Preliminary Deal Reached on $2 Trillion Stimulus Bill

March 25, 2020; Washington Post, New York Times, The Hill, and Wall Street Journal

March 26, 2020 UPDATE: The National Council of Nonprofits has released its preliminary analysis of the CARES Act. Read it here!

Early this morning, US Senate Democratic and Republican leaders and Trump administration representatives announced a deal in principle on a $2 trillion package for Senate Bill 3548, called the Coronavirus Aid, Relief, and Economic Security Act—or “CARES,” because in Washington you cannot have a bill passed without an acronym. This is a fast-moving story, and not only might we have missed some details, but provisions could still change before passage. Consider this article an early indicator of what is in the stimulus bill, as it’s still in play.

Perhaps the most telling analysis comes in the last sentence of an article written by Emily Cochrane and Nicholas Fandos in the New York Times, where they note that lawmakers have “acknowledged that it is likely other legislative measures will be needed in the coming months to counter the consequences of the pandemic.” What this means, essentially, is that we must stay alert and respond quickly when a more complete view is available to seize an opening to improve on these provisions for community and nonprofit benefit.

Among the leading provisions of the bill:

Cash to families: $500 billion (estimate)

All workers making less than $75,000 a year would receive $1,200 in direct cash payments plus $500 per child. This would be clawed back for workers making more than $75,000 a year. (For married couples, these provisions are doubled—$2,400 in direct cash for couples making up to $150,000 a year. Workers making more than $99,000 a year (or couples making over $198,000 a year) would receive zero.

Unemployment insurance: $200 billion (estimate)

The bill would also extend unemployment insurance coverage in two ways: first, by expanding the length of benefits from 26 to 39 weeks and; second, for a 4-month period, it would boost benefits for unemployed workers by $600 a week.

Big business funding: $500 billion

In a provision that recalls 2008’s Troubled Asset Relief Program (TARP), the bill creates a $500 billion fund, with “$425 billion for the Federal Reserve to leverage for loans in order to help broad groups of distressed companies and $75 billion for industry-specific loans.” Disbursement will be overseen by the inspector general and a 5-person panel appointed by Congress. Cochrane and Fandos add that, “Companies that accept money must also agree to halt any stock buybacks for the length of the government assistance, plus an additional year.” Businesses owned by President Donald Trump, senior officials, or their family members are ineligible.

Hospitals: $130 billion

Obviously, hospitals are heavily burdened by the costs of caring from the COVID 19 pandemic. This provision will help defray some of their added expenses.

State and Local Government: $150 billion

Also, obviously, state and local governments can expect to see cratering sales tax revenue. This provision is designed to avoid activating state balanced-budget provisions, which would otherwise result in reduced government services at their time of maximum need.

Small business: $367 Billion (including $17 billion for 6-months loan forbearance)

This money would be structured as forgivable loans, meaning that small businesses that pass through the assistance to their workers would not have to pay the loans back, effectively converting those loans into grants.

Other funds: $84 billion

Emergency education funding: $30 billion
Emergency transit funding: $25 billion
Aid to airlines: $25 billion
Aid to air cargo carriers: $4 billion

While the above does not capture every provision, it covers the bill’s primary provisions. In coming days, we look forward to examining the impact of the stimulus bill on the nonprofit sector. The Council of Nonprofits had been seeking $60 billion, and, as NPQ reported, there had been an effort to include student loan debt relief in the legislation, but neither of these provisions appear to have made it into the final bill. However, nonprofits are eligible to access funds from the $367 billion small business pool.

Of course, amendments on the floor of the US Senate are possible, as are further amendments by the US House of Representatives.

In the Washington Post, Erica Werner, Mike DeBonis, Paul Kane, and Jeff Stein explain some of the contentious issues that remain, writing that:

Final issues included a push by Democrats for a dramatic increase in food stamp benefits in exchange for accepting billions more in funding for the administration’s farm bailout that Republicans have included in the stimulus bill. Sen. John Hoeven (R-ND) said in a news release that the legislation would increase the amount the Department of Agriculture can spend on its bailout program from $30 billion to $50 billion.

Democrats were also seeking more money for Native American tribes. And there was dispute about whether Planned Parenthood affiliates and other nonprofit organizations offering reproductive services would be able to access the small business loans. It was not immediately clear how that issue had been resolved.

Adding complexity to the situation is that five US senators are currently quarantined and the US House of Representatives is currently not in session. According to the Wall Street Journal, Speaker Nancy Pelosi has indicated that she hopes to use “unanimous consent” to avoid the need to recall members back to Washington for a floor vote. However, she has also warned that House unanimous consent is not a given and that House members may need to come back to Washington.

It also bears emphasis that $2 trillion, although a huge sum that is equivalent to more than $6,000 per person in the US, can only float the economy for a few months, as economics reporter Jim Tankersley notes in the New York Times. For example, Tankersley estimates that the small business funds are sufficient to cover payroll for small businesses and nonprofits for about 10 weeks. “If the outbreak and the disruptions continue through summer, lawmakers will need to spend even more,” Tankersley warns.—Steve Dubb