(Bloomberg) -- The Trump administration pushed Congress to act by Monday to pass a massive stimulus package to prop up consumers, companies and local governments as the coronavirus pandemic chokes the U.S. economy.
Treasury Secretary Steven Mnuchin said he’d discussed the legislation with Senate Majority Leader Mitch McConnell, the chamber’s Democratic leader, Chuck Schumer, and House Speaker Nancy Pelosi and urged them to move fast because major parts of the economy have been “shut down.”
“We need to get this done Monday. The American public needs us to move forward,” Mnuchin said as he left a meeting with senior Senate Republicans at the Capitol. “Our objective is to have Congress pass legislation on Monday and have the president sign it.”
McConnell unveiled the Senate GOP’s version of the measure on Thursday. The centerpiece is tax rebates to individuals of $1,200 and $2,400 for married couples. Rebates are completely phased-out for taxpayers with incomes exceeding $99,000 for individuals or $198,000 for a couple.
The legislation also provides $208 billion worth of loans for companies suffering due to the coronavirus pandemic, including $58 billion for the airline sector and $150 billion for other distressed areas of the economy. Another $300 billion is aimed at helping smaller businesses.
The money comes with some strings attached, however, including a cap on salaries for executives at companies that get the money and a requirement that air service to certain destinations not be interrupted. It also caps severance pay for executives making more than $425,000 to twice their 2019 pay.
It permits the federal government to take an equity stake in companies that receive loan assistance, “contingent on the financial success of the eligible business.” Any gains collected from stakes in passenger or cargo airlines would be deposited into the Airport and Airway Trust Fund, and proceeds from other companies would go toward the Treasury Department.
McConnell said he would immediately engage in discussions with Democrats, whose votes will be needed in both the Senate and House to pass the legislation and get it to President Donald Trump for his signature.
“These are urgent discussions,” McConnell said. “The Senate is not going anywhere until we take action.”
Pelosi and Schumer said in a joint statement that they would demand that any compromise legislation put its emphasis on workers and small businesses. They called for a big boost in unemployment insurance and the Medicaid health insurance program for the poor and other ways of “putting money directly into the hands of those who need it most.”
And on Thursday night, in another statement, they said, “We are beginning to review Senator McConnell’s proposal and on first reading, it is not at all pro-worker and instead puts corporations way ahead of workers.”
Some Democrats had already complained about the GOP bill.
“This proposal contains no funding for first responders, child care, schools, help for the homeless, or veterans’ medical care, to name a few,” Vermont Senator Patrick Leahy, the ranking Democrat on the Appropriations Committee, said in a statement.
Eric Ueland, Trump’s chief liaison with Congress, said Mnuchin and other administration officials will be working with senators from both parties Friday and throughout the weekend. He said Mnuchin also has been in contact with leaders in the House.
While Mnuchin said passage by Congress is needed by Monday, the House is on recess and Pelosi has told members they won’t be brought back to Washington until the Senate has passed a bill.
James Lucier, senior political analyst at Capital Alpha Partners in Washington, estimated the plan would provide about $1.5 trillion in stimulus. It would provide “something to help the economy cope with the shock of an unprecedented event -- it’s not designed to restore GDP to what it would have been, or to the stock market or eliminate the damage.”
The GOP plan would affect a wide swath of the economy.
It includes Senator Susan Collins’ plan to provide $300 billion for businesses with up to 500 employees to help them make payroll and other expenses retroactive to March 1.
Those businesses would get as much as $10 million each to cover their payroll and other expenses, with the amount capped by their expenses in the previous year.
Provided businesses don’t lay off workers and meet other requirements, the loans would be forgiven by the government.
The airline industry, which suffered a steep drop in revenue as traffic plummets, would receive a total of $58 billion in loans and loan guarantees under the proposal.
Passenger carriers would get $50 billion of that while another $8 billion would go to cargo haulers. The legislation would also suspend for the rest of the year a variety of taxes and fees collected on tickets, fuel and cargo.
The legislation would require health insurers to provide coverage for coronavirus testing, and they generally would be barred from requiring co-payments or deductibles. It also would require that vaccines for Covid-19 would be available without cost-sharing, if they’re recommended as effective by experts.
The bill works to shield health professionals who volunteer their services to aid virus patients from lawsuits. Volunteers generally couldn’t be sued by patients under state or federal law unless they were engaging in criminal conduct or gross negligence.
The legislation would also delay the tax filing deadline to July 15 after the IRS already delayed the tax payment to that date. The deadline for business owners and self-employed individuals to pay their estimated quarterly taxes would be deferred until Oct. 15. The bill also delays corporate tax payments to Oct. 15.
As a way to provide liquidity to individuals, the legislation also waives penalties for pulling up to $100,000 from 401(k) and other retirement plans for individuals who contract the virus, people whose family member gets sick, or those who face economic hardship caused by the pandemic. Savers can repay those funds but aren’t required to do so.
The legislation also allows individuals who don’t itemize their tax bills to deduct as much as $300 in charitable donations on their tax returns.
Companies would be allowed to delay submitting employer-side payroll taxes to the IRS and to make payments over two years. The Social Security Trust Funds will be held harmless under this provision, according to a summary of the legislation.
The bill also fixes a mistake in the 2017 tax law that had limited tax breaks to restaurants and retailers, two sectors that are likely to be hard hit as consumers stay home to prevent the spread of the virus. The legislation would allow them to write off costs of renovating their stores in one year.
Corporations could also deduct more interest on the loans they owe and the changes would ease up some restrictions on using business losses to offset their tax bills.
In addition to changes that Schumer and Pelosi will seek, House Republicans indicated they want to have a say in the final legislation.
House Minority Leader Kevin McCarthy and top Republicanson several key committees said in a statement they’ve been in regular contact with their Senate counterparts and that collaboration will continue “as this package evolves and is refined.”
Senator Marco Rubio, who is helping lead the GOP efforts to boost small business, called for immediate action and quick negotiations on the economic rescue package.
He urged senators to put aside politics given the crisis.
“We are facing the abyss,” he said.
(Updates with new Pelosi-Schumer statement, in 11th pararaph)
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2020 Bloomberg L.P.