Bipartisan Breakthrough: Congress Passes and President Trump Signs $900 Billion Stimulus

Pillsbury Winthrop Shaw Pittman LLP

After months of deadlock, a $900 billion stimulus package promises direct payments, unemployment benefits and small business aid.

TAKEAWAYS

  • On December 27, President Trump signed into law a $900 billion COVID relief package and a $1.4 trillion government spending bill.
  • The legislation, passed by Congress on December 21, includes direct cash payments, Paycheck Protection Program (PPP) funding for small businesses and expanded PPP eligibility for news outlets and 501(c)(6) nonprofit organizations with fewer than 300 employees, and enhanced unemployment benefits.
  • The final package extends funding for state and local governments currently available under the CARES Act, but it does not include additional funding sought to help replace revenue losses, nor does it include liability protections for businesses.

Nine months after enacting the $2.2 trillion CARES Act, on December 21 lawmakers voted on and passed an additional $900 billion relief package. The compromise bill resulted from a series of intense negotiations that also produced a $1.4 trillion bill to fund the government through September 30, 2021, thereby avoiding a government shutdown. President Trump signed both bills on December 27.

Although the package is one of the largest relief efforts in U.S. history, it is a fraction of the original $3 trillion HEROES Act House Democrats passed in May. President-elect Biden has characterized the long-awaited relief as a “down payment” on future relief legislation to be pursued after his inauguration in January.

Here is a high-level summary of key provisions in the latest stimulus package:

Direct Payments

  • Another round of Economic Impact Payments of $600 per individual earning up to $75,000 per year ($1,200 for couples/joint filers earning up to $150,000 per year), and an additional $600 per child dependent.

Relief for Businesses

  • Over $284 billion for first and second forgivable Paycheck Protection Program (PPP) loans and expanded PPP eligibility for news outlets and 501(c)(6) nonprofit organizations.
  • 501(c)(6) nonprofits with 300 or fewer employees are eligible to receive PPP loans provided the organization does not receive more than 15 percent of receipts from lobbying; lobbying activities do not comprise more than 15 percent of total activities; and the cost of lobbying activities did not exceed $1 million during the organization’s most recent tax year that ended prior to Feb. 15, 2020.
  • Businesses that received PPP loans and had them forgiven will be permitted to deduct the costs covered by such loans on their federal tax returns.
  • $20 billion for new Economic Injury Disaster Loan (EIDL) grants for businesses in low-income communities.
  • $15 billion for independent movie theaters, live venues and cultural institutions.
  • $3.5 billion for continued Small Business Association (SBA) debt relief payments.
  • $2 billion for enhancements to SBA lending.
  • Extends the Employee Retention Tax Credit (ERTC) established in the CARES Act.

Unemployment

  • Revives the enhanced federal unemployment insurance benefit that expired in July and provides an additional $300 per week for all workers receiving unemployment benefits, through March 14, 2021.
  • Extends the Pandemic Unemployment Assistance (PUA) program, which provides unemployment coverage to self-employed, contract and gig workers.
  • Extends the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of federally funded unemployment benefits to individuals who exhaust their regular state benefits.
  • Increases the maximum number of weeks an individual may claim benefits through regular state unemployment plus the PUA or PEUC program to 50 weeks.
  • Provides an extra benefit of $100 per week for certain workers who have both wage and self-employment income, but whose base unemployment benefit calculation does not account for their self-employment income.
  • Adds provisions to combat fraud and abuse, requiring documentation of earnings and employment (instead of solely self-certification) and processes for verifying applicants’ identities.
  • Includes Return to Work reporting, requiring states to establish a system for employers to report when individuals turn down a job and to notify claimants of the requirement to accept suitable work, unless there is good cause for refusal.

State and Local Aid

  • The package extends the availability for funds provided to states and localities by the Coronavirus Relief Fund in the CARES Act until December 31, 2021, and provides other funding to state and local governments to carry out pandemic-related programs. However, the new legislation does not include additional aid sought by state and local governments to help replace revenue losses.

Contractor Pay Extension

  • Provides federal agencies the authority to reimburse contractors for the costs of paid leave during the COVID-19 pandemic for contractors who are temporarily unable to work due to facility closures or other restrictions.

Transportation

  • $16 billion for airline payroll support, $2 billion for airports and airport concessionaires, and $1 billion for airline contractor payrolls
  • $14 billion for mass transit agencies
  • $10 billion for state highways
  • $2 billion for private motorcoach, school bus and ferry industries
  • $1 billion for Amtrak

Rental Assistance and Eviction Moratoriums

  • Extends the Centers for Disease Control and Prevention (CDC) eviction moratorium (set to expire at the end of the year) until January 31, 2021
  • $25 billion in emergency assistance to renters

Vaccine Distribution and Health Care Provider Support

  • $20 billion for the purchase of vaccines
  • $22 billion to assist states with COVID-19 testing
  • $9 billion to the CDC and states for vaccine distribution and over $3 billion for the strategic national stockpile

School Funding and Childcare

  • $82 billion to K-12 schools and universities to assist with reopening, including $2.75 billion for private K-12 education

Nutrition and Agriculture

  • $13 billion to increase Supplemental Nutrition Assistance Program (SNAP) benefits by 15 percent
  • $13 billion for direct payments, purchases and loans to farmers and ranchers

Banks

  • $12 billion in support to small lenders focused on low-income and minority communities

Broadband

  • $7 billion to expand access to broadband

Liability Protections for Businesses Not Included

  • Notably, the legislation does not include liability protection from COVID-19-related lawsuits for businesses, despite Senate Majority Leader Mitch McConnell (R-KY) previously describing it as a “red line” issue in any COVID relief package.

On-Going Efforts to Increase Direct Payments
Prior to signing the relief package and federal spending bill, President Trump issued a public statement in support of raising direct payments to individuals to $2,000. On December 28, by a bipartisan vote, the House passed the CASH Act, a bill to increase the $600 direct payments included in the stimulus package by an additional $1,400. On December 29, Senate Majority Leader Mitch McConnell blocked an up-or-down vote on the CASH Act, instead indicating that the Senate would consider additional direct payments in tandem with other priorities.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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