stimulus update september 29 2020
September 29, 2020

Mnuchin and Pelosi Discuss Updated HEROES Act

COVID-19

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Mnuchin and Pelosi Discuss Updated HEROES Act

This is my stimulus update for Tuesday, September 29.  Democrats did release their new $2.2-trillion bill, it’s basically an updated HEROES Act, despite the fact that it doesn’t have that hazard pay HEROES Fund for frontline workers anymore, like the original HEROES Act did, but they still call it the updated HEROES Act, anyway I’m going to get into it, but first of all, I want to mention, I had a stimulus-related dream last night, I had a dream that Pelosi and Schumer and Mnuchin were negotiating but there was a fourth negotiator for the Republicans who was not Mark Meadows, he was some fellow a bit older than Meadows, taller, leaner I want to say, glasses, couldn’t really see his face, but anyway, that is a completely fictional person who really doesn’t matter other than to show you how messed up my dreams are.

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

Mnuchin and Pelosi’s Conversation This Morning

But, back to reality, Speaker of the House Nancy Pelosi and Secretary of the Treasury spoke for about fifty minutes this morning going over the Democrats’ new bill, and reportedly they have agreed to speak again tomorrow, this is according to Drew Hammill, deputy chief of staff for Speaker Pelosi.  That is a good sign that they have agreed to a second date, so to speak, tomorrow, because previously when these two have gotten on the phone with each other, the conversations have been very brief, very brief, and usually ended with statements by both of them to the effect of the other party was being ridiculous, but this is a different kind of thing here with a longer conversation and an agreement to speak tomorrow as well.

Updated HEROES Act

Now, the “updated HEROES Act” as it’s being referred to, what should we say about it?  Well, first of all, while it’s a trillion dollars short of the original HEROES Act, the length of the bill, of this updated bill, is actually longer, at 2152 pages vs. the original HEROES Act’s 1854 pages.

So this is to say that it comes in at $2.2 trillion dollars, an amount that will not be stomached by the Republican-held Senate, so if Nancy Pelosi doesn’t change her tune, and insists that this $2.2-trillion-dollar top-line or maybe a couple hundred billion less is the absolute lowest she’ll go, and that she doesn’t want to go piecemeal on anything, we’re not looking at further Congressional stimulus before the election, I’m sorry, and this is just another messaging bill.

Fact is that $2.2 trillion is just not going to fly in the Senate, but as might be intimated by the fact that the talks this morning at least didn’t go terrible based on the limited information we have, if Mnuchin and Republicans can negotiate this thing down further, there might be a deal.  But the challenge here is that Republicans agreed on, what, a $650 billion dollar skinny bill with only about half of that in being actual new money, even if the White House negotiates the Dems down to something in the neighborhood of $1.5, McConnell is not even in these conversations, so how will that fly with the G.O.P.-held Senate?

That is for the future to tell us.  Pelosi was on MSNBC yesterday, she said, “We can get this done.  It takes money to crush the virus. It takes money to make the schools safe. It takes money to put money in people’s pockets. And, of course, we want some resources to make sure that the state — that the elections are held.”  She also wrote a new Dear Colleague letter about this update HEROES Act, saying, “Democrats are unveiling an updated Heroes Act that serves as our proffer to Republicans to come to negotiations to address the health and economic catastrophe in our country.  This $2.2 trillion Heroes Act provides the absolutely needed resources to protect lives, livelihoods and the life of our democracy over the coming months.  It includes new funding needed to avert catastrophe for schools, small businesses, restaurants, performance spaces, airline workers and others.”

Let’s get into the bill itself.  Here are the links to three different documents if you’d like to do your own digging into this thing, the first link is a link to the one-page summary of the updated HEROES Act, the second is a link to the 87-page summary of the updated HEROES Act, and the third is a link to the 2152-page bill itself.  If you want to see, line by line, everything that’s in this bill, check out the eighty-seven-page summary, but I’m not going to go, line-by-line, and tell you all the little details sure, such as the $392-million-dollars for the National Oceanic and Atmospheric Association or the $26 million for the National Cemetery Administration, because while that may peripherally or indirectly impact your life, in this article I’m just going to focus on the most important items in my view.

If you want to see everything in the bill, check out the 87-page summary, there is a lot in this bill, so this article being long enough already I’m not going to sit here for half an hour and regurgitate to you every little detail when you can read them for yourself in that 87-page summary if you so choose.  I will say though that there are some things in the 87-page summary that don’t quite match the bill based on my reading, for example in the 87-page summary there’s this $359 million it says “for implementation of additional payments to individuals,” and that makes it sound like it’s money for the people, but if you look at that section in the bill itself, it’s fairly clear that this is basically just additional funding for the I.R.S. to cover pandemic-related costs, such as “costs associated with the extended filing season” and I suppose possibly costs associated with stimulus checks, perhaps, but it doesn’t sound like that’s direct money to the people.

Anyway, I’m going to cover the most pertinent items here, the ones I think you are most interested in.

So let’s get into it.  Stimulus checks, as expected, there are stimulus checks in here, same income limits as before, $1200 dollars for single filers, $2400 dollars for joint filers with $500 dollars for each dependent, regardless of age.

This is different than the original HEROES Act, which wanted to give $1200 dollars per dependent with a limit of three.  This updated HEROES Act more so follows the lead of the Republican HEALS Act with $500 dollars for all dependents, regardless of age.

But this updated HEROES Act follows the old HEROES Act’s lead in not seeking a reduction in stimulus payments for past-due child support as well as for protection from garnishment.  It specifies that information shall be obtained from the Social Security Administration and the Veterans Administration for those eligible recipients and specifically states that there would be no repayment of the stimulus in 2020 if it turns out that the taxpayer would not be eligible based on 2020 income.  Income limitations are the same as CARES Act and the old HEROES Act.

For unemployment, the $600  dollar weekly FPUC would be retroactive to the week of September 6 and would end on January 31, 2021, but just like in the original HEROES Act, this January 31 date is a “soft cutoff,” meaning that if you’re still receiving state unemployment benefits on January 31, you could still receive the extra $600 dollars weekly after that date until the earlier of when your state unemployment benefits expire or March 31, 2021, whichever comes first.

And just like the old HEROES Act, this updated HEROES Act would also extend other aspects of the CARES Act unemployment provisions through January 31, including the federal reimbursement for states that waived the “waiting week” for the first week of regular unemployment compensation as well as an extension until January 31 of the PUA, that’s the Pandemic Unemployment Assistance that provides unemployment benefits, including the FPUC, to those who would not typically qualify for unemployment such as the self-employed, and the PUA would also be extended to January 31.

Also the PEUC, the Pandemic Extended Unemployment Compensation, that’s the additional thirteen weeks of unemployment, is extended to January 31, and of course the PEUC would include the weekly FPUC, beyond the number of weeks that states typically give for regular unemployment, so if your state normally offers unemployment up to 26 weeks, the PEUC ups that to 39, this provision is also extended to January 31.

And just like the old HEROES Act, this updated version proposes for all means-tested programs to disregard the six hundred dollar FPUC when determining income for eligibility for benefits for all federal, state, and local programs and to exclude it from asset limits for nine months following receipt of the money.  So again, a lot of similarities here to the old HEROES Act.

One thing that’s new would be this $112 dollar per week additional benefit for individuals who earn at least $500 per year in self-employment income but also have W-2 income, they’re a “mixed earner,” a “side hustler” if you will.  Many of these folks were excluded from PUA because due to their W-2 income they were eligible for normal unemployment, so this benefit would seek to remedy that.

Food stamps, additional $10 billion, increases the benefit level by 15% and the minimum benefit from $16 to $13 per month for small households until September 30, 2021, allows households to use SNAP benefits to purchase hot foods, nutrition program for Women, Infants, and Children, additional four hundred million dollars, Emergency Food Assistance Program, $450 million dollars for local food banks.  Food and nutrition programs to territories, the largest allocation by far being $1.2 billion dollars in additional nutritional assistance to Puerto Rico.

What about housing?  The big number here is $50 billion to provide emergency assistance to help low-income renters at risk of homelessness avoid eviction due to COVID-19.

There’s $309 million in rental assistance to rural tenants who lost income during the pandemic, $21 billion to states, territories, and tribes to assist struggling homeowners, so they’re positioning homeowner assistance as something that’s going to funnel through the states to provide direct assistance to struggling homeowners with mortgage payments, utilities, and what not.

In addition, $4 billion in tenant-based rental assistance to allow public housing agencies to respond to coronavirus, $2 billion for a public housing operating fund, $5 billion for Homeless Assistance Grants, $5 billion for community development block grants, there are some other this and that’s as well for housing, you can look at the summary if you’re interested.

Student loans, this updated HEROES Act wants all student loans to qualify for the CARES Act protections, you remember if you watched my video on CARES Act student loan protections, it’s only certain federal loans, but this updated HEROES Act wants to include all federal student loans to qualify for the protections, and it also wants to extend these protections, extend the payment suspension and the pause of the interest accrual through September 30, 2021 with a 30-day transition period.

Also, borrowers on an IDR, an income-driven repayment plan, would not have to recertify their income or family size until 2022.  Also, for private borrowers, this bill would require the Treasury Department to make monthly payments for economically distressed private student loan borrowers until February 1, 2021 with a cap of ten thousand dollars in relief.

I didn’t see that ten thousand dollar figure for federal student loan borrowers, which struck me as odd, I’ll have to take a second look at that.

Now, state and local government, Pelosi went down to $436 million, that’s less than half of what she gunned for in the HEROES Act, I am happy about this, don’t get me wrong, $436 million sounds a bit high probably for most Republicans, but that sounds a lot better than over $900 billion, almost a trillion.  And the Dems are positioning this state and local funding as the way this bill honors our heroes, the one-pager says this bill “honors our heroes, through $436 billion to provide one year’s worth of assistance to state, local, territorial and tribal governments who desperately need funds to pay vital workers like first responders and health workers who keep us safe and are in danger of losing their jobs.”

There is $13.5 billion in economic relief to airports, $2.4 billion for Amtrak, and $32 billion in transit grants.  $25 billion in relief to passenger airlines, $3 billion to airline contractors.  There is $15 billion for the Postal Service, that’s down from the $25 billion in the old HEROES Act, so we heard that this number was negotiated down in the course of negotiations, $1.3 billion to FEMA, which frankly doesn’t sound like a lot given that it was the FEMA Disaster Relief Fund that has funded Trump’s unemployment memorandum, $400 million plus for the Census, almost $3 billion for defense-related costs, I think Republicans might like that, $3.6 billion for elections, $12 billion for broadband for kids to close the homework gap, there’s $3.7 billion for Department of Labor programs to train workers and protect workers’ employment with a little under half that going to states to help workers in their respective states, over $400 billion for public health with much of that going to fighting the virus, we have $65 billion for child care and related services, $225 billion for schools.

A couple things raise my eyebrows here like $37 million for the House to support tele-town halls, video conferencing, remote hearings, and cybersecurity.  Funding will also support changes to Member office space, such as providing plastic barriers.

Zoom is pretty cheap, and if you watch these hearings, they pretty much use Zoom, so I’m not sure where this $37 million is going to go, and I’m not sure how much these plastic barriers cost, but that seems like a lot.

Senate, $6.345 million for teleworking and IT needs as well as funds to supplement daycare operations.  That just seems like a lot, daycare operations, that’s great, how much do you really need for that?  Teleworking and IT, the Senate has like 100 people, of course they have their staff as well, but we’re not talking about some organization with tens of thousands of employees here, it just raises eyebrows.

And again, U.S. Capitol Police, $12 million for basic safety items, for temporary lodging, and for virtual hiring. My mind cannot envision why basic safety items, temporary lodging, and virtual hiring would cost twelve million dollars, I just don’t get it.

Architect of the Capitol, $181 million for face coverings, gloves, thermometers, and cleaning the Capitol.  What?  Look, I could go on and on here, I’m not going to bore you, but there is some stuff in here where I’m like, “Hmm.”  It’s small potatoes compared to the $2.2 top line on this thing, but that’s how you sneak stuff in there.

So I’m not going to just keep going on and on here, let’s talk about small business, and I think Republicans will like these proposals.  For small business, we have $50 billion in grants to struggling small business as well as a second round of PPP in three different buckets, the first bucket, which is 10% of remaining and future funding, would be for very small businesses, those with ten or fewer employees as well as sole proprietors and the self-employed, as well as for loan amounts less than $250,000 for businesses located in low- and moderate-income areas.  30% would be for non-profits.  And 50% would be for second PPP loans to small businesses with less than 200 employees and who have experienced at least a 25% percent reduction in revenue from last year due to the COVID-19 situation.

Covered period for the forgiveness would be 24 weeks, which is approximately six months, forgiveness would be streamlined for loans of $150,000 or less and even more streamlined for those under $50,000.

There would also be this $40 billion SBA Lifeline Grant Program for small businesses with fifty or fewer employees that have suffered an economic loss of at least 30%.

Businesses applying for an EIDL loan could apply for a grant for the lesser of $50,000 or one hundred and eighty days’ working capital.  Employee hiring and retention credits would also be expanded.

Now, what won’t Republicans like about this?  Well, they won’t like the top-line, I’ll tell you that much, and I think there are just so many items in here that I think Republicans will balk at, for example, there’s about $1.5 billion in this thing for prisons, prisoners, and ex-prisoners, ranging from $620 million in additional funding for federal prisons for PPE, hygiene supplies, what have you, $250 million in Second Chance Act grants to help reintegrate ex-prisoners into society, $700 in Pandemic Justice Response Act Grants to stop the spread of COVID-19 in correctional institutions, for testing at prisons, with $75 million of that going to juvenile facilities, so I don’t think Republicans will be thrilled about that.  I think they could get on board with the testing and what have you, but those Second Chance Act grants, I’m not sure.

Some Republicans may balk at the $375 million for Violence Against Women Act Programs, the $50 million dollars in environmental justice grants, won’t like expanded Earned Income Tax Credit eligibility, and they won’t like that this updated HEROES Act proposes that the  $10,000 cap on deducting state and local taxes be lifted for 2020.

Probably won’t like that this bill proposes extending the Main Street Lending Program to public universities, won’t like the vote-by-mail provisions, the fifteen percent increase to SNAP benefits, and just the $2.2 trillion top line overall is just not palatable to Senate Republicans, there’s just so much in here that they would consider fluff and even some of the provisions like $600 weekly FPUC, they would want to come down on that, so still a long way to go if stimulus negotiations are going to go anywhere.

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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