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Here Is What’s in the Senate GOP’s $1 Trillion ‘Heals Act’ Package

Submitted by ckanon@abi.org on
Senate Republicans on Monday unveiled an approximately $1 trillion stimulus package that Majority Leader Mitch McConnell (R-Ky.) has said will likely represent lawmakers’ last major legislative response to the coronavirus pandemic, The Washington Post reported. Senate Republicans’ legislation, titled the “Heals Act,” is expected to kick off negotiations with congressional Democrats, who have already vowed to oppose many of the provisions in the Republican plan. House Democrats in May approved a $3 trillion coronavirus response package that sharply diverges from McConnell’s bill in key ways, leaving the path toward a final compromise unclear on many key questions. The GOP legislation left out some White House priorities, such as the president’s demand for a payroll tax cut, but includes more than $100 billion for America’s schools; a liability shield to protect businesses from coronavirus-related lawsuits; another round of direct stimulus payments; a new round of funding for the Paycheck Protection Program, as well as more money for emergency business loans; and a reduced extension of emergency federal unemployment benefits, among other measures. The legislation is also notable for what it leaves out, as the GOP opted against including new funding for state and local governments and hazard pay for essential front-line workers, among other policies pushed by congressional Democrats. “The pandemic is not finished — the economic pain is not finished — so Congress cannot be finished, either,” McConnell said. The article gives a rundown of the key components of McConnell’s bill — and how they compare to what House Speaker Nancy Pelosi (D-Calif.) has approved.
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Legislation
Covid19
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11 Million Households Could Be Evicted Over the next Four Months

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Every year, about 2.3 million American renter households receive eviction papers at some point. During the COVID-19 pandemic, we might see that many evictions in one month, Fast Company reported. Global advisory firm Stout, with input from the National Coalition for a Civil Right to Counsel (NCCRC), used census survey results and income data to develop a new eviction estimation tool that estimates how many households could be at risk of eviction as moratoriums end, courts reopen, and rent relief efforts fall short. More than 16 million renter households are at risk of eviction, according to the tool, and more than 11 million households could be served with eviction papers over the next four months. Since April, weekly census surveys have been asking Americans if they paid their last month’s rent on time and how confident they are that they’ll be able to pay next month, along with questions meant to assess employment status, food security, and other impacts of the COVID-19 pandemic. The Stout eviction estimation tool combines that with data about how rent-burdened Americans are by income level. With a heavier rent burden, there’s a greater chance that someone’s answer of having “moderate confidence” or “no confidence” that they can pay rent will actually translate to an eviction or more rent instability. In most of the U.S., there’s no right to counsel for housing court; on average, 90% of landlords are represented in court, but only 10% or less of tenants are, which Pollock says skews how likely tenants are to win eviction cases.
Article Tags
Legislation
Consumer Debt
Covid19
Real Estate
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PPP Was Intended to Keep Employees on the Payroll, but Workers at Some Big Companies Have Yet to Be Rehired

Submitted by ckanon@abi.org on
If the name of the Paycheck Protection Program (PPP) didn’t make its purpose clear, its key sponsors spelled it out, The Washington Post reported. Sen. Marco Rubio (R-Fla.) explained that the program “was designed as an alternative for unemployment and to prevent unemployment.” But a closer look at three large companies that received millions from the $517 billion program shows that some companies have not retained most of their staff on the payrolls. The Fairmont Grand Del Mar in San Diego, a luxury hotel owned by a group led by Richard Blum, a private-equity chief and the husband of Sen. Dianne Feinstein (D-Calif.), received $6.4 million from the PPP. The hotel has been closed and most of its hundreds of workers are unemployed and unpaid. To maintain their health insurance, workers send money back to the company. A large group of restaurant companies operating under the umbrella of Orlando, Fla.-based Earl Enterprises similarly received loans in amounts ranging from $26 million to $54 million, but in the places most affected by the coronavirus pandemic, the restaurants employ only limited crews. The rest of the staff is unemployed and unpaid, employees said. The companies say that they can’t rehire many people because they can’t fully reopen properties when a government pandemic order limits guests. But their decisions to withhold the money from payroll have left employees to rely on government unemployment checks, which in some states have been difficult to obtain and, for many, will soon stop when the benefit expires. Other furloughed employees are getting kicked off company health insurance because employers are not funding their premiums.  What portion of the PPP has gone to affected employees is unknown. The Trump administration has said that 51 million jobs were “supported” by the program, but a Washington Post analysis of data on 4.9 million loans shows that the Small Business Administration reported that many companies had “retained” more workers than the companies said they employed. Academic efforts to examine whether the program boosted employment have shown mixed results.
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Legislation
Covid19
Labor/Employment
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Dollar on Course for Worst Month in Almost a Decade

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The dollar is on track to close out its worst month since April 2011 as a rise in coronavirus infections across the U.S. threatens to damp the economic recovery and keep low interest rates in place for longer, The Wall Street Journal reported. The ICE U.S. Dollar Index, which measures the greenback against a basket of other currencies, weakened 0.8% Monday to its lowest level since June 2018, according to FactSet. Investors have sold the dollar and bought currencies of countries with lower infection levels in recent weeks. That has erased 3.8% of the currency’s value in July, putting it on track for its worst one-month performance in over nine years. The recent surge in cases in parts of the U.S. has prompted local authorities to halt or rewind plans to let business activity resume, raising doubts about the prospects for the economy. California, Texas and Florida, which are among the hardest-hit states, together account for more than a quarter of U.S. gross domestic product. New claims for unemployment benefits, which offer a view on the health of the labor market, last week climbed for the first time in four months, suggesting that the recovery may be faltering. Weekly applications, which surpassed six million in the last week of March, had previously fallen as government-support programs and the gradual reopening of economies allowed employers to keep staff on payrolls and bring workers back. Investors are betting that the Federal Reserve will offer a gloomier outlook for the economy following a two-day meeting that ends Wednesday. Fed officials have already warned this month that the economy faces a deeper downturn and more difficult recovery if the country doesn’t take more effective action to slow the spread of the virus. The dollar selloff has been accelerated by the Fed’s decision to slash interest rates to near zero.
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Covid19
Finance and Banking
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Opinion: The Media's Portrayal of Small Businesses Closing Is Insulting

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Recently, Lending Tree published a report that gravely warned as many as 40% of small businesses have less than a month’s worth of cash and that, without government help, “are in danger of shutting down” — 40%! Even if a third of the 30 million small businesses in this country shut down (Lending Tree’s range was 24% to 40%) that would be like 10 million businesses going bust, according to an op/ed published by The Washington Times. That sounds terrifying until you look at this 2016 report by JP Morgan Chase, which revealed that the typical small business — even in growing economic times — normally has only 27 days of cash on hand. Not only that, but the JP Morgan Chase study assumed no future revenues, which is a lot worse of a scenario than today’s reality. So what’s up with this? A representative from Lending Tree admitted that “there isn’t typically a ton of businesses closing en masse,” but, he wrote back to me that “what is interesting now is that business revenues plummeted in March and April, and as of yet still have not recovered. That suggests businesses may need to pay their bills by other means.” What means could that be? Ah-hah! Maybe financing from Lending Tree? Also misleading is when academics make sweeping statements like the one made by a University of Connecticut economics professor where he literally predicts that giant corporations may be the “only survivors” in the post-pandemic economy. Yes, that’s right folks: All 30 million small businesses will be wiped out. 
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Covid19
Small Business
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Sycamore Partners Offers $1.75B for JCPenney with Plan to Grow Belks

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The private-equity firm that backed out of a deal to buy Victoria’s Secret in the midst of the coronavirus pandemic appears poised to win an auction to buy JCPenney out of bankruptcy, The New York Post reported. Sycamore Partners has offered $1.75 billion to buy the 118-year-old department store chain with plans to merge it with Belks. Sycamore sees JCPenney helping to revive Belks, a struggling department store chain with 300 stores located mostly in the South. Sycamore owns Belks, as well as retailers Talbots, Staples and The Limited. Also in the running for JCPenney is Saks Fifth Avenue owner Hudson’s Bay Company, which offered $1.7 billion, and mall operators Simon Property and Brookfield Property, which have teamed up with a $1.650 billion offer. While the deal is still subject to approval from the court as well as from JCPenney’s lenders, creditors and board, Sycamore has been in the lead since bids were due on July 22.
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Covid19
Retail
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Lynn Tilton Is Suing Small Companies She Once Led for $30 Million

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Turnaround executive Lynn Tilton is suing troubled small businesses she once ran, after stepping away from leading them as the COVID-19 pandemic tore through the economy, The Wall Street Journal reported. Tilton has filed lawsuits in New York against metal refiner Libertas Copper LLC, employment agency Snelling Holdings LLC, shower-curtain maker Glenoit Universal Ltd., game-controller maker FSAR Holdings Inc. and 11 other companies that she had managed for years. In the aggregate, the complaints are seeking more than $30 million in management fees, tax distributions and indemnity from the companies, which can’t pay their lenders. For years, Tilton collected millions of dollars in fees from what was known as the Patriarch portfolio of companies, a collection that included more than 75 businesses, according to the website of Patriarch Partners LLC, Tilton’s management affiliate. Some companies in the portfolio, such as fire-engine maker American LaFrance and fabric maker Duro Textiles, shut down, with or without the benefit of bankruptcy. Other companies, and their debts, were combined, and it is unclear how many businesses remain in operation.
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Covid19
Small Business
Turnaround Issues
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Florida Man Fraudulently Obtained $3.9 Million in PPP Loans and Used Some to Buy Lamborghini

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A Florida man has been arrested and is facing charges after federal prosecutors say he “fraudulently” obtained nearly $4 million in Paycheck Protection Program (PPP) loans and used some of the money to buy a Lamborghini sports car, The Hill reported. David Hines of Miami was charged with one count of bank fraud, one count of making false statements to a financial institution and one count of engaging in transactions in unlawful proceeds, the Department of Justice (DOJ) announced. The office said a complaint filed against he man alleges he fraudulently obtained $3.9 million in PPP loans, which were intended to help support small businesses and other organizations hit by the COVID-19 pandemic, after initially seeking roughly $13.5 million in PPP loans “through applications to an insured financial institution on behalf of different companies.” After being approved for a fraction of the amount by a financial institution, he allegedly spent roughly $318,000 on a 2020 Lamborghini Huracan sports car and registered the vehicle in his name and the name of one of his companies. The department said authorities seized the sports car and $3.4 million from bank accounts at the time of Hines’ arrest.
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Fraud
Covid19
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White House, Senate GOP Try Again on $1 Trillion Virus Aid

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Suggesting a narrower pandemic relief package may be all that’s possible, the White House still pushed ahead with Monday’s planned rollout of the Senate Republicans’ $1 trillion effort as House Speaker Nancy Pelosi assailed the GOP “disarray” as time-wasting during the crisis, The Associated Press reported. The administration’s chief negotiators — White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin — spent the weekend on Capitol Hill to put what Meadows described as “final touches” on the relief bill Senate Majority Leader Mitch McConnell is expected to bring forward Monday afternoon. “We’re done,” Mnuchin said as he and Meadows left Capitol Hill on Sunday after meeting with GOP staff. But looming deadlines may force them to consider other options. By Friday, millions of out-of-work Americans will lose an $600 federal unemployment benefit that is expiring and federal eviction protections for many renters are also coming to an end. With the virus death toll climbing and 4.2 million infections nationwide, the administration officials converged on the Capitol to revive the Republican package that unraveled last week. Republican senators and the White House are at odds over various items, including how to cut back the jobless benefit without fully doing away with it. Meadows said as the White House was “looking for clarity” on a “handful” of remaining issues with Republicans, but they had yet to talk to McConnell. “We have an agreement in principle,” he said.
 
In related news, House Speaker Nancy Pelosi said members of Congress wouldn't return to their home districts without first passing new coronavirus relief legislation as provisions like the federal eviction moratorium and the $600 weekly increase to unemployment benefits end this month, Business Insider reported. "Will you stay in session until a deal is negotiated?" Margaret Brennan, moderator of "Face the Nation," asked. "We can't go home without it," the California Democrat responded. Lawmakers are currently scheduled to return to their home districts at the beginning of August for the entire month, meaning time is running out for legislators to extend or replace expiring coronavirus benefits. "We've been anxious to negotiate for two months and 10 days when we put forth our proposal," Pelosi said. Read more.
 
Meanwhile, Sen. Ted Cruz (R-Texas) accused House Speaker Nancy Pelosi and House Democrats of pushing a coronavirus relief package that focuses on "shoveling cash at the problem and shutting America down" as negotiations on the next measure continue, CBS News reported. In an interview with "Face the Nation,” Sen. Cruz said that the nation is confronting two crises simultaneously: a global pandemic that has claimed the lives of more than 600,000 people worldwide and an "absolute economic catastrophe" in the U.S. But Cruz said Pelosi is "focused on neither of those." "Her objectives are shoveling cash at the problem and shutting America down," he said. "And in particular, you look at the $3 trillion bill she's trying to push, it's just shoveling money to her friends and not actually solving the problem. Our objective should be Americans want to get back to work. They want to be able to provide for their family." Read more.
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Legislation
Covid19
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40 Million Americans Face Student Loan Cliff

Submitted by ckanon@abi.org on
The federal government’s emergency relief for more than 40 million student loan borrowers is set to expire at the end of September, amid sky-high levels of unemployment and an overall economy still stifled by rising coronavirus cases, Politico reported. The looming end of the benefits also comes with a clear political dilemma in an election year: Unless Congress or the Trump administration intervenes, the Education Department will demand monthly loan payments from tens of millions of borrowers in October, just before they head to the polls. The department is already preparing to send warnings to borrowers, starting Aug. 15, about the expiration of their benefits. Both Republicans and Democrats have touted the student loan relief, which was included in the CARES Act in March, to their constituents over the past several months. But it’s not yet clear whether they will come to a bipartisan agreement in the coming weeks on what to do when the sweeping reprieve for borrowers comes to an end. Congress is now debating ways to avert the student loan cliff in October as it begins negotiating another economic rescue package. Lawmakers are already poised to blow past deadlines to extend other benefits in the CARES Act, such as expanded unemployment payments and protections from housing evictions. The expiration of the student loan benefits hasn’t been as prominent in the debate over the next stimulus bill — and it’s far from clear whether or how both parties would come to an agreement.
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Consumer Debt
Covid19
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