Senate Considers Phase 3, Aims for Passage As Soon As Possible

With more states issuing orders for residents to stay at home and businesses to close, the Senate failed to agree to a procedural motion on Phase 3 of the emergency economic relief package for the country, forcing negotiators back to the table with only one day left to meet the self-imposed deadline set by Secretary Mnuchin and Senate Majority Leader McConnell (R-KY).

On Thursday, March 19, Leader McConnell unveiled an initial proposal for Phase 3 of the Coronavirus response, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Following two days of bipartisan negotiations, he offered up a revised Phase 3 package, which incorporates some key Democratic priorities, such as $100 billion for hospitals and $250 million to strengthen state unemployment insurance programs.

The Senate convened at 2:00 pm today, Sunday, March 22nd, to resume consideration of the motion to proceed to H.R. 748, which will serve as the legislative vehicle for Phase 3 of the Coronavirus response. H.R. 748 now includes two divisions: Division A holds the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and provides for assistance to workers, health care system enhancements, and economic stabilization measures, while Division B consists of $242 billion in emergency supplemental appropriations.    

At 6:00 pm, the Senate proceeded to a roll call vote on the motion to invoke cloture on the motion to proceed to H.R. 748. The vote failed by a vote of 47-47, with a number of members missing due to self-quarantine, and Leader McConnell changed his vote in order to preserve the right to reconsider the vote at a later time while negotiations continue. Both Congress and the administration have reiterated the need to plot a path forward on Phase 3 as soon as possible.

As federal, state and local governments continue to escalate their responses to the pandemic, the latest actions and developments may be found below. Akin Gump will continue to provide regular policy developments related to COVID-19.

Stimulus Update: Senate Proceeds with Consideration of Phase 3, Additional Phases Likely

  • Phase 3: At 6:00 pm on Sunday, the Senate proceeded to a roll call vote on the motion to invoke cloture on the motion to proceed to H.R. 748, the legislative vehicle for Phase 3 of the Coronavirus response. The vote failed (47-47), and negotiations on the measure are set to continue.
  • In light of the guidance issued by the Centers for Disease Control and Prevention (CDC), the House will be adjusting its schedule moving forward and is also expected to adjust its voting procedures to adhere to these recommendations.

    Summary of Revised Senate GOP Proposal: Division A

  • Title I – Keep American Workers Paid Act: Would increase the maximum 7(a) loan amount to $10 million for businesses with 500 employees or less from March 1, 2020 to December 31, 2020 and expand allowable uses of 7(a) loans to include payroll support. The revised bill released on Sunday allows for certain notable exceptions to the 500 employee cap. The bill includes provisions for entrepreneurial development which authorize the Small Business Administration (SBA) to provide additional financial rewards to resource partners. The measure also provides loan forgiveness equal to the payroll cost from March 1, 2020 to June 30, 2020, and directly appropriates $299.4 billion for loan guarantees and loan subsidies, $700 million for salaries and expenses, and $240 million for small business development centers.
  • Title II – Assistance for American Workers, Families, and Businesses: Would provide up to $1,200 recovery checks directly to individuals (amount is means-tested) and waive the early withdrawal penalty for distributions from a retirement account for coronavirus-related needs. The bill would allow deferral of the employer's share of the payroll tax through December 31, 2020, to be repaid in 2021 and 2022. Additionally, the bill includes several relief measures for businesses, including relaxing limitations on net operating losses, allowing losses to be carried back for five years, addressing a Tax Cuts and Jobs Act technical error related to investments in qualified improvement property, and increasing the amount of interest expense that can be deducted from 30% to 50%. The revised bill no longer contains an earlier provision to allow businesses to delay the payment of quarterly estimated taxes until October 15.
  • Title III – Supporting America's Health Care System in the Fight Against the Coronavirus: Would require the Food and Drug Administration (FDA) to expedite the review of drug applications and inspections to mitigate a drug shortage, as well as establish new reporting requirements for device shortages. The measure aims to speed up innovation by removing the cap on other transaction authority (OTA) and extending the FDA's priority review voucher program. In an aim to increase access to COVID-19 care, the bill would eliminate sequestration payment cuts to Medicare providers from May 1 through the end of 2020, provide an add-on payment to hospitals for COVID-19 patients, and increase Medicare rates to home equipment suppliers for the duration of the national emergency. It would also clarify that all testing for COVID-19 be covered by private insurance plans without cost sharing and establish immediate coverage for vaccines and treatments under Medicare. The [revised Division A] includes new regulatory waivers for post-acute care providers to take on surge capacity and provides $1.32 billion in supplemental funding to community health centers to test and treat patients for COVID-19. The revisions remove proposals to establish new coding and coverage processes for novel treatments, to make direct primary care eligible HSA expenses, and other items deemed too tangential to the COVID-19 response.
  • Title IV – Economic Stabilization And Assistance To Severely Distressed Sectors Of The United States Economy: Includes a total of $500 billion to provide loans, loan guarantees, and other investments to impacted industries, consisting of $75 billion in direct lending for passenger and cargo air carriers and businesses important to maintaining national security, as well as $425 billion for loans, loan guarantees, and investments in support of the Federal Reserve's lending facilities to eligible businesses, states, and municipalities. The measure would also repeal Federal Excise Taxes collected in relation to commercial aviation through the end of the year.
  • Title V – Budgetary provisions: The emergency designations preclude budgetary effects from causing a sequester or triggering other budgetary enforcement mechanisms.

Summary of Revised Senate GOP Proposal: Division B ($242 Billion Supplemental Appropriations)

  • Agriculture, Rural Development, Food and Drug Administration, and Related Agencies [$26.4 billion]: Provides a total of $25 billion for food and nutrition services, including additional funding for food purchases and demonstration projects to increase flexibility for schools, additional funding for the Supplemental Nutrition Assistance Program (SNAP) to cover waiver authorities granted in Phase 2, additional funding for low-income households living on Indian reservations, and distribution of emergency food assistance through community partners.
  • Commerce, Justice, Science, and Related Agencies [$3.0 billion]: Provides $1.595 billion to the Department of Commerce to support economic development grants for states and communities. The measure also provides $1.207 billion for the Department of Justice to support grants assisting state, local, and tribal officers respond to coronavirus.
  • Defense [$11.6 billion]: Includes $3.5 billion for the Defense Working Capital Funds to mitigate the impact of COVID-19 on production lines, supply chain, military depots and labs, and for the Defense Production Act to increase access to materials necessary for national security and pandemic recovery. The measure also provides $1.8 billion to address increase health care cases for eligible military members, dependents and retirees, and to procure Personal Protective Equipment (PPE).
  • Energy and Water Development [$3.2 billion]: Provides $3 billon for the Department of Energy to inject domestic petroleum products into the Strategic Petroleum Reserve and $99.5 million to support research and development efforts related to COVID-19. The measure also provides $50 billion to the Department of Army and the Army Corps of Engineers to ensure the continuous operation of Corps projects related to COVID-19 response.
  • Financial Services and General Government [$1.7 billion]: Provides $562 million to the Small Business Administration (SBA) to support the SBA Disaster Loan Program, as well as $445.15 million for the General Services Administration to support coronavirus response efforts in federal buildings.
  • Homeland Security [$6.2 billion]: Provides $5.45 billion for the Federal Emergency Management Agency (FEMA) to maintain activities by the Disaster Relief Fund, support FEMA's lead role in coordinating federal response activities, and disperse grants for firefighters, emergency managers, and providers of emergency food and shelter. The measure also includes $182 million for Customs and Border Protection (CBP) to support temporary quarantine facilities and other costs, as well as $178 million for Department-wide PPE.
  • Interior, Environment, and Related Agencies [$2.1 billion]: Includes $1.032 billion to address critical response needs in Indian Country, including medical and equipment supplies, mobile triage units, medicines, transportation, backfilling for public health service corps, and increased capacity for telehealth.
  • Labor, Health and Human Services, Education, and Related Agencies [$119.4 billion]: Provides $98.778 billion to the Department of Health and Human Services (HHS) to support activities of the Public Health and Social Services Emergency Fund, including reimbursement to providers, procurement of PPE, the advancement of vaccines and therapeutic delivery, hospital preparedness, and expanded services for rural hospitals. The measure also provides $4.5 billion to the Centers for Disease Control and Prevention (CDC) for public health preparedness and response and $4.4 billion to the Administration for Children and Families to provide immediate assistance to childcare providers and support programs such as Head Start.
  • Legislative Branch [$93 million]: Provides $25 million to support the House's capability to telework and $10 billion to support the Senate's capability to telework and cover costs associated with emergency needs related to coronavirus, as well as $20 million for the Government Accountability Office (GAO) to conduct oversight of funding provided to respond to the coronavirus.
  • Military Construction, Veterans Affairs, and Related Agencies [$19.7 billion]: Provides $19.7 billion for the Department of Veterans Affairs to support increased demand for healthcare services at VA facilities and through telehealth, including the purchase of medical equipment and supplies, testing kits, and PPE, among other things.
  • State, Foreign Operations, and Related Programs [$1.1 billion]: Includes $674 million for the Department of State to bolster the response to coronavirus and provide for migration and refugee assistance. The measure also includes $353 million for the Agency for International Development and $88 million for the return of Peace Corps volunteers to the U.S.
  • Transportation, Housing and Urban Development, and Related Agencies [$48.5 billion]: Includes $31.1 billion for the Department of Transportation to maintain airport operations, maintain Essential Air Service (EAS) to rural communities, and support transit infrastructure grants and Amtrak operating assistance. The measure also provides $17.4 billion for the Department of Housing and Urban Development to support Community Development Block Grants (CDBGs), homeless assistance grants, and tenant and project-based rental assistance, among other things.

Administration Updates

Coronavirus Task Force Briefing Highlights

On Sunday, March 22, the White House Coronavirus Task Force conducted a briefing from the White House Press Briefing Room. Highlights of the discussion include:

  • President Trump expressed hope that the Phase 3 stimulus package would be passed soon and noted that the White House was involved in negotiations.
  • The President has activated the National Guard in Washington state, New York, and California. Governors will maintain command and the federal government will waive the 25 percent state share of the costs.
  • Hundreds of thousands of N95 respirators, surgical masks, surgical gowns, and gloves have been distributed from the Strategic National Stockpile (SNS) to Washington, New York, and California, with more supplies on the way.
  • The USNS Mercy, a naval hospital ship, will be deployed to Los Angeles to add emergency surge capacity. In addition, the USNS Comfort will likely be deployed to New York harbor.
  • The Army Corps of Engineers will build temporary medical facilities in Washington, New York, and California.
  • White House adviser Peter Navarro made clear that the Defense Production Act (DPA) has not been used to compel companies to produce supplies. He highlighted firms that have volunteered to make hand sanitizer and manufacturers like Honeywell that are ramping up production of respirators. It is possible, he added, that the "heavy hand of government" may be needed at some point "down the road."
  • President Trump touted the "extraordinary" support from the private sector and mentioned that GM and Ford had contacted the Administration about producing ventilators.
  • The President announced the launch of a new public-private consortium that will leverage computing resources from IBM, the Department of Energy, and others to advance research on COVID-19.
  • Vice President Pence said that he expects the COVID-19 testing backlog will be resolved by mid-week. He noted that the Food and Drug Administration (FDA) has authorized a new test that can yield results in 45 minutes.
  • Tomorrow, FDA will release new guidance outlining how critical workers such as law enforcement officers and first responders can return to work safely after they have been exposed to the virus.
  • President Trump confirmed that his Administration is considering the release of elderly, non-violent criminals from prisons in light of the crisis.

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