What's in the $550 Billion Senate Relief Package?
Earlier this week we detailed the contents of the $908 billion COVID relief package put forward by a bipartisan and bicameral group of lawmakers. A smaller proposal was also released on December 1 by Senate Majority Leader Mitch McConnell (R-KY). The proposal includes a revival of the Paycheck Protection Program (PPP), limitations on liability and malpractice lawsuits, a short-term extension of unemployment programs expiring at the end of the year, as well as money for vaccine development and supply, testing and tracing programs, additional support for child care, entertainment venues, farms, and more.
The roughly $555 billion proposal includes a few extraneous provisions not germane to the current crisis (or in fact counterproductive to the public health effort) that should be stripped from any final bill.
A breakdown of the relief package is below, including reported costs supplemented with our own estimates.
|Paycheck Protection Program Second Draw Loans||$258 billion|
|Education Stabilization Fund||$105 billion|
|Paycheck Protection Program Expansions||$60 billion|
|Vaccine and Therapeutic Development and Supply||$31 billion|
|Farm Aid||$20 billion|
|One-Month Extension of Temporary UI programs for Self-Employed and Long-Term Unemployed||~$20 billion|
|Testing and Contract Tracing||$16 billion|
|Grant Program for Shuttered Venues||$15 billion|
|Back to Work Child Care Grants||$10 billion|
|U.S. Postal Service Loan Forgiveness||$10 billion|
|Child Care and Development Block Grants||$5 billion|
|Double Above-the-Line $300 Charitable Deduction (Quadrupled for Married Filers)||~$2-3 billion|
|Temporarily Reinstate 100% Deduction for Business Meals||~$2 billion|
|Aid to Fisheries||$0.5 billion|
|Other Tax Credits, Emergency Appropriations, and Grants||Unknown|
|"Offsets" (reductions in previous budget authority)||-$569 billion|
|Net Total||$0 billion*|
Sources: Summary of the package, Joint Committee on Taxation, Department of Labor, and CRFB Calculations
*The proposed "offsets" rescind funds from the PPP program and the Federal Reserve’s lending facilities, but those funds would not have been spent under current law so the actual deficit impact will be closer to $555 billion. The precise deficit impact is unknown — for example, unemployment benefits could cost more or less depending on unemployment levels and PPP loans may not be fully utilized.
The proposal shares some similarities with the bipartisan $908 billion bipartisan package, including a second draw from the Paycheck Protection Program, education relief, vaccine development and supply funding, money to support test and trace efforts, U.S. Postal Service assistance, farm assistance, and child care support. Two notable differences on the spending side include a lack of direct state and local aid (the bill gives states another 9 months to spend CARES Act funding) and no augmented federal unemployment payments for individuals receiving regular state unemployment benefits. The bill does extend two emergency unemployment programs that are set to expire this month: Pandemic Unemployment Assistance (temporary federal unemployment assistance for self-employed and gig workers), and Pandemic Emergency Unemployment Compensation (13 weeks of extended benefits for those that have exhausted regular state unemployment). Those programs would be extended for new applicants through January. Those on the program could then continue receiving benefits for an additional two months.
As mentioned, the bill also includes some proposals unrelated to economic relief that should not be considered in the final version of a relief bill, such as tax credits for donations to school choice scholarship programs and expanding the use of tax-preferred 529 accounts. The bill would double (quadruple for joint filers) the $300 above-the-line charitable deduction passed into law under the CARES Act, which would largely subsidize donations that were already made since the deduction would end December 31. Finally, the bill would also reinstate the 100 percent deduction for business meals for 2020, subsidizing business meals that have already occurred. It does also not seem prudent to incentivize an activity that could jeopardize public health.1
There are a few provisions where the framework does not indicate the size of the proposal, such as miscellaneous grants for state stockpiles of medical products, emergency appropriations for scholarship-granting organizations (SGOs), two-year tax credits for donating to those organizations, and expanding 529 tax-preferred college savings accounts to K-12 expenses.
Like the $908 billion bipartisan proposal, the bill also includes tenuous "offsets" that in fact only reduce previous budget authority, rather than outlays. Money set aside to backstop Federal Reserve facilities and lending programs, and unused Paycheck Protection Program funds would not be spent under current law, so repurposing it would not technically reduce deficits.
This blog post is a product of the COVID Money Tracker, a new initiative of the Committee for a Responsible Federal Budget focused on identifying and tracking the disbursement of the trillions being poured into the economy to combat the crisis through legislative, administrative, and Federal Reserve actions.
1 As we understand the proposal, both the charitable contributions and business meals deduction would end in December 2020. Retroactively enacting tax breaks only provides a windfall for decisions already made. It cannot incentivize future behavior, although the virtues of subsidizing business meetings at restaurants during a pandemic are unclear.