More than half of the money from the Treasury Department’s coronavirus emergency fund for small businesses went to just 5 percent of the recipients, according to data on more than 5 million loans that was released by the government yesterday evening in response to a Freedom of Information Act request and lawsuit, the Washington Post reported. According to data on the government’s Paycheck Protection Program (PPP), about 600 mostly larger companies, including dozens of national chains, received the maximum amount allowed under the program of $10 million. Officials from the Treasury Department and the Small Business Administration (SBA) have argued that the program primarily benefited smaller businesses because a vast majority of the loans ― more than 87 percent ― were for less than $150,000, as of August. But the new data shows that more than half of the $522 billion in the same time frame went to bigger businesses, and only 28 percent of the money was distributed in amounts less than $150,000. The newly released data comes after a federal lawsuit filed by news organizations under the Freedom of Information Act challenging the SBA’s refusal to release records on borrowers and loan amounts. A federal judge ordered the release of the data by yesterday and the agency did not appeal.
United Airlines has agreed to delay the effective date of pilot furloughs until Oct. 30 while union members vote on a broader deal that would protect some 2,850 jobs for months longer, Reuters reported. However, pilots will not be paid during the month of October if that deal does not pass, according to a memorandum of understanding between United and the union representing its 13,000 pilots that was seen by Reuters. “Our pilots are voting right now on a tentative agreement that, if approved, would avoid all pilot furloughs for at least nine months,” United spokesman Frank Benenati said on Wednesday. He noted that the company continues to push for an extension of federal payroll support. If lawmakers fail to agree to extend $25 billion in payroll aid for airlines this month, tens of thousands of employees are set to be furloughed on Oct. 1. Delta Air Lines agreed with its pilots to delay furloughs until Nov. 1, the union said on Monday, but will continue to pay them in October even without an extension of $25 billion in payroll support for airlines.
Senators return to Washington, D.C., today from their annual summer recess, no closer than when they left three weeks ago to resolving sharp divisions over another coronavirus aid package and now facing a potential government shutdown that could deepen the economic pain, the New York Times reported. The impasse amounts to a fraught political situation for both parties less than two months before the November election, with millions still unemployed and cities and states beginning to enact significant budget cuts with no promise of relief from Congress. Senate Republican leaders are hoping to corral their caucus around a scaled-back stimulus plan that would reinstate lapsed federal unemployment benefits at $300 per week — half their previous level — and allocate $105 billion for schools and funds for testing and the Postal Service, according to Republican aides familiar with the discussions. The plan represents an effort to intensify pressure on Democratic leaders, who want to restore the $600 unemployment benefits and have refused to consider any measure below $2.2 trillion. The Republicans’ bill would carry a likely price tag of $500 billion to $700 billion, far less than the $3 trillion measure Democrats passed in the House and smaller than the $1 trillion measure Senate Republicans introduced in July. A procedural vote advancing the legislation could come as early as this week, according to Republican aides, but it remains unclear whether Republicans can coalesce around it. Even if they do, Democrats are expected to block it. In a letter to his caucus, Senator Chuck Schumer of New York, the minority leader, called the bill “emaciated” and urged Democrats to push for “another comprehensive, bipartisan bill that meets the moment facing our nation.” Lawmakers are more optimistic about the chances for a stopgap budget bill to avert a shutdown at the end of the month; Speaker Nancy Pelosi and Steven Mnuchin, the Treasury secretary, have reached an informal agreement on the bill. It is unclear how long the measure would provide funding after the new fiscal year begins on Oct. 1, but it would be all but guaranteed to last beyond the Nov. 3 election. Read more.
In related news, states and cities across the nation have made an array of fiscal maneuvers to stay solvent and are planning more in case Congress can’t agree on a fiscal relief package after the August recess, the New York Times reported. House Democrats included nearly $1 trillion in state and local aid in the relief bill they passed in May, but the Senate majority leader, Mitch McConnell of Kentucky, has said that he doesn’t want to hand out a “blank check” to pay for what he considers fiscal mismanagement, including the enormous public-pension obligations some states have accrued. There has been little movement in that stalemate lately. Economists warn that further state spending reductions could prolong the downturn by shaking the confidence of residents, whose day-to-day lives depend heavily on state and local services. “People look to government as their backstop when things are completely falling apart,” said Mark Zandi, chief economist at Moody’s Analytics. “If they feel like there’s no support there, they lose faith and they run for the bunker and pull back on everything.” Collectively, state governments will have budget shortfalls of $312 billion through the summer of 2022, according to a review by Moody’s Analytics. When local governments are factored in, the shortfall rises to $500 billion. That estimate assumes the pandemic doesn’t get worse. Read more.
Calls to protect corporations and schools from legal blame if workers fall ill from COVID-19 contracted on the job have incited a growing backlash as Congress and the White House negotiate over liability protections in economic relief legislation, the New York Times reported. Businesses, hospitals, schools and the trade groups that represent them have pushed for any relief package to include protections from COVID-related lawsuits. But so far, there has been little sign of a surge in litigation as the economy reopens, and prominent voices have opposed such a measure, arguing that liability shields are unfair to workers and that businesses must take responsibility to keep them safe. The issue has spilled into the world of sports. College Athlete Unity, an organization that represents thousands of athletes at universities, wrote a letter yesterday to the N.C.A.A. and the Big Ten Conference urging them to revise plans for resuming fall sports. Among the proposals was to ban the use of COVID-19 waivers. The players’ associations for the N.F.L., N.B.A., N.H.L., Major League Baseball and Major League Soccer have made a similar plea. In a letter to top Republican and Democratic lawmakers last Friday, they said that inserting liability protections in the legislation would be wrong. Some businesses — including salons, amusement parks, gyms and even President Trump’s campaign rallies — have required those who come in their doors to promise not to sue if they contract the virus. But a Republican proposal would offer a much bigger shield: It would provide five years of legal protection for businesses, hospitals, schools and nonprofits that make “reasonable efforts” to comply with government standards to protect their workers and customers from coronavirus-related lawsuits.
The Trump administration is considering a wide range of tax-cut proposals for businesses and investors in the next coronavirus response bill as it tries to shift from government spending programs to support the economy toward measures that aim to reinvigorate growth, the New York Times reported. The list of ideas under discussion includes a reduction in the capital gains tax rate and measures that would allow companies to deduct the full costs of any investments they make now or in the future, according to administration officials and several outside experts who have discussed plans with the White House. Those proposals, which are still being debated and are not final, could accompany President Trump’s top two priorities for the next rescue package: the suspension of payroll taxes for workers and an expanded deduction for corporate spending on meals and entertainment. Trump and his aides are also planning to push lawmakers to approve legal liability limits for businesses that operate during the pandemic, a top priority of business lobbying groups in Washington, D.C., and Senate Majority Leader Mitch McConnell (R-Ky.). Read more.
The Senate Judiciary Committee will hold a hearing on Tuesday at 2:30 p.m. titled "Examining Liability During the COVID-19 Pandemic." Click here for more information.
Senate Majority Leader Mitch McConnell (R-Ky.) said yesterday that the next coronavirus relief legislation must include liability protections for business owners who reopen and indicated he would be open to some aid for beleaguered states, Bloomberg News reported. The House and Senate both plan to convene in Washington, D.C., on May 4 and resume business with the expectation of additional action to respond to the novel coronavirus pandemic that has shut down businesses and thrown millions of people out of work. As some states begin gradually lifting stay-at-home orders and other restrictions, McConnell said that without protection from lawsuits, business owners could end up with years of legal claims over their efforts to restart the economy.
