With unemployment numbers high, small businesses struggling, and many lower-income workers facing evictions, Senate leadership returned to Washington to work on a bill that many are calling “CARES Act 2.”
In May, Democrats in the U.S. House of Representatives passed the Heroes Act, a $3 trillion stimulus bill designed to respond to the financial costs of COVID-19 on the United States economy. The Senate, while not addressing everything in that bill, has been shaping its own stimulus bill amid disagreements with the White House and within the GOP caucus.
While differences of opinion remain on everything this stimulus bill should cover, we have some early signals of areas of potential agreement: funding for schools, funding for COVID-19 testing and tracing, and a second round of individual stimulus checks.
The GOP-written Senate proposal would maintain federal unemployment supplemental benefits but cut them from $600 per week down to $200. That plan also includes a second round of more targeted Payroll Protection Program loans designed to benefit the hardest-hit small businesses while allow for broader forgiveness of operational expenses.
The White House has advocated for a payroll tax cut, but this seems unlikely at this juncture. This weekend the White House also floated the idea of simply extending unemployment benefits, which expire at the end of the week, while working on other parts of the package. House Democrats have signaled that they don’t support a “piecemeal” approach to stimulus.
The CARES Act 2 may extend a federal moratorium on evictions and add a new liability shield for COVID-19 based lawsuits. The GOP has also proposed an enhanced employee-retention tax credit, deductions for employer purchases of PPE and testing equipment, and an increase in the business-meal expense deduction from 50% to 100%.
We’ll keep an eye on developments and let you know how they affect our clients and other small businesses as the legislation moves forward. Please feel free to reach out if you have any questions.