“Job One” for Congress: What to Expect in the Next COVID-19 Relief Bill

Yet, while the 2020 general election left congressional negotiations at a standstill, a surge in COVID-19 cases has elevated a second stimulus package to the first priority in the lame-duck sessions. A day after winning his reelection bid, Senate Majority Leader Mitch McConnell said an economic stimulus bill is “job one.” President-Elect Biden has also encouraged quick action to provide relief to businesses and individuals suffering from the effects of the pandemic in his Emergency Action Plan to Save the Economy.

Competing Proposals: the HEALS Act, the HEROES Act and the White House Plan

The Democratic-majority House of Representatives passed the first $3.4 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act on May 15, 2020. In response, on July 27, 2020, Senate Republicans introduced a series of eight bills (S4318, S4317, S4319, S4320, S4321, S4322, S4323, S4324) estimated at $1.1 trillion and collectively named the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act.

Further, on October 1, 2020, the House passed a revised $2.2 trillion version HEROES Act, shaving $1.2 trillion from the original version.  

On October 9, 2020, Treasury Secretary Steven Mnuchin presented a $1.8 trillion offer to House Speaker Nancy Pelosi, an increase from the previous $1.6 trillion proposal and the largest offer from the Trump administration to date.

The President-Elect has outlined several measures of his own to complement the HEROES Act that aim to support U.S. companies. His central plan calls for “at least” $370 billion in new funding and federal loans to be made available for small businesses, while potentially using the Defense Production Act to compel additional bank lending. The incoming administration also supports a larger role for federal government in spurring rehiring through a “restart package” that includes funds to help retain and rehire workers, as well as grants to help small businesses adapt pandemic conditions. To offset the cost of such relief measures, the Administration would seek reduction of tax exemptions in the CARES Act such as the “Excess Business Losses” provisions.

Click here to see how the proposals compare on key provisions. 

What to Expect in Another Round of Funding

Senator McConnell’s comments suggest that a relief bill could be passed during the lame-duck post-election legislative session, possibly as part of a government funding bill, which will be necessary to avoid a government shutdown after December 11, 2020.

However, when individuals and businesses can expect additional funding will likely depend on several variables that are still up in the air: whether President Donald Trump will sign an agreed-upon bill and which party will control the Senate, which is unlikely to be decided until January.

In the meantime, there are signs the U.S. economy is hitting a rough patch several months into a partial recovery. As layoffs rise, economists are pushing for federal aid. At the National Association for Business Economics annual meeting, Federal Reserve Chair Jerome Powell commented, “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” and that “A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy,” which would be “tragic.”

What is clear, is that rather than one existing proposal becoming law over another, an agreed-upon package is likely to include some of the elements of each party’s legislation. Congressional Democrats would prefer that the $3.4 trillion HEROES Act passed by the House majority in May serve as the template for any comprehensive stimulus package, but it is highly likely that such a relief bill will need to be scaled back in price by at least half and paired with policy positions favored by Republicans to have any chance of enactment. Any such bill would likely include stimulus payments of $1,200 to most Americans, increased unemployment benefits, a renewal of the Paycheck Protection Program for small businesses, and funding for COVID-19 testing and tracing, though the devils will be in the details as to how each of those elements are formulated and negotiated.  

Democrats would also like to see significant new aid to state and local governments (including direct funds to replace revenue lost as a result of the pandemic, which Republicans generally oppose as “bailouts”), boosting Social Security payments by $200, student debt forgiveness and other protections for both individuals and businesses. In turn, Republicans will be clamoring for legislative provisions that provide liability protection for businesses and building owners related to the pandemic. It is likely that any deal reached by Republicans and Democrats either before or at the start of the Biden Administration will necessitate tradeoffs between the issues discussed below.

• Direct payments and PPP funding: all proposals seem to agree on the need for direct payments to taxpayers and an extension of PPP funding, though amounts and specifics are still in negotiation.
• Unemployment benefits: After CARES Act funding lapsed, President Trump signed an executive order for a $300 per week federal unemployment supplement. While Democrats have held firm on the CARES Act $600 per week supplement, Republicans propose a $300-400 addition to state benefits. The latest White House proposal includes $400. While Republicans fear that the $600 weekly benefit incentivizes recipients to remain out of work, Democrats see it as a lifeline for struggling families to survive the pandemic.
• State and local funding: Although this has been a key disagreement between existing proposals, Sen. McConnell recently signaled openness to funding for state and local governments. However, he also said he would like funding to be “done a little more skillfully than simply providing borrowed money for everyone regardless of their need.” The White House’s latest offer included $300 billion for state and local funding, despite the Trump administration calling the funding a bailout of Democratic-run cities. The latest HEROES Act sets aside $435 billion.
• Liability protection: McConnell has refused to pass a relief bill that does not include liability protection, stating “there’s no chance of the country getting back to normal without it.” House Speaker Nancy Pelosi said, “I think there is a balance that can be struck, but it isn’t the McConnell language.” Democrats have been opposed to proposed immunity from COVID-related litigation for corporations, claiming immunity will make it impossible to hold corporations accountable for unsafe practices.
• Testing, tracing and treatment: Treasury Secretary Steven Mnuchin said House Speaker Nancy Pelosi’s requirement for this funding would not “stand in the way,” of passing a bill, but the two have disagreed over the specific language for the funding.
• School and childcare: The amended HEROES Act allocates $182 billion for K-12, $39 billion for higher education, and $57 billion for childcare. Although diverging on the amount, school funding is also part of the HEALS Act and the Senate’s $500 billion bill which failed along party lines.

Pillsbury is carefully tracking the broad implications of the 2020 U.S. election, monitoring and analyzing the impact a new president, a changing Congress and forthcoming legislation will have on a wide range of industries. To read more of our policy insights, visit our Election Implications Resource Center.