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Unemployment insurance provision hangs up coronavirus relief package

The bill offers payments to families, loans to businesses, expanded unemployment insurance benefits and more

Senate leaders were preparing to unveil a roughly $2 trillion financial rescue package Wednesday that offers payments to families, loans to businesses, expanded unemployment insurance benefits, relief for states and a massive cash infusion for hospitals buckling under COVID-19’s strain.

The sweeping legislation was slated to get a Senate floor vote sometime Wednesday before being sent to the House. President Donald Trump has expressed support for the measure.

But so far one relatively small piece of the package — only in the current context could $340 billion be considered small — has been officially released: supplemental appropriations for hospitals as well as various federal agencies on the frontlines of attempting to contain the pandemic.

The remainder of the bill, including tax rebates for most U.S. households, nearly $900 billion in business loans and expanded unemployment insurance intended to fully replace lost wages for four months, hadn’t yet been released, though drafts were floating around the Capitol. 

The delay appeared to be at least partly due to what Lindsey Graham, R-S.C., and other Republicans called a “massive drafting error” that could incentivize layoffs by providing unemployment compensation over and above replacement wages. 

“If this is not a drafting error then this is the worst idea I’ve seen in a long time,” Graham said. Under the deal worked out with Democrats, jobless individuals would receive $600 a week for four months on top of their regular unemployment compensation, which varies by state. In South Carolina, the maximum benefit is $326 per week, so for four months an individual could get paid the equivalent of about $49,000 a year or $24 an hour, Graham said.

“I think we’ve done absolutely the worst thing we can do to stabilize the economy. We’ve incentivized people not to go back to work,” he said. “Every employer in the state has to compete with a $24 an hour minimum wage now I guess.”

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But a Senate Finance Committee Democratic aide not authorized to speak on the record about the issue said trying to limit a benefit increase to a worker’s full salary presented logistical problems. “The administration made clear that state unemployment offices did not have the technological capability to calculate wage replacement on an individual basis, which is how we came to the bipartisan agreement on a $600 increase per week in benefits,” the aide said.

Businesses taking special forgivable Small Business Administration loans under the aid package would find themselves with a shortage of workers to rehire when they open back up, critics said. And Graham argued it could actually remove health care workers like nurses from the frontlines because they’d be better off financially taking unemployment. 

[States get what they sought in coronavirus stimulus, but say it’s not enough]

Graham along with fellow South Carolina Republican Tim Scott and Ben Sasse, R-Neb., said they’d oppose the bill without a legislative fix or some sort of Labor Department regulatory change. Scott and Sasse are on the Finance Committee that negotiated the unemployment provisions, and they said the panel was working on an amendment. 

Bernie busts in

But it wasn’t yet clear whether any “fix” proposed by Republicans would pass muster with Democrats, who all along in the negotiations had been pushing for the extra $600 a week unemployment benefit.

Sen. Bernie Sanders, the Vermont independent still in the running for the Democratic presidential nomination, said if the GOP persists in trying to change the unemployment language he’d put a “hold” on the package. Sanders wants stronger conditions imposed on $500 billion in loans to struggling businesses to ensure worker protections for aid recipients.

[Thursday likely earliest stimulus bill gets to Trump’s desk]

Among the other major elements of the bill, it seemed like most of the key details had been settled on based on various drafts and summaries trickling out:

Cash payments: The package calls for sending tax rebate checks of up to $1,200 for individuals and $2,400 for married couples filing jointly, with an additional $500 per child. The size of the checks would be smaller for single filers making more than $75,000 and joint filers making more than $150,000 in adjusted gross income, phasing out by 5 percent of earnings above the thresholds.

Expanded food aid: The Supplemental Nutrition Assistance Program, or food stamps, would get an additional $15.5 billion to help address rising demand as unemployment increases. Another $450 million would go to food banks.  

Small business loans: To help small businesses avoid layoffs, the bill provides about $377 billion in loans, much of which would be forgiven if workers are kept on the payroll. 

Aid to industries: About $500 billion would be available in loans to struggling industries including airlines, hotels and more, as well as to state and local governments. Airlines could tap up to $29 billion in loans, though they’d get another $32 billion in direct cash grants to keep workers on payroll. Another $17 billion in loans would be set aside for “businesses critical to national security,” which lawmakers have said would include Boeing Co. The loans would be administered by the Treasury and Federal Reserve and would be monitored by an inspector general, a regulatory oversight board and a congressional review panel.

[Prisons and courts get coronavirus help in Senate relief bill]

Worker retention: The bill would provide employers a tax credit to offset the cost of employment taxes equal to 50 percent of a worker’s wages, up to $10,000 per employee. The employer share of payroll taxes would be suspended for two years.

Coverage of testing: Health care plans would be required to provide full coverage of diagnostic testing for COVID-19 without cost-sharing.

College aid: Monthly payments on federally held student loans would be suspended through September, with no interest accruing during that time. Eligibility for Pell grants or student loans would not be affected by absence from school due to the coronavirus. Loan repayments would be canceled for students who must withdraw from classes because of a qualifying emergency. And a portion of employer-provided student loan repayment assistance would be excluded from taxable income.

Paid sick leave: Employers would get advance funding on a payroll tax credit to offset the cost of providing expanded paid sick leave and family and medical leave.

Postal service: The struggling U.S. Postal Service would get the authority to borrow up to $10 billion from the Treasury to cover revenue shortfalls.

Election aid: States would get $400 million to prepare to hold elections during the pandemic.

[Distillers, retailers, pension plans benefit in stimulus plan]

Winners and losers

Negotiators haggled for days over various disputes that held up the drafting of a final bill. Among the sticking points were the size of cash payments for families, the amount of hospital funding, the extent of supplementary food aid, whether to offer grants or loans to airlines, and how best to oversee the industry stabilization fund.

At one point, Democrats were seeking $1,500 checks for individuals, but they settled for the $1,200 maximum provided in the bill. Hospital funding appeared to have been increased at Democrats’ urging, to about $100 billion, though Republicans have said they supported the initiative.

Lawmakers fought for days over whether assistance to struggling airlines should come in the form of loans or grants. Senate Republicans initially sought only loans, but airline unions said they would face many layoffs without direct grants. 

The bill provides $25 billion in grants for passenger airlines, $4 billion for cargo air carriers and $3 billion for contractors.

[Stimulus bill gives Fed direct loan funds with few strings]

Another major battle was fought over how to ensure proper oversight of loans to big corporations, a top priority for Democrats. The bill prevents companies that receive loans from using the money for stock buybacks and they must agree to retain at least 90 percent of their workforce. 

Companies also must agree not to send any jobs overseas for the duration of the loan and two years thereafter. Loans could not be forgiven. And the bill creates under the Treasury Department an Office of the Special Inspector General for Pandemic Recovery to monitor all loans, along with a congressional oversight commission.

Democrats had also expressed concern Trump could tap loans under the new fund to shore up his hotels and other businesses. The bill prohibits him and other senior executives from participating in the loan program.

In a loss for the Trump administration, the bill rejected a proposal to spend $3 billion to buy oil to fill up the Strategic Petroleum Reserve.

And like any sweeping legislation, the measure contains some items not directly related to the pandemic.

That includes a provision correcting a drafting error in the 2017 tax code overhaul known as the “retail glitch,” which prevents retailers and restaurants from depreciating building improvements in a single year, as was intended. Under the current law, they must depreciate over 39 years, which economists say has led to delays in business improvements.

And in a win for Senate Appropriations Chairman Richard C. Shelby, R-Ala., the measure includes a long-sought provision that would exempt from discretionary spending caps Army Corps of Engineers funding provided by the Harbor Maintenance Trust Fund, which is financed by taxes on imported cargo. 

Lindsey McPherson and Doug Sword contributed to this report.

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