The Democratic-led bill is the latest proposal for U.S. financial assistance given the economic devastation from COVID-19. The House of Representative could vote on it tomorrow despite Majority Leader Mitch McConnell calling the bill ‘dead on arrival”.
The bill (H.R. 6800) is known as the HEROES Act or Health and Economic Recovery Omnibus Emergency Solutions Act and the Republican-controlled Senate is not expected to support the current version of the 1,800 pages document. The hospitality industry faces the biggest crisis since the Great Depression, but nothing specific is being set aside in this bill for one of the last groups that will be able to recover.
Reviewing this latest bill, the majority of it contains general funding for state and local governments and more payments to Americans. The highlights of the current bill include:
- $3 trillion in total relief with just under $900 billion being sent to state and local governments.
- Hazards pay would be included with $200 billion earmarked for essential workers.
- The unemployment benefits of $600 per week would be extended to January 2021 and include student debt forgiveness.
- Testing and contract tracing efforts would be bolstered with $75 billion and farmers provided $50 billion in relief.
- Low-income renters would have access to a $100 billion fund and another $75 billion set aside for homeowners.
- Another round of $1,200 stimulus payments for most Americans would be sent with a maximum of $6,000 per household with children.
- Employer-Provided Dependent Care Assistance amount would be doubled.
- Payroll Tax Credits & Deferrals for businesses.
- The Postal Office could be awarded $25 billion to avoid bankruptcy.
Employee Re-Hiring Business Impact
With unemployment reaching 36.5 million since coronavirus took hold, the need for financial aid is certainly critical. However, with some workers making similar or more money than before with the additional federal $600 unemployment, an unintended consequence of the unemployment bonus could be an incentive not to work.
Many employers are already facing issues getting their staff back to return to work as states reopen and a six-month extension could add more difficulty. Senator Lindsey Graham said the program would be extended ‘over my dead body’. Updates to the PPP program clarified that businesses would not be penalized for their total forgivable loan amount if a reemployment offer is made in good faith and the employee declines. The guidance says that employees should be notified that they may lose their unemployment benefits.
The bill’s prognosis has a 3% chance of being enacted according to Skopos Lab.
What Other Legislation is Being Discussed
Mitch McConnell and Senator John Cornyn have indicated they are working on legislation to expand liability protections for businesses beginning to reopen. This would not cover gross negligence but would help owners from being open to litigation for employees or guests possibly contracting COVID-19 for visiting their establishment.
Steven Mnuchin told Fox News, that the White House and Treasury were open to spending more money but a lot of the money from the stimulus packages still hadn’t made it into the economy yet. “We just want to make sure that before we jump back in and spend another few trillion of taxpayers’ money that we want to do it carefully,” Mnuchin said. “We’re willing to spend whatever it takes. but whatever it takes needs to be done carefully.”
The New York Times reported the White House was focused on tax-cut proposals including possible suspension of payroll taxes for workers and reducing capital gains tax rates.
While states are beginning to reopen, several areas including New York do not foresee any openings until late into the summer. Their city council is looking at ways to help tenants with personal liability protection from landlords and other countermeasures, but more federal relief, especially for the hospitality industry, is needed to ensure businesses have a fighting chance to reopen their doors and survive.