stimulus update september 15 2020
September 15, 2020

Democrats REJECT Double Stimulus Check Proposal

COVID-19

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Democrats Reject Double Stimulus Check Proposal

This is my stimulus update for Monday, September 15.

In this update I am going to go over in detail the Problem Solvers Caucus’ new stimulus proposal, we have seen their proposal, and it calls for a second and potentially third round of stimulus checks and I will also get into the negative response of House Democratic leaders, they rejected it today faster than I got rejected by Hot Becky for junior prom.

Don’t want to read? Watch the video here!

Problem Solvers Caucus’ New Stimulus Proposal

So as good as this proposal is, it looks like House Democrats are going to kill it, but I think it’s a good proposal, and I want to tell you about it, not to get your hopes up, but just to show, there are still decent people in Congress, on both sides of the aisle, who can actually come up with something decent on a bipartisan basis, and I only wish that those who have been in D.C. for decades like Nancy Pelosi and Mitch McConnell and Schumer and several fiscal hawk Republican senators could do the same, but they can’t, they won’t.

Yesterday, I told you that the Problem Solvers Caucus, 50 House Republicans, 50 House Democrats, they were putting together their own bipartisan stimulus proposal, and they released it this morning, and I like it, Mark Meadows likes it, I think many of you will like it too, unfortunately top Democrats in the House don’t like it.

This proposal is called the “March to Common Ground,” they say, “Having seen no progress on a new COVID-19 relief package in four months, and in recognition of Americans’ increased suffering, the Problem Solvers Caucus (PSC) has developed a comprehensive, bipartisan framework to meet the nation’s needs for the next six to twelve months that can pass both chambers of Congress and be signed into law by the president.”

Supposedly in putting this thing together, they spent six weeks listening to their constituents, the average Jacks and average Jills throughout the country, listening to what they want.

What’s the top line?

$1.5 trillion dollars, that’s the number you’re going to hear in the media, but there’s a caveat there in that it’s actually only about $1.38 trillion or so in new money by my math, in the proposal itself there is a chart that says one-point-five-two trillion in new money but I think that’s misleading.

problem solvers caucus logan allec stimulus update

That said, the way the proposal is put together this figure could balloon by an additional four hundred billion dollars due to automatic boosters in 2021 if the virus and economic situation are still not going so great at that point.  So with those boosters, this could very well be a $2-trillion-dollar proposal.

I do like what they’re doing in proposing these automatic boosters that I’m going to go over later in case the economy needs it next year.  I think that’s a great approach, to say, alright, we’re going to do this much now, which might be on the smaller side to appease Republicans, but if it turns out that we need more, then automatically more aid will go out with another round of debates, to potentially appease Democrats, though we know Pelosi is not impressed.

So what’s in this thing?

First, let’s get into the bit I know many of you are wondering about, there would be an additional round of $1200 stimulus checks including $500  dollars per dependent, including adult dependents, and they say “retroactive” for the adult dependents, so I would imagine that means that in addition to including adult dependents in another round of stimulus checks they would send an additional round of $500 per adult dependent to cover the fact they were missed under the CARES Act.

But wait, there’s more, there’s an automatic booster for stimulus checks.  In this proposal, in addition to a second round of stimulus checks, they’re also calling for a third round in March 2021 “if warranted based on metrics,” and these metrics would be tied to COVID-19 hospitalizations as well as progress on a COVID-19 vaccine.

They haven’t elaborated on what exactly the numbers they would be looking for here are to trigger the automatic boosters, I’m sure if they actually put together a bill rather than just this summary proposal here, they would spell that out, but these Problem Solvers appear to be very stimulus-check friendly, let’s just say that much.

What about unemployment?  They are calling for $450 per week of enhanced unemployment for an eight-week transition period beginning in mid-October, so we’d be looking at $450 a week throughout the last half of October and maybe into early December, and this would be followed by for an additional five weeks up to $600 per week into January 2021, which would be up to but not exceeding one hundred percent of previous wages.

Then, similar to stimulus checks, they’re calling for an automatic booster to unemployment in February, they’re calling for an automatic three-month extension of supercharged unemployment beginning in February 2021, again, “if warranted, based on” COVID-19 hospitalization metrics and COVID-19 vaccine progress.

They also propose a 15% women, infants, and children nutrition program increase through March 2021 and a 15% food stamps, SNAP program, increase through July 2021. That’s good, people need to eat.

They’re also calling for $25 billion in rental assistance to the “most needy” and in addition to that other rent stabilization programs, and/or an eviction moratorium through January 2021.

Now, I’ve talked about automatic boosters so far, for rental assistance they’re actually proposing an automatic reducer to the tune of $10 billion, so if the COVID situation improves, instead of this $25 billion for rental assistance, could knock it down to as low as $15 billion.

There’s also student loan forbearance through the end of the year.

In terms of COVID-19 response, they want $25 billion for testing and contact tracing, $35 for healthcare provider support, and $45 billion for forgiveness of Medicare loans to providers so as not to reduce the Medicare Trust Fund, so that’s a total of $100 billion dollars for COVID-19 response, interesting there’s nothing in there specifically vaccine-related, especially considering they tie the boosters to a COVID-19 vaccine in part.

In terms of schools and child care, $100 billion dollars for K-12 schools for virtual, hybrid, and/or in-person learning, $30 billion for higher education institutions such as colleges and universities, and $15 billion for child care.

They want $400 million for election aid to states, $12 billion for broadband in underserved communities, $25 billion for agriculture, $15 billion for the Postal Service, and a possible Census extension.

In terms of small business relief, they’re proposing a second round of PPP funding consisting of $145 billion left over from the CARES Act PPP funding, and I think they’re missing that in their chart, they only include $130 billion CARES Act state and local funding but in terms for new money for small business they’re proposing $45 billion in new PPP funding and $50 billion in new EIDL funding.

In terms of other business relief, they want to fix the Main Street Lending Program, which is really targeted toward larger businesses than the PPP, not like Disney or Coca-Cola or anything like that, but generally larger businesses than PPP-eligible businesses, and they also want $50 billion dollars for an employee retention tax credit.  And for PPP as well they’re proposing up to a $60 billion dollar automatic reducer if the COVID-19 situation improves significantly.

Now everything so far I’ve discussed are things that are not so controversial.  Maybe some of the dollar amounts are controversial, maybe Republicans would balk at $450, $600 unemployment, but in concept, they agree with the notion of extending unemployment, 52 Republican senators voted in favor of that last week.

And maybe the Postal Service funding is a bit controversial with Republicans, and maybe the PPP is slightly controversial with some Democrats since they think there’s the potential for abuse, but they would probably be good with just some more oversight.

But now let’s talk about the things that are more controversial, and unfortunately these are the things that the Senate leaders, Mitch McConnell in the Senate and Nancy Pelosi in the House, hold the most dearly.

Contentious item number one: the Problem Solvers Caucus is proposing $500 billion dollars in new money for state and local aid as well as allowing $130 billion in CARES Act money to be repurposed more flexibly, Republicans are on board with that last bit, it’s the new money they freak out about.

So what’s in this $500 billion in new money for state and local governments that the Problem Solvers are proposing?  Well, it’s one hundred and thirty billion in new money for documented, future state and local expenses through 2021 related to COVID-19.

Now, I think Republicans could potentially get on board with that as long as it’s all documented because the Republican complaint here, warranted or not, but their party line right now is, “We don’t want to give federal money to blue states like New York and California,” who according to Republicans have bloated pension funds and can’t reign in spending.

But I have a suspicion that if funding could be tied to documenting true needs due to COVID-19, Republicans would be on board.  But that’s not the only state and local funding the Problem Solvers are proposing, they’re also proposing $370  billion for state and local general revenue shortfalls, $250 billion for state governments and $120 billion for local governments because tax revenues are crashing.

Businesses are shut down in many places, there goes sales tax and corporate income tax.  People are not making nearly as much money as they were, there goes personal income tax.

So state tax revenues are down, they are facing unprecedented budget shortfalls, and Democrats to the tune of $900 billion, almost $1 trillion in HEROES Act, and to some degree Problem Solvers Caucus to the tune of $370 billion, want to make up those general revenue shortfalls.

Republicans don’t like this, they think that a lot of these big red states have made their bed, now they lie in it so to speak.  Way back on April 22nd I made a video telling you what Mitch McConnell thought should happen to states, I’m not going to go into that issue here because I’ve already covered it in that video.

So the state and local business is something I think Republicans will not like in this proposal.

That said, there is also an automatic reducer to the state and local funding of up to $130 billion dollars, that’s the amount allocated for COVID-19 expenses, so what it’s saying is, “Look, if 2021 rolls around and hospitalizations are down and we have the vaccine, maybe states won’t need up to this $130 billion, and we won’t give it to ‘em.”  So like I said earlier, I like that.

I think that’s a decent compromise, we’ll allocate up to this much, this larger number to hopefully appease Democrats, but you know if it turns out the money isn’t needed based on specific, objective benchmarks, they don’t give it here in this four-page summary, but if these specific, objective benchmarks are met, then we won’t allocate that much, to appease Republicans.

Now, what will Democrats not like in this Problem Solvers Caucus proposal?  They will not like the liability protection that made its way in here.

Now, Mitch McConnell and the Republicans have pushed for an almost five-year protection for establishments like businesses, hospitals, schools, etc., against litigation claiming that a customer, patron, employee contracted COVID-19 at the establishment insofar as the establishment followed the current health and safety guidelines with respect to COVID-19, masks, social distancing, etc., I covered what the Republicans want in this regard in my July 29 update, and what Republicans want is fairly specific.

As far as this Problem Solvers Caucus proposal, they’re not specific.  It simply says, they want “Enhanced protections for entities which follow enhanced OSHA guidelines” as well as a “robust enforcement of worker safety.”  They don’t say five years, at least not in this four-page summary here, we don’t know exactly what they’re thinking here, but we know that Nancy Pelosi has called this liability protection, at least insofar as what the Republicans want, a “poison pill,” something that she cannot accept because she feels that it would leave workers unprotected if they get COVID-19 at their place of employment.

So I think the Problem Solvers Caucus was being intentionally vague here in what exactly they want in this regard to potentially appease their House leader.

House Democrats’ Response

Speaking of Pelosi, in her call this morning with her Democratic caucus in the House, she said, “A skinny deal is not a deal.  It is a Republican bill.”  And, on top of that, and this is extremely disheartening, the Democratic chairs of eight House committees published a statement this morning saying, “While we appreciate every attempt at providing critical relief to American families, the Problem Solvers Caucus’ proposal falls short of what is needed to save lives and boost the economy.”

In this statement they go on to praise their HEROES Act, and they say that the Problem Solvers’ proposal “retreats from critical policies and fails to respond to additional issues that have emerged since May.  When it comes to bolstering the public health system, supporting state and local governments, and assisting struggling families, the Problem Solvers’ proposal leaves too many needs unmet.  With the general election just forty-nine days away and the Postal Service sabotaged by the Trump administration, their proposal also abandons our responsibility to protect the life of our democracy.”

In my opinion, this is complete B.S.  I like this Problem Solvers proposal, it would guarantee one stimulus check, and if we need another one next year, we’ll send out a third, it extends unemployment in a sensible way that, yes, some Republicans may think too much, but you read these stories, and people literally can’t work because their places of unemployment are shut down, they need help, this proposal would help a lot of people, and I say screw these Democratic leaders.

This is disgraceful.  I’m beginning to think that possibly Republicans, crazy as the conspiracy theory claims that they make sometimes are, might be on to something here when they say that a lot of Democrats don’t want to help the people right now because they know that the economy has always been Trump’s selling point, Trump might be down on overall approval, but his approval with the economy is typically higher than his overall approval, and accurate or not, how much credit he should get for the economy, he inherited a good one, but fact is people, even some Democratic voters, like Trump on the economy, and Republicans have suggested that top Democrats don’t want to give any additional help before the election because they think it could help Trump, and just based on behavior like this, maybe they have a point.

This Problem Solvers’ proposal is decent, it’s not perfect, but for House Democratic leaders to dismiss it out of hand with such strong language just hours after it was released just sounds incredibly, incredibly tone-deaf to me to the cries for help from the people of this nation.

Logan Allec, CPA

Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

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