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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.

The Treasury Department on Friday made it slightly easier for small-business owners to avoid having to repay government-backed loans they took out under a program designed to keep them from laying off employees and permanently closing, the New York Times reported. Officials released a term sheet to guide borrowers on how to convert their Paycheck Protection Program loans into grants. The terms appeared to ease a requirement that businesses rehire a certain percentage of their employees in order to obtain forgiveness. But they did not do away with a requirement that many businesses found onerous: At least three-quarters of the money must be spent on payroll expenses and the rest on rent and utility bills. Many small businesses faced a quandary after receiving the loans: Despite having cash, they had to remain closed. There were plenty of expenses the money could go to, such as retooling their interiors to accommodate social distancing or making other, overdue payments. But the law said that they had to spend the money paying employees, even if there was no work for them to do. And when employees turned to state unemployment benefits — with an extra $600 a week injected by the federal government’s $2 trillion CARES Act package — many found it was financially better to be out of work than to return to work. Many small businesses were wondering whether the loans they had gotten would be forgiven after all or — in the worst case — whether the federal authorities would eventually accuse them of fraud. Friday’s guidelines said businesses that had to lay some employees off and were unable to rehire them could still get forgiveness as long as the layoffs occurred early on during the lockdowns. Combined with a safe-harbor provision that frees businesses that took out smaller loans from the worry of an audit, the guidance could solve a significant problem for many owners. Earlier this week, federal officials said they would take business owners at their word for loans under $2 million. Read more. 

In related news, lawmakers and government officials are preparing to make significant changes to the Paycheck Protection Program, amid cooling demand for government-backed loans and criticism from business owners who say they can’t tap the funds, the Wall Street Journal reported. The changes are likely to include giving businesses more flexibility to spend the money, according to lawmakers and others following the deliberations. Under the original terms, 75 percent of the funds were required to be spent on employee salaries for the loans to be forgiven. The government also is expected to extend the time to spend the loan money beyond the two months it originally set. Both changes follow complaints from restaurants, hair salons and others who say they can’t hire back staff while they are closed during the coronavirus pandemic and need more money to cover their overhead costs. The steps being considered will mean a shift in the program’s focus — from one that was primarily aimed at keeping employees on the payroll, to also helping to keep small businesses from failing. Change is being driven in part by cooling demand for loans, which business advocates say reflects an inability of companies to use the money. The initial tranche of $350 billion in loans ran out April 16, after about two weeks. But three weeks after the second $310 billion tranche of funding was opened up, about 37 percent of the funds remained available, according to figures on the SBA website. “Liberalizing the rules by lowering the requirement to spend 75% on payroll-related costs and/or extending the time frame that funds can be used is critical for the survival prospects of millions of small businesses, and the ultimate success of this program,” said Ann Marie Mehlum, a former top SBA official and senior adviser at FS Vector, a financial advisory firm. Read more. (Subscription required.) 

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. 

The White House has threatened to veto a $3 trillion coronavirus relief bill that House Democrats hope to bring up for a vote on Friday, UPI.com reported. Known as the HEROES Act, the legislation Democrats unveiled on Tuesday aims to funnel money to state and local governments to address issues that were not included in previous measures and increase funding for the U.S. Postal Service. Since it was announced, Republicans have balked at the package, deriding it as a partisan move filled with expenses unrelated to the coronavirus pandemic, a notion the White House repeated Thursday in its letter to the House of Representatives. "This proposed legislation, however, is more concerned with delivering on longstanding partisan and ideological wishlists than with enhancing the ability of our nation to deal with the public health and economic challenges we face," the Trump administration said. "If H.R. 6800 were presented to the president, his advisors would recommend that he veto the bill." In late March, President Donald Trump signed a more than $2 trillion COVID-19 bailout package, and Senate majority leader Mitch McConnell, R-Ky., said instead of working on a new bill focus should now be on maximizing the effects of the first package. "We now have a debt the size of our economy," McConnell said. "So I've said, and the president has said as well, that we have to take a pause here and take a look at what we've done."