As of December 27th, 2020 the Paycheck Protection Program is back, and Biz2Credit can get your business started with an easy process to help you get funded quickly.
On January 31, ten Senate Republicans announced that they had come together to propose an alternative COVID-19 relief package. The $618 billion plan, which they believe could garner bipartisan support, was a fraction of President Joe Biden’s $1.9 trillion relief package. They asked to meet with President Biden to discuss the plan in detail. “Our proposal reflects many of your stated priorities,” they wrote in a letter to President Biden, “and with your support, we believe that this plan could be approved quickly by Congress with bipartisan support.”
COVID-19 Relief Packages
Both President Joe Biden’s proposal and the Republican counter-proposal face opposition on Capitol Hill: Democrats want larger a stimulus package and Republicans favor a smaller one. President Biden’s proposal would be the largest since the $2.2 trillion CARES Act passed in March.
Since both relief packages are in the news, we wanted to break down what it means for Americans and small businesses. We are focusing on four main things:
- Why does this new plan matter?
- What’s in the new plan?
- How does it compare to the Biden administration plan?
- What does this mean for small businesses?
Throughout, we are examining what this means for working Americans and what each package provides in:
- unemployment benefits,
- direct payments,
- and small business loans.
The last year has been difficult for many people and small businesses. Even with COVID-19 vaccines being distributed, it will take a while for the economy to return to normal. In the last week, news about the economy has spurred economists in the stimulus plan discussion:
When the next COVID-19 economic relief plan passes Congress and is signed into law, it will be a welcome relief for many Americans who are in dire need of assistance.
Who are the Senators and why does this matter?
There are five COVID-19 relief packages that have passed Congress since March 2020, all of which have been bipartisan. These packages have provided more than $4 billion in relief – including the most recent $900 billion package from December 27, 2020.
Although Democrats have control of Congress and the White House, they only hold a small majority in the Senate. For a bill to break a Senate filibuster vote, the 50 Democrats in the Senate need 10 Republicans to join with them. That is why it is significant that ten Senators have come together for this plan. The ten also represent the group of moderate Republicans who have joined with Democrats on other legislative measures. They are Senators:
- Susan Collins (R-ME),
- Lisa Murkowski (R-AK),
- Bill Cassidy (R-LA),
- Mitt Romney (R-UT),
- Rob Portman (R-OH),
- Shelley Moore Capito (R-WV),
- Todd Young (R-IN),
- Jerry Moran (R-KS),
- Mike Rounds (R-SD),
- and Thom Tillis (R-NC).
Late Monday evening, the Senators met with President Joe Biden in the Oval Office to discuss their $618 billion stimulus bill. Their plan is significantly less than the plan President Biden has proposed, with some of the main differences focused on stimulus checks to Americans and funding for local governments.
What’s in the Republican’s new plan?
On Monday afternoon, the group of 10 Republican Senators unveiled their proposal for a sixth bipartisan COVID package. The package focuses on eight specific areas of funding:
- Direct COVID Pandemic Response: $160 billion
- National Vaccine Program
- Expansion of testing
- Disaster relief fund
- PPE for first responders and medical professionals
- Producing and stockpiling supplies
- Provider Relief Fund
- Unemployment Insurance (UI) benefits: $132 billion
- $300/week through June 30 for all states
- Child Care: $20 billion
- Child care and development block grant
- K-12 Schools: $20 billion
- Getting children back in school initiative
- Small Business: $50 billion
- Paycheck Protection Program funding
- Economic Injury Disaster Loan (EIDL) program
- Direct Payments: $220 billion (estimated)
- Direct payments of $1,000/person (totaling $1,600/person after December 2020 amount)
- For singles, payments would start phasing out at income level $40,000/year
- Capped at $50,000 yearly income
- For joint fliers, payments would start phasing out at income level $80,000/year
- Capped at $100,000 yearly income
- No checks to convicted inmates
- Nutrition: $12 billion
- Extends SNAP benefits through September 30
- WIC benefits
- NAP block grant
- Behavioral Health Services: $4 billion
- Substance Abuse and Mental Health Services Administration
- U.S. Health Resources and Services Administration
Senator Collins told reporters after meeting with President Biden at the White House: “All of us are concerned about struggling families, teetering small businesses and overwhelmed health care system, getting vaccines out and into people’s arms and strengthening our economy and addressing the public health crisis that we face.”
The previous bipartisan plans passed with the support of former Treasury Secretary Steven Mnuchin, former President Donald Trump, and former Senate Majority Leader Mitch McConnell (R-KY). However, GOP Senators are now in the Senate minority trying to work with a Democratic White House that has promised aggressive action.
How does it compare to Biden’s plan?
The group of 10 Republicans’ proposed package is about one-third of the size of Biden’s proposed stimulus package. It does not include many benefits that Biden had proposed in his $1.9 trillion American Rescue Plan. Here are nine main changes:
- COVID-19 Vaccination and Testing: $160 billion
- Both Biden and the 10 Republicans are proposing $160 billion for a vaccination and testing plan with PPE.
- Stimulus Checks: $600 billion (estimated)
- One of the main points of Biden’s plan was sending a $1,400 per-person check to working families, which would bring the total relief payment from December to $2,000.
- Schools: $170 billion
- Biden is asking for $170 billion in federal funding for K-12 schools and higher education institutions.
- State and Local Governments: $350 billion
- Biden proposed “emergency funding for state, local, and territorial governments.”
- The Republican proposal does not have any aid for state and local governments, which, as NPR reports, was “a key sticking point in past rounds of relief negotiations.”
- Child Care: $40 billion
- $25 billion emergency fund for hard-hit child care providers.
- $15 billion for the child care and development block grant – less than the GOP plan.
- Unemployment Aid: $200 billion (estimated)
- Increase benefits to $400/week through September.
- See more below.
- Small Business Funding: $50 billion
- Biden’s plan would provide $15 billion in grants to 1 million hard-hit small businesses and $35 billion to financing programs with state and local governments.
- See more below.
- Earned-Income Tax Credit
- Families would receive a refundable tax credit on as much as 50 percent of their spending on child care for children under 13-years-old.
- The Republican plan drops President Biden’s proposal for an increase in the child tax credit. Democrats have called the proposal an important step toward reducing child poverty.
- Minimum Wage
- Biden’s proposal calls for raising the federal minimum wage from $7.25/hour to $15/hour. Republicans oppose this plan.
Biden and the group of GOP Senators have some common ground already with funding for coronavirus vaccination and testing, nutrition, and behavioral health services at the same level. However, Republicans oppose other parts of the American Rescue Plan. You can read more about what this plan provides here.
After meeting with the group of 10 Republican Senators, Biden has been meeting with Treasury Secretary Janet Yellen as well as House and Senate Democrats to discuss the economic relief. “[President Biden’s] view is that the size of the package needs to be commensurate with the crises we’re facing. That’s why he proposed $1.9 trillion,” White House press secretary Jen Psaki said on Monday.
Biden has said recently that he is open to sending $1400 stimulus checks to a smaller, targeted group. This is one of the first potential compromises that Biden has signaled after meeting with the group of 10 and could be the start of bipartisan negotiations.
What does this mean for small businesses?
Looking at these two plans from the small business perspective shows some stark differences. Focusing specifically on UI benefits and small business funding, we wanted to examine both of these plans and how they could help small businesses.
UI Benefits
The amount of weekly benefits allotted in each plan and the length of time benefits will be available is different in each plan.
- Republicans propose benefits at $300/week through June 30
- The Biden administration proposes benefits at $400/week through September
Increased federal unemployment benefits would help employees who have been laid off or furloughed. Although both are not the additional $600/week benefits enacted by the CARES Act. But greater benefits lasting a longer time would help the millions of Americans who are unemployed.
Small Business Funding
Biden administration’s plan:
- allocates $15 billion in grants to more than 1 million of the hardest hit small businesses.
- focuses on using local government to help fund loans and financing for small businesses.
Although there is not a set a monetary amount with the local government funding, the American Rescue Plan predicts that a “$35 billion investment in successful state, local, tribal, and non-profit small business financing programs” could lead to “$175 billion in additional small business lending and investment.”
The GOP Senators’ plan proposes $50 billion in small business funding:
- $40 billion for PPP funding
- $10 billion for EIDL program
This most recent coronavirus relief bill authorized a total of $284 billion for the Paycheck Protection Program and Biden’s plan does not mention the PPP. This $50 billion investment would make $324 billion available in PPP funding and $30 billion total available for EIDL programs.
COVID-19 Economic Relief
The Associated Press reports that “the goal is to have COVID-19 relief approved by March when extra unemployment assistance and other pandemic aid expire.” Whatever the plan looks like, it is needed for pandemic and economic relief in the United States.
Lawmakers in Washington will be working on the next relief bill immediately. “Congress has a responsibility to quickly deliver immediate comprehensive relief to the American people hurting from COVID-19,” House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer (D-NY) said in a statement.
What happens next?
On February 1, House Budget Chairman John Yarmuth (D-KY) introduced the 2021 Joint Budget Resolution. The resolution instructs 12 House committees to draft budget legislation by February 16. A similar version is said to be introduced in the Senate, via Budget Chairman Bernie Sanders (I-VT) as soon as this week. Although a COVID relief package has not been drafted yet, the fiscal blueprint will include budget reconciliation instructions to allow the relief package to pass with a simple majority. Budget reconciliation allows lawmakers to “quickly advance high-priority fiscal legislation” with a simple majority vote and without a filibuster. This means that the Democrats could pass their spending bill in the House and Senate without any GOP Senators’ support.
On February 2, President Biden and Treasury Secretary Yellen joined Democratic senators and said the Republican offer of a $618 billion plan was “too small.” President Biden has repeatedly said they need to act fast on pandemic relief: “We need to act. We need to act fast. We need to restore the soul of the country,” he said.
As of Wednesday, February 3, Democrats in the House and Senate were still planning to go with the bigger stimulus bill. In a meeting with Democrats, President Biden said he was “not married” to a number with his COVID economic rescue plan, but he urged Congress to “act” on relief for Americans who suffering during the pandemic and economic crisis.
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