Senate Rolls Out Massive Coronavirus Stimulus Plan

Senate Rolls Out Massive Coronavirus Stimulus Plan

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Plus, what will coronavirus relief checks cost?
Thursday, March 19, 2020

McConnell Releases Senate GOP’s Four-Part Coronavirus Stimulus Plan

Senate Majority Leader Mitch McConnell on Thursday introduced the Republican plan for the next phase of economic response to the coronavirus pandemic, setting the stage for talks with Democrats as lawmakers race to deal with the fallout from the virus.

"It is critical that we move swiftly and boldly to begin to stabilize our economy, preserve Americans' jobs, get money workers and families and keep up our fight on the health front," McConnell said Thursday. "This is exactly, exactly what our proposal will do."

In outlining the plan, McConnell said it was based on four major components:

  • Help for small businesses: Senate Republicans are looking at providing “hundreds of billions of dollars” in federally guaranteed loans, with money used for “core expenses” such as payroll and rent converting into grants that don’t have to be paid back.
  • Cash payments to individuals: Senate Republicans are proposing sending $1,200 in cash per adult ($2,400 for married couples) and $500 per child, slightly different than the $1,000 per adult and $500 per child pitched by the Trump administration. The direct payments would  go to people earning up to $75,000 a year and then phase out gradually, with individuals earning above $90,000 not eligible for assistance. But the plan reportedly would provide only $600 to poor families who don't pay federal income taxes.

    The idea of direct payments reportedly has generated some deep division among Republicans, with some objecting to the concept while others reportedly pushed for the lower payments to people who don’t pay federal income taxes.
  • Loans for industries affected by the virus: McConnell said the industries affected had not brought this trouble upon themselves. “We are not talking about a taxpayer-funded cushion for companies that made mistakes,” he said. “We are talking about loans, which must be repaid, for American employers whom the government itself is temporarily crushing for the sake of public health.”
  • Funding for the public health response: “Our proposal will go even further to remove barriers to care, speed innovation, fund the hospitals and health centers that will treat patients, and expand healthcare workers’ access to the tools they need, including respirator masks,” McConnell said.

What’s next: Lawmakers are racing to get something done, but this package is likely to be contentious, both within the GOP and in talks with Democratic leaders Chuck Schumer and Nancy Pelosi.
“McConnell is seeking to first build a consensus among Senate Republicans — on everything from direct payments to loans — and then will bring his proposal to Schumer to iron out the details,” Politico reports. “Senators expect those talks to last well into the weekend, and McConnell is urging lawmakers to stay close by so that the Senate can quickly vote on and pass the aid package.”
Schumer and Senate Democrats have outlined a $750 billion package of their own focused more on existing safety net programs. And House Democrats are working on another coronavirus stimulus plan, but they also have internal disagreements to sort out, with some in the party reportedly urging larger cash payments while others have pushed to further strengthen existing programs, including unemployment insurance and Medicaid.

And what’s after that: Even as lawmakers seek to quickly finalize a massive stimulus, talks are reportedly ramping up regarding a fourth legislative package that could include infrastructure spending and a payroll tax cut.

How Much Would It Cost to Send Americans Coronavirus Relief Checks?

Analysts at the Committee for a Responsible Federal Budget did some quick calculations on the cost of sending Americans checks as part of a massive government effort to support the economy during the coronavirus crisis. One proposal that is currently being discussed — sending $2,000 to each adult and $500 to each child — would cost about $570 billion, CRFB said Thursday.

Although it looks like Congress and the administration intend to move forward with some kind of support plan, plenty of questions remain, including income cutoffs and taxability of the aid. CRFB provided an analysis of some of those options in the chart below.

Trump Supports Letting Government Take Equity Stakes in Businesses That Get Bailout Funds

President Trump said Thursday that he supports the controversial idea of having the government take equity stakes in some companies that receive federal funds as part of the coronavirus stimulus effort.

The White House’s top economic adviser, Larry Kudlow, had floated the idea on Wednesday.

The background: Taking equity stakes would be a way to protect taxpayer money, but it can be extremely controversial — or at least it was more than a decade ago, when the Obama administration did it in the wake of the financial crisis. Critics decried the idea of having the government involved in the ownership of private businesses, even if those equity stakes turned out to be profitable for the government.

“While deeply controversial politically, taxpayer backstops for the financial, automotive and housing-finance industries during the 2007-09 crisis were a key component of averting another Great Depression,” Bloomberg’s Justin Sink and Luke Kawa write. “While there were losses in some cases, equity stakes helped the government come out ahead on many of the transactions.”

Sink and Kawa note that Kudlow had been adamantly opposed to such government intervention in the wake of the 2008 financial crisis and called the Obama administration’s rescue of General Motors “an attack on free-market capitalism.”

“Call it Bailout Nation or Ownership Nation, it’s an unprecedented degree of government command, control, and planning, all in the name of a tough economic downturn,” Kudlow reportedly wrote at the time.

This week, Kudlow said that the 2008 GM bailout had been a good deal for the government.

Mnuchin and McConnell Say Cash for Companies Is Not a ‘Bailout’

Treasury Secretary Steven Mnuchin and Senate Majority Leader Mitch McConnell both emphasized Thursday that federal aid to big businesses such as airlines planned as part of the administration’s proposed stimulus package of $1 trillion or more is not a “bailout.”

The administration’s plan, still subject to negotiations with Congress, calls for $50 billion in loan guarantees for passenger and cargo air carriers as well as $150 billion for other “severely distressed sectors” of the U.S. economy, such as cruise operators and hotel companies.

The stimulus package would also provide $300 billion for loans, not grants, to small businesses affected by the pandemic.

“We’re not talking about so-called bailouts for firms that made reckless decisions,” McConnell said. “None of these firms — not corner stores, not pizza parlors, not airlines — brought this on themselves. We’re not talking about a taxpayer-funded cushion for companies that made mistakes. We’re talking about loans which must be repaid.”

Mnuchin has struck a similar note. “This isn’t a bailout,” he told Fox Business on Thursday. “We're not going to force things on people, but people who need liquidity, we're going to make sure that the taxpayers are compensated fairly.”

The Washington Post’s Robert Costa and Philip Rucker report that Mnuchin also sought to ensure that Senate Republicans were careful about the language they used when he met with them on Tuesday:

“[T]he secretary pleaded with them not to use the politically charged word ‘bailout’ in describing the proposed relief for Boeing, one of many large corporations that stands to benefit from the administration’s plan. One senator raised a hand and asked if they should instead call them ‘freedom payments,’ which prompted laughter, according to a person briefed on the closed-door meeting who spoke on the condition of anonymity to be candid about the discussion.”

Putting conditions on funds: Democrats are pushing to include measures in any stimulus package to ensure that taxpayer money provided to corporations does not get used for stock buybacks or executive pay. “As far as I’m concerned, conditions like that would be OK with me,” President Trump said Thursday.

Hospitals Say They Need $100 Billion

Professional groups representing hospitals, doctors and nurses say they need $100 billion to help pay for the surge in expenses related to the Covid-19 outbreak.

In a letter to Congress Thursday, the American Hospital Association, the American Medical Association and the American Nurses Association said “hospitals are currently losing up to $1 million per day” treating patients infected with the virus, and they expect to losses to continue and possibly grow larger. The requested funds would be used to pay for patient treatment, equipment, childcare for providers, and expanded hospital capacity.

Axios’s Bob Herman notes that the hospitals, flush with cash in recent years, will receive payment for the services they perform. “Medicare, Medicaid and commercial insurers will still pay hospitals and doctors for all coronavirus care they provide,” Herman said Thursday, adding that providers have already created new billing codes for coronavirus-related services.

Numbers of the Day: 25 and 50

The Trump administration is once again looking at the idea of issuing 25-year and 50-year bonds as it grapples with how to finance a massive stimulus plan of more than $1 trillion, Bloomberg’s Jennifer Jacobs and Saleha Mohsin report. Treasury Secretary Steven Mnuchin had previously concluded that there wouldn’t be enough market demand for 50- or 100-year bonds, but that the Treasury would now look to take advantage of low interest rates. “We have no problem issuing more debt here,” he said.


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