Under a pandemic contingency plan agreed by Republicans and Democrats on Sunday night, the headlines are checks for $ 600 to people earning $ 75,000 a year or less and an additional $ 300 a week from federal unemployment benefits for many.
Beyond that, what do we have?
To begin with, the bill pursues a number of programs that were due to expire at the end of this year, including federal unemployment benefits for concert workers and for people whose state benefits have expired.
The legislation should also extend a moratorium on evictions and money for rent assistance.
Paycheck Protection Loans For Small Businesses
There is also money for the Paycheck Protection Small Business Loan Program. This is by far the biggest item in the COVID relief plan: $ 284 billion for companies to help keep their employees on the payroll – subsidies if the rules are followed, loans if the rules are not followed.
“The greatest amount of damage, and the greatest amount of potentially irreversible damage to employment, is in the small business sector,” said Karen Petrou, co-founder and managing partner of the economics consultancy based in Washington Federal Financial Analytics. “So, handing over these PPP loans to small businesses, including very small and minority-owned businesses, is essential to return the economy to a sustained and more secure base of low and moderate income employment.
This time around, however, P3 funding will see some key changes. The initial rollout was the subject of criticism: some large restaurant chains and others large companies took PPP money, and many small businesses – with no bank connections established – were stranded in the initial rush. There was also system fraud.
Now, Democratic leaders say, the changes will target the money more on small businesses and independent restaurants.
“You’re rushing for $ 649 billion, literally, you know, in a week’s going to be some disastrous mistakes, and there were some in the first deployment,” Petrou said. “From what I’ve seen, this version of the program is much stricter, much better, and it will really work for real small businesses.”
Listen to David Brancaccio’s full interview with Karen Petrou from the Marketplace Morning Report:
Senate Majority Leader Mitch McConnell noted there will be a second raffle for the hardest hit small businesses – if they took PPP money in the first round, they might be eligible to do it again.
In addition, there is expanded eligibility for nonprofits, local newspapers, and TV and radio broadcasters.
More generally, when it comes to helping small businesses, the bill should include $ 15 billion for cinemas and theaters.
No direct support for state and local governments
There’s a lot to this deal, but it’s also missing a lot, including the Republicans-led effort to prevent companies from being sued for their coronavirus responses, and direct aid to state and local governments. There is a clear need in this area, said Dan White, director of government consulting and public finance research at Moody’s Analytics.
“Based on the amount of tax revenue that has declined and the amount that some spending programs like Medicaid have increased, overall, we think states and local governments will need around $ 170 billion over the course of time. the next year and a half, two years. “White said.
It will mean budget cuts elsewhere. But it could also mean higher taxes, especially for those living in the northeast, White said.
“States and local communities have already cut back considerably. I think we’ve lost about 1.3 million jobs in states and local communities since April, ”he said. “That puts us at the lowest level of state and local employment since about 2001. And so the questions I get from state and local decision makers are not, you know, ‘what can we cut? ? It is: “How can we increase incomes without harming the economic recovery?” “”
State and local governments will at least get something out of the package as it is now, including money through the Federal Emergency Management Agency, assistance with public transportation systems, and assistance with l ‘education. White said, however, that there are many stipulations on how these subsets of money can be used – “it’s not something they can use just to fill budget deficits because the economy not going well”.
Listen to David Brancaccio’s full interview with Dan White from the Marketplace Morning Report:
Federal Reserve lending facilities
Finally, the Federal Reserve was in the center of a major obstacle in negotiations before the weekend. Republican Senator Pat Toomey of Pennsylvania insisted that there be language in the bill describing what the Fed’s emergency lending powers will look like in the future. The Fed put in place a number of emergency loan programs during the pandemic.
Initially, Toomey wanted the bill to ban the Fed from doing anything similar without congressional approval. He made a compromise. So now the bill just says the Fed can’t recreate these exact same programs, and they expire at the end of this year.
Former Fed Chairman Ben Bernanke issued a statement claiming that it was “vital” that the Fed’s ability to respond to a crisis “should not be constrained.”