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7 big differences in the latest House & Senate COVID-19 relief proposals

Capitol_Senate side_by Scrumshus via Citypeek-Wikipedia
Photo by Scrumshus via Citypeek-Wikipedia

The Senate this week released its plan for another round of coronavirus relief. As expected, there are substantial differences between this Republican-crafted bill and the measure passed in mid-May by the Democratically-controlled House.

Both bills are wide-ranging, but there are some key provisions that are of particular interest to most of us. Both also use as a basis in many areas the Coronavirus Aid, Relief and Economic Security (CARES) Act provisions that were enacted in late March.

Below is a comparison of seven key areas in the latest GOP Senate's Health, Economic Assistance, Liability Protection and Schools (HEALS) Act and the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act that House Democrats produced.

1. Unemployment benefits: This is the biggest area of concern for those folks still struggling because of pandemic precautions such as the closures of their workplaces. It's also the area of greatest disagreement in the two bills, with the House wanting to continue the current added $600 federal unemployment money and the Senate drastically reducing the amount.

Senate Republican HEALS Act …

House Democrat HEROES Act …

Would cut the current federal boost to state unemployment benefits, which expires on July 31 (or sooner in some states), from $600 to $200 through Oct. 5. Then starting that month, states would be required to implement a system that replaces roughly 70 percent of laid-off workers' wages. The added $200 in federal money would expire Dec. 31.

Would keep the $600 additional federal unemployment benefit through January 2021. Workers who lost jobs due to the pandemic and still getting state benefits then also could continue receiving the $600 through March 2021.

 

COVID19 paper check-DJT notation

2. Direct stimulus payments: These payments are eagerly awaited by individuals and families across the country who are making ends meet, but barely. Both plans call for additional stimulus payments. The base amount is the same as the original CARES created $1,200. However, there are differences in the treatment of dependents.

Senate Republican HEALS Act …

House Democrat HEROES Act …

Calls for a second round of direct stimulus payments of up to $1,200 for individuals and $2,400 for families. Qualifying dependents, regardless of age, would be worth $500 each.

As with the CARES Act, the economic impact payments would again phase out based on income. Individuals who earn more than $75,000 a year and married couples who earn more than $150,000 would get the scaled back amounts. No payments would go to individuals earning more than $99,000 and don't have any children or child-free couples with adjusted gross incomes (AGIs) of more than $198,000.

Social Security, both regular benefits and disability payment recipients, as well as veterans getting federal benefits again would automatically get HEALS stimulus amounts.

Is more generous than the CARES or HEALS proposals. It provides for $1,200 per family member, up to a maximum of $6,000 per household.

The HEROES Act also would reduce of relief payments for higher earners using the CARES and HEALS Act parameters.

However, the House bill also expands who is eligible for the payments, specially allowing immigrants in the country illegally to receive money. This reverses a CARES Act provision by allowing payments go to those who file taxes jointly with someone who uses an Individual Taxpayer Identification Number (ITIN), which typically is used in place of a Social Security number by undocumented immigrants.

As with HEALS, Social Security and Veterans' Affairs benefits recipients automatically will get any economic impact payments for which they qualify.

 

3. Small business assistance: Everyone on Capitol Hill realizes that the survival of small businesses is key to any pandemic recovery. But as so often happens when the two parties control different chambers, they take different remedy routes.

Senate Republican HEALS Act …

House Democrat HEROES Act …

Would let some small businesses apply for a second Paycheck Protection Program (PPP) loan. Eligible companies would be those with fewer than 300 employees and that have lost at least 50 percent of their revenue during the first or second quarter of 2020. The loan amount is lower — $2 million instead of $10 million — but businesses would have more leeway on how they can spend the money. A separate low-interest, long-term loan program would be created for seasonal businesses or those in low-income communities.

Does not include any added PPP money. It does, however, provide $10 billion for a separate small business loan program dubbed Economic Injury Disaster Loans. That program recently ran out of the $20 billion that Congress had previously allocated it.

 

4. State, local and other government funding: The two Parties' different policy approaches is evident when it comes to Uncle Sam helping out state and more local government entities.

Senate Republican HEALS Act …

House Democrat HEROES Act …

Does not include any funding specifically for state, local and tribal governments. The thinking behind the zero amount reportedly is because some of the money allocated to these jurisdictions in the CARES has not, months later, been spent. However, the Senate bill does give states or cities some flexibility to use the previous CARES money for revenue shortfalls

Calls for $500 billion to states and $375 billion to local governments. The money can be used to cover budget shortfalls due to lost tax revenue, particularly in the consumer spending and tourism sectors, when necessary pandemic lockdowns were put in place, as well as to keep essential workers on payrolls.

 

Department of Education classroom photo
Department of Education photo

5. Education funding: It's always about the children and during the COVID-19 pandemic there's been much disagreement on how and when to safely get youngsters back into their traditional classrooms. The two bills offer some incentives here.

Senate Republican HEALS Act …

House Democrat HEROES Act …

Proposes $105 billion for educational funding. Around two-thirds of that would go to K-12 schools, with the remainder allocated to higher education institutions. The money is further parsed out, with all districts getting some, but more money going to schools that reopen for in-person instruction. Governors also would be given a portion ($5 billion) to allocate as they deem appropriate for their states.

Was enacted before it became clear that going back to school was going to be such a major issue. However, it does create a $90 billion state fiscal stabilization fund for the Education Department to support K-12 and higher education. About 65 percent of that fund would go through states to local school districts.

 

6. Company or worker protections: How to help out, or not, state and more local government entities in the latest COVID-19 economic impact bills reflects another chasm in Democratic and Republican policy approaches.

Senate Republican HEALS Act …

House Democrat HEROES Act …

Provides liability protections for businesses, schools, health care providers and non-profits that might face legal actions from individuals who contract COVID.

Focuses on consumer protections. It would require new Occupational Safety and Health Administration (OSHA) regulations regarding workplace plans to protect employees from COVID-19 exposure.

 

7. Costs: Size matters a lot, at least as far as the cost to the U.S. Treasury, when it comes to the Senate and House proposals.

Senate Republican HEALS Act …

House Democrat HEROES Act …

Will cost a total of $1 trillion.

Final tally comes to $3 trillion.

The GOP, particularly its Freedom Caucus/Tea Party wing, is starting to refocus on federal spending. A cynic (c'est moi?!) might say it's a recalibration of the Party as it considers the possibility of losing the White House. It's hard to fight federal spending that's usually associated with the Democratic Party when your own has added to the deficit. So look for Senate and House Republicans use the expense argument early and often during the debates to reconcile the two bills.

The Democrats, on the other hand, aren't just falling into the "tax and spend" trope. They point to economists who and say the pandemic in an extraordinary situation that demands extraordinary action by individuals and Uncle Sam. "A mistaken and premature turn toward fiscal austerity impeded the recovery from the Great Recession, and policymakers must avoid making the same mistake now," argue the authors of the Center for Budget and Policy Priorities' latest coronavirus economic analysis.

The House and Senate likely won't split the difference dollar-wise, but expect both chambers to give somewhat when it comes to adding or cutting costs in order to get to a final bill.

 

Timing is everything: As in comedy, timing is everything. Of course, many say congressional legislation is dark comedy, but I digress.

The information above focuses just on some key provisions in the HEROES and HEALS Acts and then only highlights of those. Both bills are big and there are some difficult areas that must be worked out before a final measure is enacted.

Time is of the essence, particularly if you're counting on unemployment payments to help cover your daily living expenses. Senate Majority Leader Mitch McConnell (R-Kentucky) has set Aug. 7 as the deadline for a deal. But we all know how often Congress busts deadlines.

Personally, I don't expect to see a final, combined new coronavirus relief bill that soon. A short-term bill could pass to give laid-off workers some immediate help, but I would not be surprised to see the House and Senate work into their usual August recess period to come up with a plan that's acceptable to most all in both Congressional chambers and the White House.

 

Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.

But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.

 

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