Mitch Ado about Nothing

Update 459 — Mitch Ado about Nothing:
GOP COVID Bill “Semi-Irrelevant” — Trump

If, as polls suggest possible, Republicans are driven from office in November, having lost the White House and their Hill majorities, it won’t just be the price of fealty to Trump. It’s also the deaf ear to the dire needs of nearly 32 million Americans who are currently unemployed and almost everyone else affected by COVID. An ideological paralysis could snuff out a recovery and a Party.

Mitch McConnell’s Senate GOP conference is split — half ideologues opposing any more COVID spending, half amenable to more. Everyone in the administration, every Fed Governor, maybe every economics Ph. D all urge Congress to stimulate our stalled economy through rapid and substantial fiscal policy. Trump and most observers are no doubt disappointed with the Senate GOP’s paltry opening bid, $1 trillion, a sum inadequate to the task.

Today we examine what provisions will likely make their way into a final package, the sticking points for sides, and what will be left on the cutting room floor.




Senate Majority Leader Mitch McConnell finally unveiled the next GOP relief package on Monday, days before expanded unemployment benefits expire for millions of Americans. The Republicans’ Health, Economic Assistance, Liability Protection and Schools (HEALS) Act bears little in common with the House-passed HEROES Act, itself two months old. 

Bipartisan Appeal in HEALS

The $1 trillion Republican HEALS Act omits key provisions of the $3 trillion Democratic HEROES Act. There is some bipartisan consensus emerging on several of these bills’ provisions, suggesting their inclusion in a final package.

  • Cash Payments Round Two: White House and Congressional leaders on both sides have been supportive of a second round of direct cash payments. HEALS payments would be nearly identical to those in the CARES Act. Americans earning up to $75,000 would receive $1,200; payments then phase out for those earning up to $99,000. 

    A key change in HEALS would expand the $500 check per dependent to include adult dependents. HEALS payments would total $300 billion. Comparatively, the HEROES Act’s payments would include ITIN filers and give families $1,200 for up to three dependents, pumping $413 billion into the economy. A final deal may hue closer to the HEALS proposal. 
  • PPP Expansion: HEALS would allocate $190 billion to the Paycheck Protection Program (PPP) for small businesses to take out original and “second draw” loans and extend the program to Dec. 31. The PPP deadline is currently Aug. 8. These second draw loans would be limited to businesses with fewer than 300 employees that have suffered a revenue decline of at least 50 percent. Industry groups are bristling at the revenue loss threshold. The GOP also proposes new “Long-term Recovery Sector Loans.” This program would authorize $100 billion to the SBA to issue loans up to $10 million with a 20-year maturity and a 1 percent fixed interest rate. Target recipients would be seasonal businesses and businesses in low-income areas.

    Democrats offered their own expansions of the PPP in HEROES including extending the program to Dec. 31 and expanding the loan coverage period from eight to twenty-four weeks. House Democrats have also been fighting for more set-asides for minority-owned businesses, which Secretary Mnuchin supports. At a minimum, there will likely be a PPP extension and more lending for lower-income communities.
  • Employer Tax Relief: The CARES Act created the Employee Retention Tax Credit (ERTC), which provides a 50 percent refundable tax credit for an employee’s wages up to $10,000. HEALS expands the ERTC by raising the reimbursement threshold to 65 percent and the qualified wages per employee to $30,000. This is compared to an 80 percent reimbursement rate for up to $45,000 in wages in HEROES. We should expect some expansion of the ERTC.
  • School Funding with a Catch: HEALS would appropriate $105 billion for education, with roughly $47 billion restricted for K-12 schools that reopen, including private schools. HEROES included $100 billion for education funding, with $58 billion going to public K-12 schools and no re-opening requirements. With nearly identical top-line numbers, the debate will come down to reopening requirements. 

Negotiation Battlegrounds

As negotiations advance, key battles lie ahead: 

  • Unemployment Insurance: While Democrats fiercely advocated maintaining the $600 benefit, HEALS reduces the benefit from $600 to $200 through September. Beginning in October, the GOP bill would modify the structure for benefits to match 70 percent of a worker’s prior income. 

    The Republican proposal will have devastating effects on the 32 million Americans now dependent upon unemployment insurance. Per the Century Foundation, the HEALS Act would strip $10 billion in unemployment benefits per week. It will also be difficult to implement at the state level, further delaying unemployment payments as states struggle to reprogram their UI systems. 
  • Liability Immunity: A major flashpoint in negotiations will be the GOP’s five-year liability shield for schools, hospitals, and businesses in the HEALS Act. Spearheaded by Sen. Cornyn, the bill shields employers who comply with the weakest standard, protecting them from even civil rights, gender discrimination, and disability claims under the ADA. Providing these legal protections to employers deprives workers of them. McConnell insists that his caucus will not support a bill without liability protections. 
  • State and Local Funding: Despite bipartisan pleas from governors and mayors for additional federal funds, the HEALS Act fails to provide states and localities additional financial support. Impending budget shortfalls would significantly prolong the recession.

    Instead, the plan offers states some “flexibility” in the use of CARES Act aid to offset major revenue losses. Democrats, on the other hand, have proposed around $1 trillion in federal aid to states and municipalities. Without federal support, states will have to undertake serious austerity measures, including further layoffs.


The items left out of the HEALS Act are as notable as those included. Many priorities outlined by House Democrats in the HEROES Act went unanswered, including:

  • Election Funding: The HEROES Act provides $3.6 billion in additional election assistance to facilitate mail-in voting and ensure election security. Many states have already used the election assistance funds provided in the CARES Act to finance primaries and are in desperate need of more. Despite these concerns, the Republican bill does not provide any new money. 
  • Hazard Pay: In HEROES, Democrats advanced a proposal to create a $190 billion ‘Heroes Fund’ which increases essential workers’ pay by $13/hour. The increased pay would be capped at $10,000 per worker and retroactive to Jan. 27. The HEALS Act does not address hazard pay.
  • Eviction Moratorium: Last week, the CARES Act’s eviction moratorium expired, leaving millions of tenants at risk of eviction. While the HEALS Act makes no mention of the eviction moratorium, the HEROES Act extends it, in addition to providing a 60-day mortgage forbearance.

The GOP Christmas Tree

While President Trump’s payroll tax cut didn’t make it, a bizarre tax deduction for business meals did. HEALS would allow businesses to deduct 100 percent of business meal expenses for the rest of the year as an excuse to help the restaurant industry. This provision is strongly opposed by Leader Schumer and hunger advocates who point to the callousness of Republicans deducting business meals but not expanding SNAP benefits.

Banking deregulation is also on the docket with reports that Senate Banking Chairman Mike Crapo wants to extend lower capital requirements for community banks. Although not part of the package yet, the provision would allow community banks to lower their capital leverage ratio from nine to eight percent through 2021. Weakening of capital requirements should not be extended to larger banks. Capital requirements have helped the banking sector weather the crisis so far, this is no time to loosen them as the economy remains fragile.

Next Time…

With the next House and Senate COVID relief bills so far dissimilar in size and substance, negotiations could keep Congress in session into the August recess. The Republicans’ refusal to legislate until expiration dates are nigh will — in the meantime — strip relief from tens of millions of Americans. This will crush families’ budgets and unnecessarily harm the sputtering economy. On Friday, we will take a deeper look into what’s needed in the next package to bridge our economy through this crisis among the provisions on the table. 

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