President Biden’s “American Rescue Plan”

Pillsbury Winthrop Shaw Pittman LLP

Last week, President Biden released a fact sheet summarizing a proposed $1.9 trillion COVID-19 stimulus package, which promises to have a broad reaching impact on U.S. businesses.

TAKEAWAYS

  • The proposal includes a $15 billion grant program to more than one million of the hardest hit small businesses, reimbursement for employee sick leave, and $35 billion to generate low-interest loans and venture capital to help entrepreneurs.
  • The proposal allocates $130 billion for schools to spend on a variety of safety and student support applications to assist with school reopening and to support safety measures for in-person learning.
  • The proposal is designed to provide a “down payment” on forthcoming clean energy and technology initiatives, including placeholders for investment in clean energy projects by small businesses, as well as states looking to reduce electricity costs in disadvantaged communities.

President Biden recently unveiled a broad-reaching $1.9 trillion stimulus package, which will likely be the new administration’s first legislative priority. The majority of the plan focuses on providing support to workers and families hurt by the pandemic, as well as improvement to medical treatment and the rapid distribution of vaccines. However, there are key provisions that will be of importance to the private sector, as well as public and private schools, that we outline below.

On January 12, 2021, then President-elect Biden unveiled a broad-reaching $1.9 trillion stimulus package. It includes funding for a wide range of programs including expanded testing and vaccine distribution, federally financed employee sick leave, cybersecurity, rental assistance, small business grants, and local government assistance. The underlying goal of the proposal is to get the pandemic under control and mitigate its economic and social impact on the country.

President Biden has indicated that he intends to lobby for bipartisan support of the package. In addition to controlling the House of Representatives, Democrats will hold 50 seats in the Senate, as well as the tie-breaking vote from the Vice President once Senators-elect Ossoff and Warnock are sworn in. Passage of the legislation would normally require 10 Republican votes in the Senate to overcome a filibuster; however, Democrats in the House and Senate may take advantage of a parliamentary process known as budget reconciliation, which only requires a simple majority to close debate and avoids the threat of a filibuster. Thus, Congress could pass Biden’s proposal without Republican support.

The majority of the plan focuses on providing support to workers and families hurt by the pandemic, as well as improvement to medical treatment and the rapid distribution of vaccines. However, there are key provisions that will be of importance to the private sector, as well as public and private schools, that we outline below.

Reimbursement for Employee Leave

Employer reimbursement for employee sick leave is included in the stimulus proposal. The plan calls for Congress to reinstate the requirement from the 2020 Families First Coronavirus Response Act (Pub. L. 116-127) for companies to provide employees at least two weeks of paid sick leave at 100% of their base salary, as well as an additional 12 weeks of paid leave to take care of children or family members for coronavirus-related reasons at 2/3 of their base salary through September 30, 2021. The relief would cover up to $1,400 a week, or the full amount of leave for employees earning up to $73,000 a year.

Unlike the legislation passed in 2020, the President’s plan eliminates loopholes for employers of less than 50 people or more than 500, as well as medical care providers. Companies with less than 500 employees will be reimbursed by the federal government in the form of a payroll tax credit for the full amount of the leave their employees take. Biden’s proposal also provides these sick leave benefits to federal employees and reimburses state and local governments for the cost of employees who utilize paid sick leave.

Small Business Funds

A $15 billion grant program to provide financing to “more than one million of the hardest hit small businesses” will be included in the proposal. The plan does not yet provide details on how the one million hardest hit small businesses would be identified, but this aide is separate from the existing Paycheck Protection Program, and the plan does reference assistance to restaurants, bars, and arts, along with other businesses that have suffered disproportionately under the pandemic. Additionally, it includes a $35 billion investment to local financing programs, which is estimated to generate as much as $175 billion in low-interest loans and venture capital to help entrepreneurs, including those in the clean energy sector. The proposal specifically references entrepreneurs in the clean energy sector, but it does not indicate if such businesses will receive preferential treatment or be a priority recipient of loans.

Aid to State and Local Governments

In the COVID-19 relief legislation passed by Congress in December (Consolidated Appropriations Act, 2021, Pub. L. 116–260), Democrats were unable to persuade Republicans to agree to dedicated funding for state, local, and tribal governments to replace revenues lost as a result of the pandemic, and to shore up finances for key functions like public safety, economic development, and transit. The Biden relief plan addresses these concerns, proposing $350 billion in emergency funding to state, local, tribal, and territorial governments, to permit them to “keep front-line workers on the job and paid,” while supporting the Administration’s goals for vaccine distribution, school reopening, and other functions. In particular, the plan – doubling similar funding in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136) – recommends $3 billion in funding to the U.S. Economic Development Administration to support infrastructure development and other economic development activities. The plan would also provide $20 billion for public transit agencies, many of whose ridership levels have plummeted during the pandemic.

Cybersecurity

Referencing the recently disclosed cyber-attack on agencies and public companies, the proposal allocates over $10 billion in cybersecurity and information technology spending. This includes $9 billion for the Cybersecurity and Infrastructure Security Agency (CISA) and General Services Administration (GSA) to launch a new cybersecurity and information technology shared service. An additional $690 million is designated to CISA to improve security monitoring and incident response; the specific CISA programs that would receive this infusion of funding are not referenced in the plan, though it is assumed that one or both of the Continuous Diagnostics and Mitigation Program and the National Cybersecurity Protection System program – the two largest CISA cybersecurity programs – will be beneficiaries. Finally, $200 million is allocated to hire hundreds of experts to support the federal Chief Information Security Officer and U.S. Digital Service.

Support for Tenants

President Biden’s proposal extends eviction and foreclosure moratoriums and continues applications for forbearance on federally guaranteed mortgages through September 30, 2021. The plan also includes an additional $25 billion in rental assistance, in addition to the $25 billion allocated in the COVID-19 relief legislation passed by Congress in December (Consolidated Appropriations Act, 2021, Pub. L. 116–260) for low and moderate-income renters. It also calls for $5 billion to help people cover home energy and water costs through programs like the Low-Income Home Energy Assistance Program. This program includes a competitive set-aside of funding for states to invest in clean energy and energy efficiency projects that reduce electricity bills for families in disadvantaged communities. Lastly, the proposal includes $5 billion in emergency assistance to find housing for people experiencing, or at risk of, homelessness.

School Reopening

President Biden has stated that his administration aims to reopen most schools within 100 days of his inauguration. The proposed legislation allocates $130 billion to aid schools in reopening and to support safety measures for in-person learning. The plan suggests that there will be some flexibility in how these funds are applied, but lists the following potential uses: reducing class sizes and modify spaces so students and teachers can socially distance, improving ventilation; hiring more janitors and implementing mitigation measures; providing personal protective equipment; ensuring every school has access to a nurse; increasing transportation capacity to facilitate social distancing on the bus; hiring counselors to support students as they transition back to the classroom; closing the digital divide that is exacerbating inequities during the pandemic; providing summer school or other support for students to compensate for lost learning time; creating and expanding community schools; and covering other costs needed to support safely school. Additionally, $5 billion is allocated for state governors to use at their discretion on education programs and student needs that have been impacted by COVID-19. Finally, approximately $35 billion will be allocated to funding higher education public institutions, including community colleges and historically black colleges.

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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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