The Republican-led Senate proposed the Heath, Economic Assistance, Liability Protection and Schools (HEALS) Act yesterday, a series of stimulus proposals designed to pick up where the CARES Act left off.
However, these individual proposals may not be passed as quickly as many hope. Assuming these proposals are passed by the Senate, they must still be approved by the Democrat-led House of Representatives where they may meet some resistance, both for what they include and for what they leave out.
Here are the five major issues with the HEALS Act:
- Extended Unemployment Benefits Fall Short
- The Business Liability Shield is a Republican Wish-list Item
- No New Funds for State & Local Governments
- No Eviction Moratorium or Other Relief for Renters
- No Cohesive Plan or Timeline
Extended Unemployment Benefits Fall Short
The extension of the $600 weekly federal unemployment benefit has long been a priority for the Democrats. They included an extension in the HEROES Act that would have taken the benefit through January 31, 2021.
The Republicans, on the other hand, have been less enthusiastic about extending the $600 weekly benefit on the premise that it serves as a disincentive for people to return to work because some people actually earn more money while unemployed than they do while working.
The new bill calls for a reduction of the $600 weekly benefit to $200 per week until October 5th. After that point, the $200 weekly payment would be replaced by an amount (up to $500) that, when combined with state unemployment benefits, would provide up to 70% of the worker’s lost wages through the end of the year. State unemployment benefits vary by state but provide $378 per week on average.
Capping unemployment benefits based on lost wages creates a complex layer of administration in many states. Individual states will be required to create a resolution to this issue at a time when many state unemployment systems are already struggling to meet the workload and state budgets have been decimated. States that are unable to do so would be able to apply for a waiver from the Department of Labor in order to continue paying a fixed dollar amount for up to two additional months.
Democrats have called for a full extension of the benefit, with the Washington Post reporting that the $600 weekly benefit will be the starting point in negotiations.
The Business Liability Shield is a Republican Wish-list Item
The HEALS Act also includes a five-year “Liability Shield” designed to protect businesses, schools, non-profits, medical facilities, and similar organizations from coronavirus-related lawsuits, with the exception of “gross negligence” and “willful misconduct.”
This is a “red-line” issue for the Republican Party. Senate Majority Leader Mitch McConnell (R-KY) has said multiple times that the Senate will not pass a bill without liability protection.
However, the Democrats feel just as strongly that this should not be included in the next bill as it prioritizes relief for big businesses and not those who need it the most.
Along these same lines, the HEALS Act includes a 100% deduction for meals through the end of 2020, up from the current 50% rate. By itself, this is not enough to prevent the bill from passing. But it does fall under the same umbrella of helping corporate America as opposed to putting the money directly in the hands of those who need it the most.
No New Funds for State & Local Governments
Including new funds for state and local governments is a big priority for Democrats. They included $1 trillion in new funding in the $3 trillion HEROES Act, which the House passed in May (the Senate rejected the HEROES Act in lieu of creating their own bill).
While the Senate did address funding for state and municipal governments in the HEALS Act, they did not provide new funding. Instead, they simply made it easier for states and municipalities to spend up to $150 billion in funds that were already allotted under the CARES Act.
The CARES Act prohibited the funds from being used to cover budget shortfalls related to the coronavirus. The HEALS Act would change that, however, and allow these government organizations to use use the funds to bridge budget deficits. A portion of funds allocated to each state must first be sent to counties and cities before it can be spent at the state level. Under the HEALS Act, states would also be prohibited from using these funds to cover state pension plan obligations.
No Eviction Moratorium or Other Relief for Renters
The CARES Act included a 120-day moratorium on evictions for residents of homes and buildings that have a mortgage backed by the government, as well as those who rely on housing vouchers. The eviction moratorium expired July 24th, leaving millions of residents at risk of being evicted if they are unable to pay their rent.
The moratorium prevented landlords of affected buildings from initiating eviction proceedings, charging additional fees, or imposing additional penalties for being late with or missing rent payments. Tenants are still required to pay their rent after the moratorium ends.
As recently as last week, White House economic advisor Larry Kudlow indicated the eviction moratorium would be extended. However, that has not been included in any of the new proposals.
This will certainly be a point of contention among the Democrats.
No Cohesive Plan or Timeline
The HEALS Act is not a single bill—it is a series of proposals separately drafted and proposed by various Senate committees. The lack of a single cohesive plan makes the process of negotiating and passing the proposals more time-consuming.
Even the Republican party is unsure how quickly a bill can be passed. Only four days ago, Senator McConnell said, “Hopefully we can come together behind some package we can agree on in the next few weeks.”
Last week, Senator Ted Cruz (R-TX) was even more blunt when he asked, “What the hell are we doing?”
These delays do nothing to help Americans who need assistance today. Federal unemployment benefits have lapsed for most, the eviction moratorium has expired, and many people are struggling. Even if benefits are made retroactively, that does nothing to help people pay their rent or put food on the table today.
The HEALS Act May Still Be Passed, but There is a Lot of Work to Do
The HEALS Act covers a lot of ground and it gets a lot of things right—direct stimulus payments, school funding, small business relief such as tax credits and more PPP Loans, healthcare-related provisions, and more. It also takes steps in the right direction by including enhanced unemployment benefits, even though the latter isn’t as much as Democrats would prefer.
There is still hope we will see another stimulus bill soon. It will just take a lot of time and negotiation to work things out.