The legislation will send $1,200 checks to many Americans.
A $2 trillion stimulus package was struck by Senate leaders and the Trump administration in the early hours Wednesday, a move that will provide “big help and quick help” to the nation's businesses and workers affected by the unprecedented COVID-19 pandemic.
Senate Majority Leader Mitch McConnell and Minority Leader Charles E. Schumer announced what McConnell called a “historic relief package” on the Senate floor at about 1:30 a.m. “I’m thrilled that we’re finally going to deliver for the country that has been waiting for us to step up,” the republican from Kentucky said.
“Help is on the way, big help and quick help,” Schumer added, according to The Washington Post. “We’re going to take up and pass this package to care for those who are now caring for us, and help carry millions of Americans through these dark economic times.”
While details are unfurling, the legislation will send $1,200 checks to many Americans and create a $367 billion loan program for small businesses. It also sets up a $500 billion fund for industries, cities, and states. Portions of the bill were still being drafted Wednesday morning.
The New York Times said it includes “direct support for companies large and small that have lost all or most of their customers in recent weeks, and direct payments to low- and middle-income families.” It also includes measures meant to encourage companies to keep employees on their payrolls, even if their businesses have shuttered temporarily (as many restaurants have) and increases aid to workers laid off anyway, or who have had hours and wages cut back.
- $1,200 for most adults, $500 per child
- $130 billion for hospitals
- 4 months of unemployment insurance (was 3 before)
- $500 billion for corporations
- $350 billion for small businesses
- $150 billion for state and local governments
A significant boost to unemployment insurance is coming, too, with $150 billion dedicated for state and local stimulus funds and $130 billion for hospitals. The agreement arrived after five consecutive days of heated negotiations and failed attempts to reach a bipartisan agreement.
The end result is a bill more that more than doubled in size.
Unemployment insurance would extend by 13 weeks and include a four-month enhancement of benefits, according to The New York Times. Democrats said it would allow workers to maintain their full salaries if forced out of work as a result of the pandemic.
The $1,200 lawmakers agreed to provide in direct payments apply equally to workers with incomes up to $75,000 per year before phasing out and ending altogether for those earning more than $99,000. Families would receive an additional $500 per child.
CNN reported it would likely take until at least May before the money goes out. About 90 percent of Americans would be eligible to receive full or partial payments, according to estimates by the Tax Policy Center.
Qualifying income levels will be based on 2019 federal tax returns, if already filed, CNN said, and otherwise on 2018 returns.
McConnell said the Senate hopes to pass the legislation later Wednesday. The Washington Post noted action could take longer with the House out of session, and is also dependent on whether lawmakers can agree to pass the bill by “unanimous consent,” which would require agreement from all members of the chamber.
Treasury Secretary Steven Mnuchin, White House legislative affairs director Eric Ueland, and newly named White House chief of staff, Mark Meadows, met alternately with McConnell and Schumer as midnight neared.
“It’s a very large investment in the U.S. economy,” Mnuchin told reporters after the deal was struck, as reported by The Washington Post. “And people worked tirelessly around the clock going through the documents. So, again, couldn’t be more pleased.”
Mnuchin added President Trump would “absolutely, absolutely, absolutely,” sign the bill.
The bill is being moved quickly through Congress without public hearings or formal review—an update that sent the stock market up sharply Tuesday in anticipation. The Dow Jones industrial average hiked north of 2,100 points, or 11.4 percent.
McConnell called the investment a “wartime level,” of commitment. White House National Economic Council Director Larry Kudlow said it was the “single largest Main Street assistance program in the history of the United States.” It dwarfs the $800 billion “Troubled Asset Relief Program” passed in 2008 during the financial crisis.
Administration officials said they hoped the effect would far exceed the $2 trillion cost and generate as much as $4 trillion in economic activity.
Schumer said this was “not a moment of celebration, but one of necessity.”
“To all Americans I say, ‘Help is on the way,’” he added.
One of the key changes of the current deal over previous efforts concerns the massive loan program center to Democrats’ demands.
It concerns the $500 billion loan and loan-guarantee program that the Treasury Department would be tasked with administering for companies, states, and cities. Of that amount, $425 billion is slated to go to businesses, cities, and states. Another $50 billion would go to passenger airlines, as well as $8 billion for cargo airlines, and $17 billion for firms deemed important to national security.
President Trump previously said he wanted some of the money to go to the cruise ship industry as well, but also wanted assistance for hotels.
After push back from Democrats, the $500 billion fund—$425 for the Federal Reserve to leverage for loans in order to help broad groups of distressed companies and $75 billion for industry specific loans (like airlines and hotels), will now be overseen by an independent inspector general and five-person oversight board appointed by Congress. Companies that accept money must agree to stop any stock buybacks for the length of the government assistance, plus an additional year.
Democrats also added a provision that blocks Trump family businesses, or those of other senior government officials, according to The New York Times, from receiving loan money under the programs, as revealed by Schumer in a letter to Democrats.
The unemployment insurance boost is a critical lever. It expands eligibility and offers workers an additional $600 a week for four months, on top of what state unemployment programs pay.
Senator Marco Rubio negotiated the small business portion, The Washington Post said. He noted it grew to $367 billion, with inclusion of six months of loan forbearance for all small businesses, adding $17 billion to the original proposed $350 billion number. The agreement includes $350 billion to establish leading programs for small businesses. It only applies to companies that keep their payrolls steady through the pandemic. Small businesses that pledge to keep their workers would also receive cash-flow assistance structured as federally guaranteed loans. If the employer continued to pay its workers for the duration of the coronavirus crisis, the loans would be forgiven.
According to Senate Minority Leader Chuck Schumer's office, reported by ABC News, the deal also includes $10 billion in Small Business Administration emergency grants and up to $10 million of emergency relief per business. It allocates $17 billion for the SBA to cover six months of payment for small businesses with existing SBA loans.
It offers $30 billion in emergency education funding and $25 billion in emergency transit funding.
Senator John Hoeven said in a news release the legislation would increase the amount the Department of Agriculture could spend on its bailout program from $30 billion to $50 billion.
There is still work to be done. According to The Washington Post, if unanimous consent is not possible, aides of both parties said the most likely scenario would be a day-long vote where members would be encouraged to spread out their trips to the floor and not congregate as the vote is taken. At least two House members and one senator have tested positive for COVID-19. Others are quarantined.
As of Tuesday night, there were more than 55,000 confirmed case of the coronavirus in the U.S.
This is a developing story. More to come as updates roll out, particularly how it affects the restaurant industry, which was not immediately clear early Wednesday.