By Reginald Tucker
When the House of Representatives passed a new $3 trillion stimulus package late last week, the overarching goal was to help states continue to fund essential services such as police and fire departments, as well as provide relief for the millions of healthcare workers on the frontlines in the battle against the novel coronavirus. But with little indication that the Senate intends to approve the bill, observers say the measure merely serves as a “starting point” for a broader and more robust stimulus package.
“No bill that is proffered becomes law without negotiation,” House Speaker Nancy Pelosi said during an address. “So far, we have pushed through four bills—all on a bipartisan basis. I have confidence because the American people know we have to support our local government—police and firemen, first responders, teachers, sanitation. Many of these people risk their lives to save lives, and now they may lose their jobs.”
Stimulus bill seeks aid across the board
This latest stimulus bill, known as the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES), comes on the heels of a $484 billion package approved last month. The measure contains several Democratic priorities, including $100 billion for rental assistance and $75 billion in mortgage relief. It would allocate $3.6 billion to bolster election security and provide a $25 billion bailout for the Postal Service. To put things in perspective, the $3 trillion package is double what Congress has already approved in four earlier packages.
The HEROES Act seeks $1 trillion in aid for states, local governments as well as tribal governments. Democrats also want more direct stimulus payments to go out to more Americans, and they’ve asked to expand the pool of Americans who are eligible for those stimulus payments. Furthermore, Democrats want to extend to January 2021 the extra $600 in enhanced unemployment benefits that are set to expire in June.
Drilling down deeper into the 1,800-page bill, the HEROES Act seeks to temporarily suspend a limit on the deduction of state and local taxes from federal income taxes—which Democrats have repeatedly pushed for—and would disproportionately benefit high-income taxpayers in high-tax areas.
The bill would also substantially expand eligibility and increase the value of some tax credits, such as the earned-income tax credit, that are targeted to the poorest Americans. Democrats are also seeking to provide hazard pay for frontline health care workers, forgive student debt and bolster Medicaid and Medicare programs.
The bill also includes provisions to assist farmers, protect renters and homeowners from evictions and foreclosures, while extending family and medical leave provisions previously approved by Congress. Additionally, the legislation would also provide relief for essential workers, such as aviation, rail and Amtrak workers, as well as extend work visas for immigrants.
A wait-and-see approach to funding
According to the New York Times, Senate Republicans, led by Senator Mitch McConnell of Kentucky, have called for the chamber to take their time in evaluating the implementation of the nearly $2.8 trillion in legislation that Congress has already approved and President Trump has signed into law. Critics of this tactic, however, say there’s no time for the “wait-and-see” approach.
“Time is of the essence here,” Speaker Pelosi stated. “In past bills, Republicans put forth their proposals, and they we worked in a bipartisan way—that’s what we anticipate now with this bill. Across the country, Republican and Democratic mayors, governors, etc., all want this bill to happen. We need investment in state and local government as well as the testing that needs to be done across the country, largely at the state level. Timing is very important, but we have lost precious time.”
Weighing the impact of the current stimulus package
So, what amendments might be necessary to mollify both parties’ concerns while still having enough “teeth” to make a real impact on the economic recovery? Two must-haves for Republicans are: a) assurances that provide liability for employers who reopen so they cannot be sued if the worst-case scenario happens; and b) payroll tax cuts. Modified legislation would also seek ways to expand the ability of states to spend the state and local aid already allocated.
But it’s not your typical “them vs. us” tug of war. Even some progressive Democrats contend the current bill does not go far enough to support workers in need of healthcare and regular paychecks. For instance, Representative Kendra Horn, Democrat of Oklahoma, said she supported parts of the package, but could not back it in its current form. “This is a vote saying we need to do the work to get this bill where it needs to be,” she stated after casting her vote.
Horn is not alone in her dissent. Democratic Congresswoman Pramila Jayapal and Congresswoman Alexandria Ocasio-Cortez—each known for their progressive politics—have indicated plans to vote “no” when the bill hits the Senate floor. Jayapal said the bill does not do enough to ensure paycheck guarantees for struggling workers, while Ocasio-Cortez said the bill can go even further, especially when it comes to healthcare.
A stimulus bill is slow work, but time is of the essence
Unlike the previous bills passed by the House and approved by the Senate, this latest stimulus package is not expected to move quickly. In fact, according to Jerry Seib, Washington Bureau chief of the Wall Street Journal, this bill could drag on for months. “This package is less legislative blueprint and more about Democrats’ opening bid in a negotiating process with Senate Republicans,” he said. “This could stretch on for weeks, maybe even months. Democrats have laid out their priorities for that next step, and they have attached fairly high price tags to those priorities.”
Advocates of the bill as presently constituted say time is a luxury Americans don’t have at the moment. “Setting aside how we got here, we cannot take a pause,” Speaker Pelosi said. “It’s not OK to pause when people are hungry across America—hunger doesn’t take a pause. People are jobless across America. People can’t pay their rent. We have to address this with humanity.”
Is more funding on the horizon?
While the country awaits the outcome of the Senate vote, industry observers predict more government initiatives to get the economy back on track are imminent. “The $3 trillion bill is nothing more than a party-line wish list, but it does get us back to negotiations and confirms that our legislators are aware that what has been done so far is not enough,” said Scott Humphrey, CEO of the World Floor Covering Association (WFCA). “The next stimulus package must truly be focused on small business and not simply utilizing small businesses to control unemployment. The mandate that 75% of PPP loans be paid out in salaries may have aided the unemployment situation, but with many states not allowing professional flooring dealers to open up, it did little to protect their businesses.”
In the inevitable “next phase” of stimulus action, Humphrey said he wants to see substantial tax breaks for professional flooring dealers. “Further, I would like to see the next phase offer help to the associations that service our industry and others. Thus far, 501C3s have provided help through the SBA’s PPP loans, but other non-profits have been left out. Associations are essential to the overall health and well-being of our industry.”
In the end, Humphrey said he is confident government will do the right thing. “Treasury Secretary Mnuchin and Fed Secretary Powell have gone out of their way to communicate that there are many bullets left in their guns,” he explained. “I would hope to see an evaluation of how existing stimuli have worked prior to guessing at the next fix. Still, I am certain there will be additional solutions offered.”