%1

Americans have gotten $239 billion — and counting — from the IRS to help them ride out the coronavirus pandemic. Whether households get another round of $1,200 stimulus payments is tied to the increasingly partisan debate over how quickly the economy should reopen, the Wall Street Journal reported. Many Republicans, however, predict a rapid economic recovery as lockdowns end, and they say that government aid to households should now shift to focus more on incentives to work. They say that the stimulus payments provided so far have helped tide Americans over as the economy recovers. “Things are starting to pick up because this bridge to the other side that we built with the stimulus bill appears to be working,” said Kevin Hassett, President Trump’s economic adviser, last week. That view will carry weight as the Republican-controlled Senate considers the $3 trillion coronavirus relief package passed last week by the Democratic-controlled House. That bill, as a whole, is unlikely to become law, but pieces of it may survive. The House package included a second, larger round of payments. Individuals would again get $1,200 from the Internal Revenue Service, but the payment per child would rise to $1,200 from $500. Groups excluded from the first round would get money, including college students, adult dependents, and households with undocumented immigrants where not everyone has a Social Security number. Those payments to people who were initially excluded in the law that passed in late March would be retroactive, adding $23 billion to the original $293 billion size of the first round. Together with larger payments for dependents, the second round of stimulus would be worth $413 billion. “The $1,200 doesn’t go very far over six weeks, so we decided to build a more robust initiative this time around,” said Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee. Many House Democrats, seeing a slow return to normal and a protracted economic downturn, contend it is crucial to get money out again. They see fresh cash injections as a bridge to help families weather an uncertain economic future amid more waves of infections and deaths.

As the Democratic-run House of Representatives approved its $3 trillion coronavirus relief bill on Friday night, analysts are saying it’s likely that President Donald Trump will end up signing a new aid package into law next month or later following extensive negotiations, MarketWatch.com reported. The House’s 1,815-page bill, dubbed the HEROES Act, calls for almost $1 trillion in additional aid for state and local governments, a second round of direct payments to American households and $200 billion for “hazard pay” for essential workers. The measure also incorporates a cannabis-banking bill, and it would roll back a cap on state and local tax (SALT) deductions and make changes to the federal government’s new Paycheck Protection Program for small businesses, such as eliminating a rule that requires that 75 percent of a PPP loan’s proceeds go toward payroll expenses. “We expect that negotiations over a finalized version of the Phase 4 bill will take at least until the end of May,” said Height Capital Markets analysts in a note. “We expect a final package to come together successfully but note that passage will likely be delayed into June.” Henrietta Treyz, director of economic policy at Veda Partners, said in a note that the next package is likely to have a final price tag of between $1 trillion and $1.5 trillion, and “it will now come in June at the earliest.” Senate Majority Leader Mitch McConnell has repeatedly stressed moving slowly on the next package and often criticized the House Democrats’ approach. But the White House probably would support another round of direct payments, according to a CNBC report on Thursday citing two Trump administration officials. The next package would follow last month’s $484 billion measure that has been described as a “Phase 3.5” response to the coronavirus crisis. It also comes after the $2.2 trillion CARES Act that passed in late March, a mid-March package costing an estimated $192 billion, and an $8 billion measure that was finalized in early March. 

Fannie Mae and Freddie Mac extended their suspensions on mortgage foreclosures through at least June as U.S. homeowners continue to be hit hard by lost jobs and income amid the coronavirus pandemic, Bloomberg News reported. The two mortgage giants, which backstop about $5 trillion of home loans, won’t push for forced sales of properties on which borrowers have stopped making payments. Fannie and Freddie initially announced the halts on foreclosures in March, though the relief was set to expire May 17. “During this national health emergency, no one should be forced from their home,” Federal Housing Finance Agency Director Mark Calabria, the company’s regulator, said in a Thursday statement. Providing aid to mortgage borrowers has been a central element of the U.S. government’s response to the coronavirus economic crisis. As part of the $2 trillion stimulus bill passed in March, Congress allowed homeowners suffering through pandemic-related hardships to delay their payments for as long as a year if their loan is backstopped by Fannie, Freddie or a federal agency.

U.S. consumers have continued to pull back by record amounts on shopping and eating out due to coronavirus lockdowns aimed at containing the pandemic, April retail spending figures are expected to show today, the Wall Street Journal reported. U.S. retail sales, a measure of purchases at stores, gasoline stations, restaurants, bars and online, likely dropped by more than 12 percent in April from a month earlier, according to economists surveyed by the Wall Street Journal. That would eclipse an 8.7 percent drop in March sales, which was the steepest month-over-month decline in records dating to 1992. Social distancing, business closures, travel restrictions and other disruptions that started in mid-March have taken a particularly heavy toll on retail stores and restaurants, many of which remain closed or are opening gradually as states begin to reopen their economies. The Federal Reserve separately is expected to report Friday that industrial production — a measure of factory, utility and mining output, including oil and natural gas production — fell a seasonally adjusted 11.1 percent in April, which would be the biggest monthly drop in records dating back more than a century.

As the coronavirus crisis drags on and the timeline for a vaccine remains uncertain, U.S. households and small businesses are rapidly running out of money, according to new federal data released yesterday, the Washington Post reported. Low-wage workers who had little in savings to begin with have been some of the hardest hit by shutdowns at hotels, restaurants, stadiums, gyms, bars and many other businesses, Federal Reserve data show. As a result, many are struggling to pay their bills, even with government aid. It is a similar story for small businesses. About half will be out of cash within a month, according to a separate release from the Census Bureau. While the federal government has moved swiftly to provide emergency loans and grants to small businesses, many owners have told the Washington Post the grants came with too many strings attached. Others say they worry about taking on loans when they do not know how long they will be closed or operating at half-capacity.

Republicans universally rejected a $3 trillion stimulus measure drafted by House Democrats to bolster the U.S. economy, but the draft plan has the seeds for an eventual, smaller compromise, Bloomberg News reported. With House Speaker Nancy Pelosi (D-Calif.) pushing the House toward a Friday vote on the Democratic package, a Senate Republican aide said that Majority Leader Mitch McConnell (R-Ky.) doesn’t plan to move on any GOP alternative until June at the earliest. The framework for a compromise — probably still weeks away — likely will be built on state and local government aid, expanded tax breaks and legal protections for businesses and assistance for unemployed workers. There are several pressure points looming that will increase the stakes, including expiring pandemic unemployment insurance and Paycheck Protection Program provisions at the end of July, and the Sept. 30 ending of grant funding for airlines, as well as the fiscal year. Republicans are counting on the lifting of lockdowns in many states along with the previous stimulus money still flowing out to juice the economy enough that another big spending package won’t be necessary. That aligns them with President Donald Trump, who has said he’s in “no rush” for another stimulus package. Treasury Secretary Steven Mnuchin, who was a linchpin in the negotiations that produced the previous stimulus bills, dismissed the Democratic bill and said that both sides should spend the next 30 days assessing how well those earlier efforts are working. Federal Reserve Chairman Jerome Powell yesterday urged Congress to keep spending in order to avoid long-term damage. “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” he said. Read more.

The “Health and Economic Recovery Omnibus Emergency Solutions Act” (HEROES Act), introduced on May 12 by Rep. Nita Lowey (D-N.Y.), is the latest legislative spending package aimed at stabilizing the economy amidst the COVID-19 pandemic. In addition to providing funding for states, localities and territories to pay essential workers, conduct additional testing and provide an additional round of direct payments to households, the legislation has included a few bankruptcy provisions. According to the bill summary:

• Sec. 20104 protects Economic Impact Payments from any form of transfer, assignment, execution, levy, attachment, garnishment, legal process, bankruptcy or insolvency law, and any other means of capture prohibited for payments made under Chapter 7, Subchapter 2, of the Social Security Act.

• Section 90001 (c) makes a technical clarification to ensure that hospitals in bankruptcy still qualify for PPP loans due to the essential nature of their operations.

• Sec. 110203 extends and expands the eviction moratorium and foreclosure moratorium in the CARES Act to include all renters and homeowners, improves the forbearance provided under the CARES Act, and specifies the loan modifications and loss mitigation that should be available to homeowners following a moratorium to prevent any homeowner from facing a lump-sum payment that they cannot afford. Additionally, this section protects federal relief payments from being taken in bankruptcy proceedings, ensuring that homeowners in bankruptcy proceedings can participate in the mortgage forbearance program created by the CARES Act and other COVID-19 mortgage assistance; increases the amount of home equity protected in the bankruptcy process to $100,000; makes it easier for homeowners to exit bankruptcy so they can resume normal economic activity and continue paying off their mortgages; and opens up chapter 13 to more homeowners and small businesses by raising the limits for debt to qualify for a bankruptcy through chapter 13.

Click here for the bill text.

Click here for the bill summary.

One of the most progressive lawmakers in the House and one of the most conservative in the Senate, staring down a pandemic-driven unemployment rate at its highest level since the Great Depression, have come to the same conclusion: It’s time for the federal government to cover workers’ salaries, the New York Times reported. As Congress prepares to wage a new battle over how to best aid workers and businesses devastated by the coronavirus crisis, Representative Pramila Jayapal (D-Wash.) and Sen. Josh Hawley (R.-Mo.) are both making the case to their party’s leaders that guaranteed income programs should be part of the federal relief effort. Jayapal’s bill would cover workers’ salaries up to $90,000 for up to six months — allowing businesses to rehire furloughed and laid-off employees — and distribute grants to businesses to cover operating costs. It would cost $654 billion over six months and benefit more than 36 million workers, according to an analysis by Moody’s prepared for her office. Hawley has introduced a similar proposal mirroring the British government’s plan that would cover 80 percent of employers’ payroll costs up to the median wage, about $49,000 a year. A companion bill that Hawley introduced goes further, providing families and single parents making less than $100,000 with a monthly check for the duration of the crisis.

Negotiations on Capitol Hill over the next package of coronavirus economic relief have revived discussions about ending surprise medical billing, an effort to bolster patient protections that has sparked heavy spending by opponents who warn of damage to the health-care system, the Wall Street Journal reported. Surprise billing typically occurs when a patient is treated at a hospital that is in their insurance network by a medical professional who isn’t, potentially leading to crippling medical charges. The push to end surprise billing pits patient advocates and health-insurance providers, who back the effort, against hospital and medical groups who say it amounts to government rate-setting that would jeopardize the finances of some hospitals and mean out-of-network doctors earn less money. Lawmakers and the administration have already ensured that anyone without insurance getting treated for Covid-19, the disease caused by the new coronavirus, can’t get stuck with an unexpected medical bill — and advocates say that protection should be expanded to cover patients with any medical issue. But the pandemic’s effect on hospitals, especially rural hospitals that have halted the elective procedures that bring in much of their revenue, adds a complication to the debate, according to congressional aides. Moving to end surprise medical billing could cost hospitals more money just as they are already struggling. The top Republicans and Democrats on the Senate health committee and House Energy and Commerce panel have been pushing for almost a year to end surprise medical billing. They reached a rare, high-level bipartisan agreement in December, backed by President Trump, to end the surprise bills and include a new system in which insurers would pay at least an agreed-upon rate for services, and independent arbitration would settle billing disputes. But its supporters — chief among them the Senate health committee’s chairman, Sen. Lamar Alexander (R-Tenn.) — weren’t able to include it in a must-pass spending measure at year’s end, leaving its fate uncertain. Alexander is retiring at the end of this year and has made ending surprise medical billing one of his final goals.