he planned to proceed -- even after President Trump unloaded on him over Twitter, calling him a “grandstander” who should be ejected from the Republican Party.
The House often passes bills by unanimous consent without a quorum. Not this time. As Massie made his intentions clear, lawmakers of both parties began filing into the House chamber and public galleries in order to be able to establish a quorum -- or a majority of the House, in this case 216 members because of a few absences -- while also trying to maintain social distancing.Some New Yorkers returned to Washington even though the federal government has said people from that state should quarantine for 14 days after leaving.
His actions were widely criticized, so much so that even President Trump and former Secretary of State John Kerry
The House adjourned until next Tuesday, March 31
. Schedule still remains fluid but they will begin working on the framework for Phase 4. Reminder – the Senate is in recess until April 20
Congress is expected to convene after Easter to consider a
Coronavirus Phase IV bill. Senate Appropriations Chairman
(R-Ala.) said several times he wants a major infrastructure package. And a fourth bill could tie up loose ends if any lawmakers are unhappy with the details of the “phase three” package, Sen.
(R-Mo.) said on the floor yesterday.
“I’d say the minute we’re done with phase three, we’ll start talking about phase four because all of us know that phase three can’t have included everything that needs to be included,” Blunt said.
Negotiators should keep in mind that they’ll have another major piece of legislation that could include their ideas, and that this “moment is more important than everybody winning everything they’d like to win,” Blunt added.
White House Legislative Director Eric Ueland agreed that another piece of legislation will likely be needed, and said negotiators would decided its content after they “see what is helping, what’s working, what needs to be facilitated and expanded, what needs to be redirected.”
Friends, as you read the bill please know our Coronavirus Response team at Michael Best is standing by to assist you with this and previous relief provided. We have a product outlining all new financial options being offered by the government to assist you through this crisis. Let us know if you need assistance.
On behalf of the team, Denise Bode
· The CARES Act contains provisions that could directly provide a minimum of $2.742 trillion in near-term liquidity. The bill would also provide significant corporate tax relief that could be worth $100 billion or more, pushing the total amount of liquidity generated by the CARES Act alone to near $3 trillion.
· The key tax item is a five year net-operating loss (NOL) carryback for tax years 2018, 2019, and 2020. Through a technical fix, the NOL carryback is made available to pass-through businesses as well. The NOL carryback provides a refund from previously paid taxes. Such a refund would be particularly helpful in a year like 2020, when losses could be high.
· Treasury Secretary Steve Mnuchin said the CARES Act would facilitate up to $4 trillion in financing for U.S. business by leveraged lending from the Federal Reserve, backstopped by Treasury funding, as well as by Treasury loans and loan guarantees. The CARES Act is a big part of the Treasury story, but the CARES Act on its own provides impressive further liquidity from a combination of spending, tax deferral, tax relief, and small business lending.
COVID-19 response bill
now before the U.S. Senate could have a total direct price tag of over $2 trillion, providing a tidal wave of liquidity to support an economy in crisis.
note this bill linked is not the final, final version of the bill which will be provided when they get agreement on unemployment benefits).
The CARES Act is more about financial stabilization than fiscal stimulus, but it would create a torrent of liquidity pouring dollars into the economy through direct payments, tax credits, tax deferrals, loans, and loan guarantees. As Senate Majority Leader Mitch McConnell (R-KY) stated on the Senate floor this morning, “The $2 [or $3] trillion package that Congress is expected to pass this week should be thought of as ‘emergency relief’ and not a ‘stimulus’ measure.”
Also with financial stabilization in mind, the CARES Act gives the Treasury Department new authority to support the Federal Reserve’s 13(3) lending program, and it grants apparently unlimited powers for the FDIC to guarantee the debt of insured depository institutions and non-interest bearing transaction accounts. The CARES Act also would suspend the CECL accounting standard, which banks have said would hamper lending during a crisis. All of this points to increased lending, and a safety net for depositors and creditors beneath the institutions doing the lending.
Topline on Relief Provided:
Temporary deferral of (payroll tax) employer side social security contributions
: $720 billion. This is estimated at $60 billion per month for twelve months. Deferred taxes would be due half in 2021, and half in 2022.
Financial support to distressed businesses, state governments, and municipalities
: $500 billion($425 billion for loans to the Fed and $75 billion for industry loans). The Treasury Department would be authorized to make up to $500 billion in loans, loan guarantees, and investments. The Treasury could use part of these funds to support the Fed’s purchase of securities through its 13(3) lending program. Treasury loan guarantees could support total lending that is a multiple of the guarantees themselves.
and will include oversight from an inspector general and a congressionally appointed 5-person panel. Companies that receive government aid must agree to halt stock buybacks for the entire time they receive the aid, plus one year. Restrictions on employment cuts.
Special Purpose Vehicle (SPV) Lending Facility:
Treasury funds for corporate loans, Fed purchases of municipals & corporate bonds and secondary mortgage market
Distressed Grants/Loans for Industry:
· Airlines $50 billion
· Air Cargo $ 8 billion
· “National Defense” Boeing $17 billion
Emergency Small Business loans and Community Lendin
: $367 billion.
$350 billion of federally guaranteed loans would be offered through the Small Business Administration. Part of these loans would convert to grants.Would apply for those who keep their payrolls steady through the crisis. Small businesses that pledge to keep their workers would also receive cash-flow assistance structured as federal guaranteed loans. If the employer continued to pay its workers for the duration of the crisis, those loans would be forgiven.
$17 billion of community lending
Individual tax rebates
: $250 billion. Tax rebates of up to $1,200 per individual and $2,400 to couples, with $500 for every child. (See the Congressional estimate reported in The Hill.)
Expanded Unemployment Insurance
: $250 billion. The bill itself gives no indication of the total costs. It simply authorizes the Treasury to make such payments as are needed out of the general fund, and stipulates that “such sums shall not be required to be repaid.” However, the $250 billion estimate has been reported by Politico Pro (subscription required). The bill would extend unemployment insurance by 13 weeks and include a 4-month enhancement of benefits. It would allow workers to maintain their full salaries if forced out of work as as result of the pandemic.
Deferral of individual taxes
: $200 billion. The estimate is based on Congressional testimony by Treasury Secretary Mnuchin. This figure includes individuals and small business passthrough entities.
Deferral of corporate income tax (3 quarters
): $180 billion. The estimate is based on nine months of corporate income tax revenue to the government at $20 billion per month. (Note that tax deferral was in the original version of the CARES Act as introduced by McConnell.
: $150 Billion
· $100B in direct payments to Hospitals & Healthcare Providers to ensure healthcare providers continue to receive the support they need for COVID-19 related expenses and lost revenue.
· Expands Medicare accelerated payment program to allow hospitals (esp. rural hospitals) to request up to 6 month advanced lump sum payment (up to 100% of prior period payments – Critical Access Hospitals (CAH) can receive up to 125%. Hospital would not be required to start paying down loan for four months, and have at least 12 months to complete repayment without incurring interest.
· Delays DSH cuts (reimbursement rate to Disproportionate Share Hospitals) through November 30, 2020. Cuts were currently scheduled to take effect May 22, 2020.
· Temporary Repeal of Medicare Sequestration: For services rendered May 1 – December 31, 2020, Medicare Sequestration is lifted, resulting in 2% increase for ALL Medicare reimbursements.
Aid to State & Local Governments:
: $31 billion
· Education Stabilization Fund for K-12: $13.5 billion
· Education Stabilization Fund for Higher Ed: $14.25 billion
· Education State Flexibility Fund: $3 billion (both K-12 and Higher Ed - allocated based on state needs)
· Additional waiver authority for ESSA (K-12) requirements
· Defer student loan payments, principal, and interest for 6 months
· Defer payments on current HBCU Capital Financing Loans
· Additional waiver authority for Campus-Based Aid requirements
Corporate Tax Relief
The amount of corporate tax relief is $100 billion (rough estimate)The proposed tax breaks mostly have to do with reversing (only temporarily) or correcting changes made in the Tax Cuts and Jobs Act of 2017.
The main items are:
(1) net operating loss
(2) faster access to previously banked
alternative minimum tax credits
(3) an increase in the
deduction for business interest from 30% to 50%
of business interest
technical correction for qualified investment property (QIP), fixing the notorious “retail glitch”
in the 2017 tax reform bill.
The CARES Act would provide
five-year NOL carrybacks
for tax years 2018, 2019, and 2020. Since the year 2020 is likely to bring the largest corporate losses in U.S. history, the NOLs for 2020 could be unusually valuable. The NOL carrybacks would provide an immediate tax refund from prior tax years. A technical fix would allow pass-through entities to claim the NOLs as well. Meanwhile restaurants and retailers would be the main beneficiaries of the QIP fix.
.The 30% limit on interest expense raises $18 billion and $20 billion in 2019 and 2020 according to the same score. We extrapolate cautiously that increasing the deductible percentage of interest expense back to 50% for two years would cost the Treasury about $50 billion in total. We do not have enough data to estimate the value of QIP and the AMT tax credits, but they are sufficiently important issues to the business community that would judge them non-trivial in scale.
White House COVID-19 Updates:
How to Help
– If you or your organization is interested in helping the effort to combat the spread of COVID-19, FEMA has established a website (
) with more information. Examples for the private sector include:
- To sell medical supplies or equipment to the federal government, please email specifics to email@example.com.
- If you have medical supplies or equipment to donate, please provide us details on what you are offering.
- If you are a private company that wants to produce a product related to the COVID response – email firstname.lastname@example.org.
- If you are a hospital and other companies in need of medical supplies, contact your state Department of Public Health and/or Emergency Management.
- For non-medical supplies, services or equipment, if you are interested in doing business with FEMA, visit our Industry Liaison Program.
White House COVID-19 Updates
- President Trump, Vice President Pence, and Members of the Coronavirus Task Force Hold a Press Briefing (VIDEO)
- President Trump Approves Disaster Declarations in Florida, Iowa, Louisiana, and Texas
HHS Announces Grants to Provide Meals for Older Adults (
- Today, HHS is announcing $250 million in grants from the Administration for Community Living to help communities provide meals for older adults. The Families First Coronavirus Response Act, signed into law by President Trump on March 18, 2020, provided the additional funding for the nutrition services programs authorized by the Older Americans Act of 1965.
OCR Issues Guidance to Help Ensure First Responders and Others Receive Protected Health Information about Individuals Exposed to COVID-19
- The Office for Civil Rights at the U.S Department of Health and Human Services issued guidance on how covered entities may disclose protected health information about an individual who has been infected with or exposed to COVID-19 to law enforcement, paramedics, other first responders, and public health authorities in compliance with the Health Insurance Portability and Accountability Act of 1996 Privacy Rule.
Secretary DeVos Directs FSA to Stop Wage Garnishment, Collections Actions for Student Loan Borrowers, Will Refund More Than $1.8 Billion to Students, Families
- Secretary DeVos announced today that, due to the COVID-19 national emergency, the Department will halt collection actions and wage garnishments to provide additional assistance to borrowers. This flexibility will last for a period of at least 60 days from March 13, 2020.
USDA Warns of Scams Targeting SNAP Recipients
- Be on the lookout for potential scammers using the COVID-19 situation to steal personal information, the USDA warned Supplemental Nutrition Assistance Program participants today. USDA is issuing this warning after receiving reports of several possible SNAP fraud attempts.
USDA Implements Immediate Measures to Help Rural Residents, Businesses and Communities Affected by COVID-19
- USDA Rural Development has taken a number of immediate actions to help rural residents, businesses and communities affected by the COVID-19 outbreak. Rural Development will keep our customers, partners, and stakeholders continuously updated as more actions are taken to better serve rural America.
DHS Initiating Crucial Research to Mitigate COVID-19
- DHS Science and Technology Directorate is conducting ongoing research that will help scientists better understand the coronavirus that causes the disease known as COVID-19, and methods to prevent its spread. In the Trump Administration’s whole of government effort, this work is being done at the National Biodefense Analysis and Countermeasures Center laboratory in cooperation with the DHS Countering Weapons of Mass Destruction Office.
Nearly 10,000 Guardsmen Called Up for COVID-19 Response
- Nearly 10,000 National Guardsmen called up across the United States, with more expected soon, are performing a variety of missions in response to COVID-19 pandemic response efforts.
Efforts Underway to Increase Sterilization Capacity in Response to the COVID-19 Pandemic
- The EPA is providing an update on efforts underway with the Georgia Environmental Protection Division to safely and quickly increase production at sterilization facilities in the cities of Covington and Madison in response to the dramatically increased need for sterile medical equipment during the COVID-19 response.