Extending and Improving the CARES Act

July 28, 2020

Over the past five months, the National Human Services Assembly has been tracking the legislative response to the COVID-19 pandemic, through our policy newsletters and PolicySource. With the August Congressional recess just around the corner, followed by a stretch of campaigning before the November election, the next two weeks are likely the last chance in the near future for Congress to reach a deal on a major Coronavirus stimulus package.

In May, House Democrats passed along a party-line vote the HEROES Act, a $3.4 trillion package that builds and extends on the relief provided in the CARES Act. Meanwhile, Senate Republicans have been waiting to release their COVID legislation presumably to build maximum leverage for the upcoming political horse-trading that is sure to occur. This article will examine the three major provisions from the CARES Act that are set to expire and assess how the negotiation for a new COVID relief package is shaping up. In addition, it will give the human services’ perspective and impact on the financial well-being of families and nonprofits.

Unemployment Insurance (UI)

The CARES Act established the Federal Pandemic Unemployment Compensation (FPUC) program, which provides an extra $600 per week to workers receiving UI benefits through July 31. The CARES Act was enacted in March under the assumption that four months of enhanced UI benefits would be enough time to contain the Coronavirus outbreak so that employers could safely rehire their workers. However, with the FPUC expiration looming, COVID-19 cases are reaching record highs, and millions of individuals are still unable to return to work.

House Democrats: The HEROES Act would fully extend FPUC through January 31, 2021, with a phaseout period through March 31, 2021. During a press conference on July 24, Speaker Nancy Pelosi (D-CA) reiterated her support for continuing enhanced UI benefits and told reporters she would not accept stopgap legislation.

House Republicans: Republican House Leadership has made it clear that their Conference does not want to extend enhanced UI benefits, instead focusing on incentivizing people to return to work. This is reflected in House Ways and Means Committee Ranking Member Kevin Brady’s (R-TX) Reopening America by Supporting Workers and Businesses Act, under which people currently receiving unemployment benefits who return to work would receive $1,200.

Senate Democrats: Senate Democratic Leader Chuck Schumer (D-NY) and Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced the American Workforce Rescue Act, which would peg the enhanced UI benefits to a state’s unemployment rate. Under this methodology, an individual would receive the full $600 weekly extra benefit only if their state’s three-month average unemployment rate is at least 11 percent. For every percentage point drop in the unemployment rate, residence enhanced UI benefits would be reduced by $100, with recipients receiving ordinary UI benefits when a state’s unemployment rate dips below 6 percent.

Senate Republicans: Senate Majority Leader Mitch McConnell (R-KY) was at first resistant to any further UI extension, but as COVID-19 conditions have worsened, Senate Republicans have expressed a new willingness to maintain the enhanced benefit in some form. There still seem to be divisions within the Republican Conference over how much to expand UI benefits or whether to have a second round of stimulus checks. However, recent reports point to McConnell preparing to introduce legislation that boosts UI benefits by only around $200 per week and then having states develop a system to provide UI benefits at 70 percent of a worker’s prior income.

NHSA Position: With more than 30 million workers having filed for unemployment benefits, it is critical that Congress not roll back this vital economic lifeline. During a normal economic recession, the priority of the government should be to get people back to work, but in the middle of a global pandemic, it is more important that families are given the resources to stay healthy and safe regardless of employment status. If FPUC were to expire, workers who lost their job due to COVID-19 would be receiving, on average, only 40 percent of their ordinary salary, not nearly enough to cover the cost of living. The National Assembly urges Congress to continue the $600 UI enhancement for as long as this crisis lasts.

Federal Eviction Moratoriums

The CARES Act provided a 120-day moratorium on evictions for most residents living in federally financed or subsidized properties, which expired on July 25. This provision covered an estimated 12.3 million rental units, of predominantly low-income families. If this moratorium is not reauthorized in the next COVID package, in 30 days, landlords will begin evicting tenants who are unable to pay four months of back rent.

House & Senate Democrat Proposal: The HEROES Act would not only extend the moratorium on evictions by 12 months, but it would also expand coverage to almost all single-family and multi-family rental housing, not just ones that are federally financed or subsidized. Additionally, the bill would establish a $100 billion emergency rental assistance program through the Department of Housing and Urban Development. Senate Democrats have put forward two bills, Senator Elizabeth Warren’s (D-MA) Protecting Renters from Evictions and Fees Act and Senator Sherod Brown’s (D-OH) Emergency Rental Assistance and Rental Market Stabilization Act, both of which mirror language from the HEROES Act.

House & Senate Republican Proposal: House and Senate Republicans have not introduced any legislation to extend the eviction moratorium or provide financial aid through rental assistance. The White House though seems to be open to an eviction moratorium extension.

NHSA Position: With up to 23 million families at risk of losing the roofs over their heads in the coming months, Congress must act immediately to reinstate and expand the eviction moratorium through the duration of this health crisis, as well as make available rental assistance to the families hardest hit by COVID-19. Even before the pandemic, millions of Americans suffered from housing insecurity, and COVID-19 has magnified and intensified the problem. Protecting families from eviction would likely not only reduce the spread of COVID in the short term but will provide a solid foundation for people to go back to contributing to their communities once this crisis abates.

Paycheck Protection Program

The Paycheck Protection Program (PPP) was created through the CARES Act to provide contingent forgivable loans for businesses and nonprofits with fewer than 500 employees. PPP was originally allocated $349 billion with the application period ending on June 30, but the passage of S. 4116 last month extended the PPP application deadline to August 8 and provided another $310 billion.

House Democrat Proposal: The HEROES Act extends the PPP application deadline through December 31 and allows nonprofits of all sizes eligibility for PPP loans. Additionally, the bill sets aside 25 percent of all PPP loans for the exclusive use of nonprofits. The HEROES Act would also expand the forgiveness period by six months and eliminate the rule mandating 75 percent of PPP loans be used for payroll in order to be eligible for forgiveness.

Senate Republican Proposal: Senate Republicans want legislation that would streamline loan forgiveness for small loans under $150,000, and create an intermediate forgiveness process for loans under $1 million. Senate Republicans have also called for an extension of the PPP application period for businesses and nonprofits with less than 300 employees or employers that can demonstrate 50 percent lost revenue.

NHSA Position: As the application period comes to an end, many nonprofits are still in need of financial assistance as they experience plummeting revenues and increased demands for their services during this crisis. The National Assembly supports the PPP program changes in the HEROES Act which would ensure that the nonprofits dedicated to providing pandemic-related services will not be excluded from loans due to size.

Next Steps

During the worst economic crisis since the Great Depression, now is not the time to put fiscal restraint above building the well-being of American families. Unfortunately, as time runs out, Congress appears to be deadlocked over Republicans’ concerns that a new relief package would be too generous to families suffering from Coronavirus’s adverse effects. Congressional Republicans are creating another roadblock to a relief deal by their insistence on including a 5-year liability shield to protect at-risk employers from lawsuits. Leader McConnell has repeatedly called the exclusion of liability protections a “red line” for Republicans. Democrats conversely have attacked liability protections as a way to undermine worker protections and refused to include it in the HEROES Act.

The National Assembly is not optimistic that Congress will reach a deal before the August 1 recess deadline. However, Speaker Pelosi has announced that she will keep the House in session until Congress comes to an agreement, so there is hope that a retroactive package might be cobbled together. As negotiations progress, the National Assembly will continue to work with our members and allies in the human services community to insist that Congress stay in session until they have passed a bill that extends UI benefits, eviction moratorium, and PPP for nonprofits.