On Monday, a bipartisan group of congressional policymakers released two compromise relief bills to address the Covid-19 pandemic, for a total of around $ 908 billion: the Coronavirus Emergency Relief Act and the Bipartite Law on State and Local Government Support and Small Business Protection. The latter bill deals with both state and local aid and the liability protection of companies operating during the pandemic, which have been controversial and are the subject of ongoing negotiations in Congress, while the former contains provisions that enjoy wider support.

the Coronavirus Emergency Relief Act is estimated at around $ 748 billion and focuses on emergency aid for workers and businesses to provide relief until a vaccine becomes widely available next year. Two of the main areas are the renewal of support for the Paycheck Protection Program (PPP) and the extension of the unemployment assistance benefits paid. by the CARES law in the spring and will expire at the end of the year.

The PPP was one of the most widely used programs under the CARES Act for businesses struggling to stay open as the economy contracted and public health restrictions were tightened. By providing forgivable loans for qualifying expenses, such as employee salaries or operating expenses like rent and utilities, many businesses have avoided having to shut down permanently. This relief proposal would provide an additional $ 300 billion to the Small Business Administration (SBA) for loans to small businesses with 300 or fewer employees and include reserves for small borrowers and initially underserved communities.

The bill would also make the tax treatment of canceled PPP loans more generous by allowing the deductibility of professional expenses paid by the product of the PPP. Under current law, income that is excluded from taxable income also cannot deduct the associated expenses from taxable income to avoid a double benefit. However, some decision makers in Congress have argued that it is Congress’ intention to provide both benefits. This provision would clarify this status of PPP expense deductions, which have been denied by the Internal Revenue Service (IRS) in related administrative guidelines.

Big three The CARES law extends unemployment assistance would be extended. The Pandemic Unemployment Assistance Program (PUA), which makes unemployment compensation available to skilled workers in the odd-job economy and self-employed entrepreneurs, would be extended for an additional 16 weeks, up to the end of April 2021.

Emergency Pandemic Unemployment Compensation (PEUC), which extends the basic unemployment period from 26 weeks to 39 weeks, would also be reauthorized. If these two extensions expire at the end of the year, around 12 million unemployed would see their income fall to zero. Federal Pandemic Unemployment Compensation (FPUC), which provided an additional unemployment assistance allowance of $ 600 per week and expired in late July, would be extended from 16 weeks to $ 300 per week.

The Emergency Coronavirus Relief Act also provides grants and assistance to strengthen coronavirus screening and tracing efforts by states, communities and territories; increases support for health care providers and mental health treatment; and provides additional assistance to airports and transit systems. Supplementary Nutrition Assistance Program (SNAP) benefits would increase temporarily by 15% for four months, and $ 25 billion in rent assistance would be provided to states and communities through the Coronavirus Relief Fund (CRF). Finally, the bill also extends federal student loan forbearance until April 1, 2021 and provides support for education providers and the deployment of broadband to increase digital access during the pandemic.

the Bipartite Law on State and Local Government Support and Small Business Protection separate aid to states, towns and tribes as well as the protection of corporate liability against the broader relief bill. The bill would provide $ 160 billion in state and local aid in three installments ($ 91.2 billion to states, $ 60.8 billion to local governments, and $ 6 billion to tribal governments). One-third of aid would be distributed according to population, with the remaining two-thirds attributed to lost income with a minimum amount of state aid of $ 500 million.

As notes our colleague Jared Walczak, this allocation formula has certain limitations: it would not take into account the revenue decisions made by states or the underlying source of the revenue cuts, and states could be encouraged to adjust their revenues to maximize their aid depending on the formula. However, the formula benefits from using the calendar year 2019 as a benchmark for revenue loss, instead of state revenue projections that reward states for overly optimistic projections and punish those who are cautious.

State and local aid and the protection of corporate liability are two of the main obstacles to reaching a broader agreement for relief from the pandemic. Another disagreement centers on whether to provide a second round of relief payments like those in the CARES Act, which no bipartisan bill includes. In addition, a separate group of lawmakers have put together a package to extend a a variety of unrelated tax breaks that are due to expire at the end of the year in the hope of enjoying broader relief that would be provided in the coronavirus emergency relief law.

Policymakers in Congress aim to attach a government funding omnibus relief bill later this week. If that effort fails, it is likely that further relief from the pandemic will await the New Year, brokered by a new Congress and a new presidential administration. With the growing number of Americans suffering from the virus, tightening public health restrictions and warning signs of slowing economic activity, additional support to bridge the gap until the vaccine is released. widely available would help avoid unnecessary economic hardship.