Republicans Enter COVID Relief Negotiations with Weak Hand:
On Tuesday, the Senate GOP finally released the HEALS Act, its $1 trillion coronavirus relief plan. The Senate Republican Policy Committee (RPC) released an overview of the package, which can be viewed here.
Following the release of the package, Senate Republican Leadership ran into issue with rank and file members, who were critical of the proposal. Senate Majority Leader McConnell did not appear to have anything near majority Republican support, let alone backing from Democrats who instantly attacked them, which will make the negotiation process even more difficult for the Leader. “I think it’s a statement of the obvious that I have members who are all over the lot on this,” Senator Mitch McConnell, Republican of Kentucky and the majority leader, told reporters after the closed lunch session. “There are some members who think we've already done enough, other members who think we need to do more. This is a complicated problem.” Senator John Cornyn (R-Texas), the author of the liability protections that Republicans insist should be in any final legislation said of the package, “If it is going to be passed with mainly Democratic votes, it is going to be mainly a Democratic bill.”
Further weakening Republicans’ hand at the negotiation table, President Trump also called the Republican proposal “semi-irrelevant,” noting that it would have to be reconciled with Democrats’ “needs and asks.” Mr. McConnell said it would be up to Mark Meadows, the White House chief of staff, and Steven Mnuchin, the Treasury secretary, to do the reconciling.
ABC Calls for Additional Guidance and Flexibility in PPP Rulemaking:
On July 27, ABC submitted comments to the U.S. Department of the Treasury and U.S. Small Business Administration on an interim final rule changing key provisions of the SBA’s Paycheck Protection Program and its loan forgiveness and loan review procedures.
While ABC expressed support for several changes to the PPP, such as decreasing the portion of a PPP loan that must be spent on payroll costs from 75% to 60% and increasing the timeline to spend PPP funds from eight weeks to 24 weeks, ABC also urged the agencies to take the following actions in order to further assist small businesses:
- Provide further guidance on when businesses should apply for loan forgiveness and when they are notified of their forgiveness status
- Issue further guidance on the PPP audit process
- Increase flexibility for employee retention requirements and loan forgiveness
- Provide further clarification of nonpayroll costs
- Refocus efforts to deliver PPP funds to underserved communities and minority businesses
ABC has followed the implementation and additional revisions to the PPP and submitted comments on a previous rulemaking related to the program.
ABC will continue to provide updates on the PPP and other SBA resources through Newsline and at abc.org/coronavirus.
NLRB Nominees Headed to Floor This Week:
On Thursday, July 23, Senate Majority Leader Mitch McConnell (R-KY) filed for cloture on the nominations of Marvin Kaplan and Lauren McFerran to the NLRB. We are expecting a final vote on their confirmations this week or next. It is possible that they will be confirmed on a voice vote or via another agreement with Senate Democrats.
Kaplan is currently a Republican Board member and was nominated for a second term. ABC will be sending a letter of support for the Kaplan nomination. His current term expires on August 27. McFerran (D) has served on the Board under both Presidents Obama and Trump. Without confirmation of at least one of these candidates, the Board will no longer have a quorum when Kaplan’s term expires.
ABC Asks President Trump to Review Policies that Impede Competition and Job Creation:
On July 28, ABC sent a letter to President Trump applauding him for issuing two executive orders, Regulatory Relief to Support Economic Recovery and Accelerating the Nation’s Economic Recovery from the COVID-19 Emergency by Expediting Infrastructure Investments and Other Activities, which will help to remove burdensome barriers to job creation and help the economy continue to rebound from the COVID-19 crisis.
ABC Election Series—RNC National Update:
A reminder that Thursday, July 30th from 3 p.m.-3:30 p.m. EDT ABC will be hosting an election update with the Republican National Committee: CLICK HERE to register. This update is a part of the ABC Election Update Series, which is powered by the Free Enterprise Alliance. The series is reserved for ABC members and registration is free of charge thanks to our generous sponsors. You can find more information about future ABC Election Update Series webinars online here.
House Democrats Move Forward with Appropriations Bills:
While negotiations continue on the next round of COVID relief from Congress, the House this week is set to pass their second minibus of fiscal year 2021 appropriations bills. The House is expected to consider the legislation, H.R. 7617, beginning today. The package includes six FY 2021 spending bills: Defense, Commerce-Justice-Science, Energy and Water Development, Financial Service and General Government, Labor-HHS-Education, and Transportation-Housing and Urban Development.
A division-by-division summary is available as a PDF here.
While the bill is unlikely to become law, the Democrats spending bill have been criticized by Republicans for busting budget caps and containing poising pill riders that would defund the President’s priorities.
COVID-19 & Face Coverings:
An updated list of jurisdictions where face coverings are recommended or required can be read here.
OSHA FAQs on cloth face coverings is available here.
CDC’s information on the use of cloth face coverings can be found here.
REMINDER—What’s in the GOP COVID Relief Proposal:
Of note, addressing ABC priorities, the package would:
- Expand PPP eligibility to include certain 501(c)(6) organizations, with 300 or fewer employees, excluding professional sports, political campaigns, and lobbying expenses.
- Eligibility requirement specify that the organization cannot receive more than 10 percent of receipts from lobbying, the lobbying activities do not comprise more than 10 percent of receipts, and the organization has 300 or fewer employees.
- Expand the Employee Retention Tax Credit (ERTC) from 50 percent of qualified wages reimbursed through the credit to 65 percent.
- Under the CARES Act, employers are eligible for the ERTC if their (1) operations were fully or partially suspended due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. The HEALS Act lowers the amount of the reduction in gross receipts required to qualify as an eligible employer from a 50- percent decline to a 25-percent decline compared to the same calendar quarter in the previous year. The CARES Act limited the amount of qualified wages taken into account per employee to $10,000 for the year, and the HEALS Act increases the limitation on qualified wages taken into account per employee to $10,000 per quarter (limited to $30,000 for the calendar year).
- The bill also enhances coordination between the credit and the Paycheck Protection Program by allowing employers to be eligible for both programs, but with limitations to prevent overlapping benefits
- Provide liability protections for employers through temporarily limiting liability for personal injuries arising from alleged COVID-19 exposure at a school, college, nonprofit, church, or business. Text of the bill can be found here.
- In order to qualify, entities must (1) have made reasonable efforts to comply with applicable public health guidelines, and (2) not engage in willful misconduct or grossly negligent behavior.
- These protections would apply to personal injury lawsuits stemming from actual exposure to coronavirus as well as feared or potential exposure. Nuisance claims will also be covered.
- Covers coronavirus-related exposure injuries that take place between December 1, 2019 and October 1, 2024.
Notably, the bill DOES NOT fix the Paycheck Protection Program tax deductibility issue. ABC has pushed for this issue repeatedly since the IRS’s guidance that excluded the ability of small businesses to deduct eligible expenses paid with a forgiven Paycheck Protection Program (PPP) loan from their taxes. Without this relief, millions of small businesses will face significant tax liabilities and earlier this month sent a letter to Congressional leadership along with more than 100 business organizations. Treasury Secretary Steve Mnuchin has consistently objected to a fix for this critical issue, defending the IRS guidance and stating tax deductibility of PPP loans would be “double dipping” into the program. The fix authored by Sen. John Cornyn (R-Texas) was excluded from the final package due to objections from the White House and Treasury.
Continuing the Paycheck Protection Program, the proposal provides $190 billion of committed and appropriated funds to support PPP and PPP Second Draw Loans, and defines eligibility for PPP Second Draw loans as small businesses that meet the applicable SBA revenue size standard, have no more than 300 employees, and demonstrate at least a 50 percent reduction in gross revenues. Critics have said the restriction would leave too many struggling yet viable employers on the sidelines while putting too much emphasis on businesses on the brink of failure. You can view a section by section summary of the provisions here.
The proposal also includes a second $1,200 direct payment for Americans. Under the plan, people earning up to $75,000 can receive the full amount. Dependents regardless of age also qualify for $500, expanding the range of people that qualify for cash compared to the initial wave of stimulus checks that left out many adult dependents and college students. The payments phase out for single-filers earning above $99,000, and joint-filers with no children earning more than $198,000. The plan also calls for the reduction in increased federal unemployment benefits from $600 to $200 per week for a 60-day period, or until states are able to provide a 70 percent wage replacement. More information on these provisions and other critical tax provisions in the bill can be found here.
The GOP package also provides additional flexibility for the $150 billion in state funds provided under the CARES Act and extends the time frame under which that money can be used. The bill includes $16 billion in new money for expanding state testing capacity — on top of $9 billion that hasn't been spent yet — $26 billion for the development and distribution of vaccines, $105 billion to help schools reopen, $20 billion to assist farmers and ranchers and close to $30 billion to "bolster the U.S. defense industrial base." You can view more information on the emergency funding here.