Yesterday, Senate Majority Leader McConnell (R-KY) unveiled a proposal for Phase 3 of the Coronavirus response, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In response, Senate Democrats have released a document outlining their considerations on the Republican package, which they have dubbed a "nonstarter," asserting that the proposal provides relief for corporations but fails to provide sufficient support for workers or to the public health threat on the ground.

For workers, Senate Democrats have particularly voiced concerns that the CARES Act does not provide for any expansion of unemployment insurance. In addition, they have strong concerns that it does not provide any funding for the Department of Defense to purchase personal protective equipment (PPE) for medical workers or funding for state and local governments, first responders, health care workers and law enforcement to procure PPE. Democrats have also requested increased funds to support programs for vulnerable populations such as Head Start, food banks and nutrition assistance, as well as increased assistance to homeless populations and veterans. Additionally, they have emphasized the need for additional funding for the Federal Emergency Management Agency (FEMA), educational institutions, tribal communities and airports and public transit systems.

Majority Leader McConnell has established an informal goal of reaching agreement on Phase 3 among the Senate negotiators tonight, March 20, so that legislative counsel can put whatever deal is reached into legislative text over the weekend and prepared for a final vote in the Senate on Monday. Whether such an ambitious timeline can be met depends on the success of the negotiations, though the need to act quickly has not been publicly doubted by any of the negotiators.

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

Stimulus Update: Senate Democrats Express Concerns about Republican Phase 3 Proposal, Senate Continues Negotiation on Phase 3, Additional Phases Likely

  • Phase 3: Leader McConnell (R-KY) released his proposal for Phase 3 of the COVID-19 response (Bill Text). In response, Democrats released a document outlining their concerns about the package. Republican negotiators have begun to engage with Senate Democrats in order to find a path forward on Phase 3.
  • 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.

Section-by-Section Summary of GOP Phase 3 CARES Act

  • Division A – Small Business Interruption Loans: Would increase the maximum 7(a) loan amount to $10 million for eligible businesses with 500 employees or less from March 1, 2020 to December 31, 2020 and expands allowable uses of 7(a) loans to include payroll support. 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, $300 million for salaries, and $240 million for small business development centers. The proposal authorizes $10 million for the Minority Business Development Agency and waives prepayment penalties for loans made during the covered period.
  • Division B – Relief for Individuals, Families, and Businesses: Would provide up to $1,200 recovery checks directly to individuals, extend the tax filing deadline by two months to July 15, waive early withdrawal penalties from qualified retirement accounts for coronavirus-related purposes, and alter regulations on charitable contribution deductions in 2020. Additionally, the CARES Act includes several measures of relief for businesses, providing for a delay in estimated tax payments for corporations and allowing employers to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees.
  • Division C – Assistance to Severely Distressed Sectors of the Economy: Would provide a total of $208 billion in collateralized loans and loan guarantees to impacted entities, including up to $50 billion for passenger air carriers, up to $8 billion for cargo air carriers, and up to $150 billion for other eligible entities. The measure would also repeal Federal Excise Taxes collected in relation to commercial aviation through the end of the year.
  • Division D – Health Care Response: Would provide permanent liability protection for manufacturers of personal respiratory protective equipment in the event of an emergency, and require the Food and Drug Administration (FDA) to expedite the review of drug applications and inspections to mitigate a drug shortage. In an aim to increase access to COVID-19 care, the bill would clarify that all testing for COVID-19 be covered by private insurance plans without cost sharing and provide $1.32 billion in supplemental funding to community health centers to test and treat patients for COVID-19. 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. The package's education provisions would waive the institutional matching requirement for campus-based aid programs and allow institutions to transfer unused work-study funds to supplemental grants. Under the measure, employers would not be required to pay more than $200 per day and a total of $10,000 for paid family and medical leave or more than $511 per day and a total of $5,110 for sick leave.
  • Division E – Temporary Permit Use to Guarantee Money Market Mutual Funds: Would temporarily suspend the statutory limitation on the use of the Exchange Stabilization Fund for guarantee programs for the money market mutual fund industry.
  • Division F – Budgetary Provisions: Emergency designation.

Administration Updates

Coronavirus Task Force Briefing Highlights

On Friday morning, March 20, the White House Coronavirus Task force conducted a briefing from the White House Press Briefing Room. Highlights of the discussion include:

  • President Trump is in conversation with Senate Majority Leader McConnell and Minority Leader Schumer regarding "various elements" of the Phase 3 stimulus deal. The President said he is opposed to stimulus money being used for stock buybacks.
  • The President praised the aggressive actions being taken by Gov. Newsom in California and Gov. Cuomo in New York, while stating that a "national lockdown" is unlikely.
  • Secretary of State Mike Pompeo announced that Mexico and the U.S. will restrict nonessential travel across the southern border as of midnight tonight.
  • In addition, the Centers for Disease Control and Prevention (CDC) and Customs and Border Protection (CBP) will bar the entry of any individuals without proper documentation seeking to enter the U.S. from Canada or Mexico. Individuals will be returned to their country of origin and will not be housed in CBP or Immigration and Customs Enforcement (ICE) facilities.
  • According to Vice President Pence, many businesses have been donating supplies or volunteering to manufacture ventilators and respirators for health workers. In addition, the government is working with anesthesiologists to identify tens of thousands of ventilators that can be converted to care for patients with COVID-19.
  • Over the weekend, the Administration will announce a "major procurement" of N95 respirators.
  • ADM Brett Giroir, Assistant Secretary for Health, will make an announcement tomorrow regarding the status of testing.
  • Data from Italy suggest significantly higher mortality for men than women across all age groups.
  • The Department of Education will not enforce standardized testing requirements during the outbreak.
  • The Treasury Department is extending the tax filing deadline to July 15.

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