Senate Unveils Third Relief Package; Talks Continue Today
Senate Majority Leader Mitch McConnell unveiled an expansive economic relief package on Thursday as Congress considers a third legislative measure in an effort to combat the coronavirus crisis that is gripping the nation and could plunge the country into recession.
McConnell’s package, a 247-page bill, was released after consultations with Senate Republicans and is centered around direct cash payments to families, payments to small businesses, loans to industries decimated by the virus, and increased funding for the healthcare industry. Talks between the GOP and Senate Democrats are expected to start today; a bill needs 60 votes and bipartisan support to move forward.
The package would provide direct cash payments to individuals; defer payroll taxes paid by employers; provide loans secured by company assets for airlines and other impacted industries; boost payments to hospitals, provide assistance to small businesses, implement tax changes for individuals and businesses, etc. Leader McConnell acknowledged the package was subject to change as negotiations progress with the House, Senate Democrats, and the White House.
You can read subject-to-change highlights of the proposal below:
- The bill would provide direct payments to individuals of about $1,200 per person or $2,400 for married couples filing jointly, with $500 extra per child, at a cost of $273 billion
- The proposal would provide $300 billion in loans to small businesses, defined as 500 employees or less. The maximum loan would be $10 million, and each loan would be tied to an applicant’s average monthly payroll mortgage, rent, utility payments, and other debt obligations over the previous year
- The package would provide additional aid to the health care industry with a focus on increasing the number of hospital beds and respirators.
- The package would provide some financial relief to college students by allowing the Secretary of the Department of Education to defer student loan payments for three months without any penalty to the student, and for an additional three months if the secretary deems it necessary.
- For employers, language in the bill would ease small-business paid leave mandates in separate legislation, HR 6201, the President signed into law Wednesday night.
- The package includes several tax measures for individuals and businesses, including
- Waiving early withdrawal penalties for taking money out of retirement accounts
- Creating a special deduction for up to $300 in charitable donations for taxpayers who don't itemize.
- Letting companies defer paying the 6.2 percent Social Security payroll tax, which applies to wages up to $137,700 this year. Instead, companies could pay half of that tax next year and the other half in 2022.
- Allowing companies to "carry back" net operating losses incurred in 2018, 2019 or 2020 to offset taxes paid over the past five years when they were profitable generating a refund from the IRS
- Letting unprofitable companies generate bigger refunds from alternative minimum tax credits built up over prior years, to use instead of write-offs for equipment expenses that are only good for reducing taxable income
- Raising the limit on businesses' deductions for interest payments to 50 percent of income through the end of the year.
House Democrats are indicating they want to go bigger and broader than the already-massive economic stimulus package offered by Senate Republicans to blunt the coronavirus pandemic.