Two key Republican senators on Monday introduced legislation that would authorize $28 billion in payroll assistance to avoid thousands of airline industry layoffs set to begin Oct. 1, Reuters reported. Sens. Roger Wicker, who chairs the Commerce Committee, and Susan Collins, who chairs the appropriations subcommittee overseeing airline issues, introduced the measure that would grant airlines a new bailout days before existing payroll support runs out. The bill would tap $11 billion in new funds and $17.4 billion in funding repurposed from other unspent funds from prior coronavirus relief measures.
White House Chief of Staff Mark Meadows met with major airline chief executives yesterday as the industry braces for thousands of job cuts in two weeks, and urged lawmakers to embrace a $1.5 trillion coronavirus aid package proposed by a bipartisan congressional group and endorsed by President Donald Trump, Reuters reported. Meadows told reporters “if (House) Speaker (Nancy) Pelosi was willing to move a bill to keep people from being laid off in the airline industry that’s stand-alone, that the president would certainly support it.” But congressional aides say that it is unlikely that Congress would agree to a stand-alone bill to assist airlines when so many other sectors are struggling and seeking assistance. “The needs have only grown. Some of the needs for the small businesses, needs for restaurants, needs for transportation and the rest,” Pelosi said yesterday. Other transportation sectors are also seeking billions of dollars in new bailout funds, including public transit, bus companies and the Amtrak passenger rail service. Meadows said that the administration had examined executive action options, all of them less than ideal. Airlines did not offer a new proposal but again made the case that helping avert airline job cuts was one good reason to pass a broad coronavirus relief bill.
Lawmakers are aiming to unveil today a bipartisan spending bill averting a government shutdown next month, but Democrats and Republicans remain at an impasse over another round of coronavirus relief despite President Trump’s renewed interest in a deal, the Wall Street Journal reported. House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin agreed earlier this month to pass a short-term spending bill to keep the government running when its funding expires on Oct. 1. Lawmakers and aides said that they were finishing up discussions yesterday on a bill they planned to introduce midday today that would keep the government funded likely into mid-December. Democrats had hoped to extend its duration into 2021, but didn’t intend to derail talks over its end date, aides said. The bill is expected to be introduced in the House, but will reflect a bipartisan agreement between both chambers.
President Donald Trump said that he was open to more stimulus spending for pandemic relief in stalled talks with congressional Democrats, Bloomberg News reported. Trump, at a White House press conference yesterday, said that he liked “the larger numbers” in a compromise $1.5 trillion stimulus proposal from a bipartisan group of House lawmakers that was an effort to break a months-long deadlock over bolstering the U.S. economy amid the coronavirus pandemic. The plan from a 50-member group of House Democrats and Republicans has a bigger total spending figure than the administration previously endorsed. It’s also higher than what Senate GOP leaders say would be acceptable to Republicans. But Trump, on Twitter earlier yesterday, urged Republican lawmakers to accept a higher level of spending than the last proposal made by the Senate GOP. After initially proposing a $1 trillion stimulus at the end of July, Senate Republicans attempted to advance a bill providing $650 billion in economic aid, without the direct payments to individuals that the president — and Democrats — want.
Many House Democrats are raising pressure on party leaders to break the logjam with the White House on coronavirus aid, eager to pass a bill before Election Day even with further concessions to Republicans, the Wall Street Journal reported. There is no vote on coronavirus-related aid scheduled for the House’s current three-week session. Anxious Democratic lawmakers, including incumbents defending competitive seats, want negotiators to return to the table to strike a deal before Congress takes a monthlong break for campaigning. Moderate Democrats have sent letters to their leadership, encouraging House Speaker Nancy Pelosi (D- Calif.) to resume negotiations with the White House. Pelosi has held firm that Democrats should support an expansive package that includes money for state and local governments, schools and extends unemployment assistance and food programs. The top two House Democrats, who are rarely at odds, are in disagreement about the next steps. House Majority Leader Steny Hoyer (D-Md.) has expressed a desire to be more flexible on negotiations and pass legislation during the September session, according to aides. Democrats currently have 232 seats in the House, compared with 198 for Republicans and one independent. Pelosi had told White House negotiators she would come down to $2.2 trillion on a bill and hasn’t ruled out a deal. Some Democrats have said that they would be willing to discuss a smaller package, potentially moving closer to the $1.5 trillion the White House has said it could accept. Last week, Senate Democrats blocked Senate Republicans’ whittled-down $300 billion coronavirus aid package, which included $300 in weekly federal jobless payments and aid for small businesses among other items. Even the most impatient Democratic lawmakers don’t see value in taking up the Senate bill, citing the need for more money for state and local governments, public schools and people facing food insecurity that the Senate bill left out. Read more. (Subscription required.)
In related news, JPMorgan Chase & Co. Chief Executive Jamie Dimon said the economic recovery from the coronavirus recession could be derailed by a lack of additional economic stimulus, the election and a second wave of infections, Reuters reported. Dimon made the comments on Friday to stock analyst Brian Kleinhanzl of Keefe, Bruyette & Woods, who wrote about their meeting in a report. Dimon added that earlier government stimulus had delayed the full effects of the recession. As it hits, customers who have borrowed from the banks will feel the impact, the note said. Consumers are spending less. “Based on their data it is unclear if that trend is getting better or worse,” Kleinhanzl wrote. Read more.
Investigations of possible fraud in the federal Paycheck Protection Program are prompting some loan recipients to seek legal counsel, some lawyers say, the New Jersey Law Journal reported. Some of those cases involve clear-cut allegations of fraud, along the lines of the New Jersey lawyer charged earlier this month with fraudulently obtaining $9 million in PPP loans. But many investigations appear to focus on the more nebulous issue of whether the businesses really needed the money, lawyers said. Defense lawyers say they are getting calls from PPP loan recipients who have been contacted by investigators, or fear they may face charges in connection with the aid program. “What people don’t understand is that there is tremendous political pressure to get the money out the door,” said Christopher Porrino, chairman of the litigation department at Lowenstein Sandler. Knowing whether a PPP recipient will face trouble for taking aide it didn’t need is difficult, Porrino said. Applicants were required to certify that they needed the money to make payroll, “a pretty mushy standard,” he said. Adams said the PPP application process was fairly simple, although the specific requirements changed repeatedly while applications were being taken. The Small Business Administration, which runs the PPP program, apparently did not conduct a lengthy review of each application due to a desire to distribute the funds promptly. “If you sacrificed the speed at which this relief went out to the public for greater due diligence and verification, you may exacerbate an economic collapse. The speed at which this went out helped these businesses,” Adams said. Timothy Anderson, a criminal defense lawyer in Red Bank, said Congress made the application process “as easy as possible,” and when applicants made representations about their finances, “took their word for it.” In making the process so easy, though, the government “assumed a certain amount of fraud,” said Anderson. Read more.
In related news, U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell will testify on Sept. 24 before the Senate Banking Committee on coronavirus relief, the committee said in a statement yesterday.
Business groups are throwing their support behind a pandemic insurance bill modeled after a post-9/11 law that created a federal backstop for claims related to acts of terrorism, The Hill reported. The Pandemic Risk Insurance Act, much like the 2002 Terrorism Risk Insurance Act (TRIA), would provide compensation for losses resulting from pandemics or public health emergencies. But unlike TRIA, which had broad bipartisan support and was reauthorized as recently as 2019, the pandemic measure introduced by Rep. Carolyn Maloney (D-N.Y.) has garnered little to no support from Republicans, despite widespread backing from the business community. The legislation has support from the National Retail Federation, International Franchise Association, the U.S. Travel Association and several insurance industry groups. Maloney’s measure, introduced May 26, would create a system of public-private compensation for pandemic-related losses. Unlike the COVID-19 liability shield sought by Senate Republicans, her bill would not be retroactive. Read more.
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Rep. Kevin Brady (Texas), the top Republican on the House Ways and Means Committee, introduced legislation on Friday that would create a payroll tax holiday from Sept. 1 through Dec. 31, an effort aimed at forgiving the taxes deferred under a memo President Trump signed last month, The Hill reported. The bill would reduce the 6.2 percent employee-side Social Security tax to zero in the last four months of this year, and would also implement a similar tax cut for self-employed people. To prevent the holiday from hurting the Social Security trust fund, the bill would make transfers to the fund from the general fund. Trump signed a memo that resulted in the IRS issuing guidance late last month under which employers can stop withholding Social Security payroll taxes from workers' paychecks from Sept. 1 through Dec. 31. The employers currently have to recoup the deferred taxes by increasing the amount held from workers' paychecks in the first four months of next year.
More than 225,000 PPP loans worth nearly $23 billion were approved in Illinois alone. Without additional federal relief, some experts project a flood of small-business bankruptcies this fall as the PPP money runs dry, the Chicago Tribune reported. “The PPP money kept people out of bankruptcy this summer,” said Brian Shaw, a bankruptcy attorney at Cozen O’Connor in Chicago. “You’re going to see a wave of closures after Labor Day. Businesses just are not going to be able to continue.” The Small Business Administration wrapped up the PPP Aug. 8 after approving more than 5.2 million loans totaling $525 billion. The program, which was tweaked several times after its April launch, offered businesses with fewer than 500 employees forgivable loans of up to $10 million, if 60 percent of the money went toward payroll. Part of a broader coronavirus relief package, the $659 billion paycheck program has been beset by problems. It initially came under fire after banks allegedly prioritized larger clients ahead of smaller businesses. Extended for a second round, demand for the loans fell off, leaving about $130 billion of funds on the table. A Sept. 1 House subcommittee report found that billions of dollars in PPP loans may have been diverted to “fraud, waste and abuse” through lack of oversight from the SBA and the Treasury. The loans covered 24 weeks of payroll, but with no end in sight to the pandemic, the money is looking increasingly like a bridge loan to nowhere. “I think you’re going to see the wave of bankruptcies in September for reasons totally separate from the PPP loan,” said Tom Salerno of Stinson.. “You’re going to see it because they’ve got to right-size their balance sheet anyway. They’ve got to renegotiate their leases. They’re going to want to take whatever long-term debt they have and dig themselves out of this hole.” For some small businesses, getting a PPP loan and then filing for bankruptcy may have been the plan all along. The SBA barred bankrupt companies from applying for PPP loans, causing banks to deny applications and precipitating dozens of lawsuits by small businesses. The policy was ultimately upheld by the U.S. Court of Appeals in New Orleans.
Senate Republicans were confident yesterday that most GOP colleagues would vote to support a narrower coronavirus aid package, a move aimed to highlight party unity as lawmakers grew increasingly pessimistic about any deal with Democrats before the election, the Wall Street Journal reported. The GOP’s $300 billion scaled-back version of their earlier $1 trillion stimulus plan includes jobless aid, liability protections for businesses and school funding, among other measures. But facing Democratic opposition, the “skinny” bill wasn’t expected to clear its first procedural hurdle in the Senate today or spur any immediate breakthrough in stalled negotiations with Democratic leaders and the White House. Senate GOP leaders hadn’t held a vote on their earlier proposal, which divided Republicans. The less-expensive bill, which lawmakers said should bolster vulnerable party senators during the final stretch of fall campaigning, is expected to get support from at least 51 GOP senators. Republicans currently have a 53-47 majority in the Senate, but control is seen as up for grabs in the November election. Democrats have said the earlier GOP plan came up short of the needs raised by the pandemic’s health and economic effects, and the new one even more so. The new bill includes about $650 billion in spending, offset by $350 billion in savings elsewhere for a total cost of around $300 billion, according to GOP aides. The new GOP bill includes $300 in weekly federal unemployment payments through Dec. 27, establishes legal protections for businesses and health-care facilities, provides $29 billion in health-care funding, $105 billion for schools and permits the U.S. Postal Service to not repay a $10 billion loan set up in a previous aid package. It also includes a second round of the popular Paycheck Protection Program for businesses that have demonstrated a revenue loss. The proposed bill aims to resume assistance to small businesses under the PPP, which expired on Aug. 8. Under the plan, businesses with 300 or fewer employees can apply for a second PPP loan if they can demonstrate a reduction of at least 35% in their quarterly revenue from the same quarter in 2019. Such loans will be equal to 2.5 times the company’s average monthly payroll cost, with a maximum loan value of $2 million. As under the previous rule, at least 60 percent of the funds must be used on payroll. Read more. (Subscription required.)
With the Senate poised to vote today on a slender GOP coronavirus relief bill that’s certain to fail, chances for a bipartisan deal on new economic stimulus look more remote than ever. This impasse has prompted top White House officials to consider a new round of executive actions that they hope could direct funding to certain groups amid fears that the nascent economic recovery could fail to gain momentum, the Washington Post reported. White House officials have discussed efforts to unilaterally provide support for the flagging airline industry while also bolstering unemployment benefits, according to two people aware of the deliberations who spoke on the condition of anonymity to share internal policy discussions. The White House has also discussed moving without Congress to direct more money for school vouchers and changing President Trump’s recent payroll tax changes to make it more effective. Typically, such actions require congressional approval. In August, Trump signed four executive actions meant to provide more unemployment aid, eviction protections, student loan relief and to defer payroll tax payments. The moves have had mixed success and came as political talks faltered on Capitol Hill. Read more.
