House Democrats Draft Fiscal Stimulus Counteroffer
Washington Policy Analyst Ed Mills and Healthcare Policy Analyst Chris Meekins describe the proposal, which they view as a starting point for negotiations rather than a list of final provisions.
A $2.5 trillion counteroffer has been released by House Speaker Nancy Pelosi, upping the ante in a high-stakes negotiation for a federal fiscal response to COVID-19. The speaker promotes the bill as prioritizing worker protections, ensuring hospital and healthcare workers get the equipment and support they need, and adding restrictions on corporations that received federal assistance. However, the bill has been immediately criticized by Republicans for containing a “wish list” of Democratic policy positions.
We view the document as establishing a Democrat marker in negotiations rather than as a list of provisions that are likely to be adopted – making any analysis of individual provisions likely to produce a series of false positive or negative conclusions. However, if we see a phase four of stimulus, the likelihood of additional provisions could become more of a reality.
We continue to believe the more important negotiation is going on in the Senate (where Democratic Leader Schumer is constantly in contact with Speaker Pelosi). As of our writing, there have been conflicting but generally positive signs of progress toward negotiations. We continue to believe the largest-ever fiscal stimulus package will pass, but the timeline is threatening to slip. The key disagreement in our mind continues to focus on the corporate controls and transparency of the $500 billion business support fund in the bill.
Key Provisions of the House Democrats’ Bill
Individual relief. Direct payment to each American of $1,500, up to a total of $7,500 per family. These payments would be limited based upon income, similar to the Senate bill. Funds would be available for anyone with a tax ID number.
Mortgage, credit card and car payment relief. Creditors would be forced to provide consumers with relief from credit card, car payments and mortgages under the bill. Foreclosures and evictions would be banned. The bill directs the Federal Reserve to provide mortgage services with liquidity for delinquent borrowers. We have heard considerable concerns about the impact of mortgage moratoriums on mortgage servicers, so this provision is a sign that policymakers are starting to recognize this as a problem (especially if there is a patchwork of state responses). Rent would be temporarily suspended for public housing residents. Credit reports would not be negatively impacted for missed payments.
Expanded unemployment benefits. Temporary Federal Pandemic Unemployment Compensation would provide workers with a $600 weekly payment if they are laid off tied to COVID-19. The bill would also provide relief for self-employed individuals who have lost work during the pandemic.
Small business loans. $500-600 billion in small business support. Including $300 billion in forgivable loans and $100 billion in grants.
Hospitals. $150 billion in payments to hospitals and community health centers to provide treatment and pay for equipment needed to fight coronavirus. Updated OSHA standards for workers. Requires the use of the Defense Production Act to provide hospitals with necessary medical equipment.
Corporate restrictions. Requirements to prioritize worker protections with restrictions on CEO pay, buybacks and prohibitions on lobbying.
State and local government funding. $200 billion in “state stabilization funds” to support reduced state and local tax receipts.
Education. $60 billion in funding for education priorities. $30 billion to states for school funding. $10 billion for state universities. $10,000 of student loans debt would be forgiven per borrower.
Election funding. $4 billion in funding to allow states to develop vote-by-mail and other alternatives to support the 2020 elections.
Environmental provisions. Airlines would be required to reduce their carbon emissions by 50% by 2050.
All expressions of opinion reflect the judgment of Raymond James & Associates, Inc., and are subject to change. There is no assurance any of the trends mentioned will continue or that any of the forecasts mentioned will occur. Economic and market conditions are subject to change.