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COVID-19: Federal Update (10/13)

Quick Takes

— FIVE KEY FACTORS ON THE NEXT COVID-19 RELIEF PACKAGE. President Trump has indicated that he wants to reach a compromise on pandemic relief aid prior to the Nov. 3. election. — 2020 ELECTION STATE OF PLAY. There are 21 days until the Nov. 3 election.  — SENATE REPUBLICANS LAMBASTE POTENTIAL CORONAVIRUS DEAL. Senate Republicans lashed out at a potential framework for a new coronavirus deal between the Trump administration and Speaker Nancy Pelosi on a conference call Saturday.

— TRP MEMO: THE PROVIDER RELIEF FUND AND ITS DISTRIBUTIONS. TRP has updated its comprehensive memo on the CARES Act Provider Relief Fund. 

Capitol Hill Update

— FIVE KEY FACTORS ON THE NEXT COVID-19 RELIEF PACKAGE. We’ve all watched the twists and turns of the pandemic relief legislation from the of the CARES Act months ago up to President Donald Trump’s conflicting tweets this past week. Today’s TRP Tip Sheet steps back from the daily news to assess the five key factors that will determine the likelihood that a COVID-19 relief package will be signed into law during the balance of the 116th Congress.  PRESIDENT TRUMP. The President has delegated the power to negotiate a deal with Speaker Pelosi to his senior aides, specifically White House Chief of Staff Mark Meadows and Treasury Secretary Mnuchin. As the weeks wore on, it became clear that sending Secretary Mnuchin alone would increase the likelihood of a deal given his past successes, so Mr. Meadows stepped back. Secretary Mnuchin and Speaker Pelosi have made progress on some areas of bipartisan agreement, with the White House coming up to $1.6 trillion while the Speaker has come down to $2.2 trillion.  

  • Context. In recent days, President Trump has: (1) withdrawn from the negotiations; (2) offered support for a more targeted relief approach; (3) instructed Secretary Mnuchin to return to the negotiating table with Speaker Pelosi; and (4) moved the administration’s offer up to $1.8 trillion. Given the current state of the 2020 presidential race, there is widespread consensus that President Trump has grown increasingly desperate for a deal, though the cross-cutting desire to please conservatives has delayed a major push for a bill and led to confusion about his true intentions. On balance, President Trump’s recent push is a factor in favor of a deal, and the fact that Secretary Mnuchin is negotiating alone with Pelosi also increases those chances.  

HOUSE DEMOCRATS. Democrats in the House are divided over the negotiations on a COVID package. Dozens of Democrats in more competitive districts — including many Members of the bipartisan Problem Solvers Caucus — have pushed the Speaker hard for a package because they want to show their voters they are trying to deliver and will not “allow the perfect be the enemy of the good.” These efforts led the Speaker to bring up and pass a smaller $2.2 trillion version of the HEROES Act in early October. In contrast to the anxious moderates, House progressives have objected to watering down the HEROES Act, urging Speaker Pelosi to hold firm with the view that no deal is better than a bad deal.

  • Context. Due to their divisions, House Democrats have pushed and pulled the Speaker on a COVID package. From her latest statements, she has indicated that certain matters — like unemployment insurance and state and local funding — are “must haves” in the negotiations.  On balance, it seems that Speaker Pelosi is open to a compromise, but expects significant movement by the Republicans in return.  

SENATE REPUBLICANS. Senate Majority Leader Mitch McConnell (R-KY) has not taken part in any formal negotiations but has been informally consulted by the White House throughout the process. Leader McConnell has consistently said that a relief package cannot pass without liability protections, yet this has not been a focal point of the negotiations between Speaker Pelosi and Secretary Mnuchin. While it has been reported that the $1.6 trillion figure is acceptable to McConnell, it is also likely that roughly half of the Republican Conference might vote no on such a package.   

  • Context. Just this weekend, many Republican Senators — ranging from staunch conservatives like Sens. Mike Lee (R-UT) and Rand Paul (R-KY) to moderates such as Sen. Lamar Alexander (R-TN) — sharply criticized even the current outlines of a deal, arguing that this amount of spending “betrayed conservatives” and was not palatable to GOP electorate. Opposition to the overall dollar amount is only one problem as many Republican Senators specifically object to renewing the $600 per week unemployment insurance benefits and additional funding for states and localities — key priorities for Congressional Democrats. As such, this lack of appetite for another trillion-dollar stimulus package within the GOP conference significantly decreases the likelihood that a COVID-19 package moves prior to the end of this Congress. 

— THE CONGRESSIONAL CALENDAR. With just 21 days left until the election, the calendar and Senate rules may be the biggest obstacle to finishing a relief package before November 3rd.  As Leader McConnell put it recently, a relief package “is unlikely in the next three weeks.” The reasons are threefold: (1) strong opposition from at least a handful of Senators; (2) rules that empower those Senators to debate a bill for many days; and (3) the fact that the last week in October has been set aside for Senate floor debate on Judge Amy Coney Barrett’s nomination to the Supreme Court.

  • Context. Senate leadership has indicated that moving a bill would take two weeks, thus clouding the likelihood of action on the floor prior to the end of the month. 

— THE 'LAME DUCK.' In general, lame duck sessions are not nearly as productive as people expect before the election. This is partially due to the calendar – the Congress normally convenes for just one week in November.  This year, government funding is set to lapse on Friday, December 11, meaning that there are less than two weeks are available for work in December, unless the continuing resolution (CR) is extended.  

  • Context. Beyond the few days in session, politics always complicates lame duck sessions. First, many of the candidates who have lost reelection show little interest in their work in Congress. Second, and more importantly, the party that wins the Presidency from an incumbent has little interest in moving legislation before the swearing in on January 20th. If former Vice President Joe Biden wins the presidency — and/or Democrats take the Senate — then a lame duck will likely produce little more than the spending bills needed to keep the government funded past Dec. 11. Should President Trump win re-election, this would increase the likelihood of a relief package passing Congress, but would still face many of the obstacles outlined above.

Washington Insider: What We're Reading

Senate Republicans lashed out at a potential framework for a new coronavirus deal between the Trump administration and Speaker Nancy Pelosi on a conference call Saturday, warning that there was little support for a big spending bill right before the election. At least two GOP senators warned White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin that spending as much as $2 trillion on a big bill could backfire at the ballot box. The administration has floated a large spending deal to Pelosi but is trying to get her to back down on some spending levels, but senators said even the White House wants to spend too much, according to multiple sources briefed on the call.

The Covid-19 pandemic will exact a $16 trillion toll on the U.S. -- four times the cost of the Great Recession -- when adding the costs of lost lives and health to the direct economic impact, according to former U.S. Treasury Secretary Lawrence Summers and fellow Harvard University economist David Cutler.

The U.S. Supreme Court on Tuesday agreed to decide whether more than 100 technology disputes must be reheard because judges were unconstitutionally appointed to a U.S. Patent and Trademark Office tribunal in a case arising from a medical device patent challenge. The justices said they would review a 2019 lower court decision that found a “constitutional defect” in how Patent Trial and Appeal Board judges are appointed. That ruling came in an appeal by privately held Florida-based medical device company Arthrex of a patent tribunal three-judge panel’s decision that invalidated part of one of its patents that had been challenged by British-based rival Smith & Nephew PLC.

Energy regulators are allowing resumed construction of an interstate gas pipeline project, which had previously been halted. The Federal Energy Regulatory Commission (FERC) voted 2-1 to allow the construction of the Mountain Valley Pipeline Project’s construction to proceed in light of a new assessment of its impacts on certain species. The approximately 300-mile project is expected to cross Virginia and West Virginia.  

COVID-19: What We're Hearing

— HOUSE DEMS PASS NEW HEROES ACT. House lawmakers passed the Democrats' newly revamped HEROES Act last week. The $2.2 trillion draft bill largely reflects many of the same policies that were presented in the original version, including: (1) another round of $1,200 stimulus checks and $600 per week unemployment benefits; (2) support for COVID-19 testing, treatment, and health care providers; (3) emergency paid family and medical leave; and (4) support for child care services, among other provisions. Key changes to the new HEROES Act include:

  • State and Local Aid. The bill would offer $436 billion for state and local governments impacted by the pandemic, down from the nearly $1 trillion offered in the original version. The bill also retains a temporary lift $10,000 cap on the state and local tax (SALT) deduction, but for one year instead of two.

  • PPP. The bill would repurpose $146 billion in unspent Paycheck Protection Program (PPP) funding for other small business programs contained in the bill.

  • Health Providers. The bill includes roughly $50 billion less for hospitals and other health care providers. It also does away with a $190 billion hazard pay program for health care workers and first responders.

  • Restaurant Aid. The bill would establish a $120 billion program through the Treasury Department aimed at providing restaurants and other food service entities with grant funding to offset payroll costs and eligible expenses.

  • Mental Health. The bill would provide $8.5 billion in funding to the Substance Abuse and Mental Health Services Administration (SAMHSA), an increase from the $3 billion provision in the original version.

  • Airlines. The bill would extend the Payroll Support Program (PSP) for airlines, authorizing $25 billion for the program through Mar. 31, 2021.

  • Postal Service. The bill includes $10 billion less for the U.S. Postal Service (USPS) compared to the original version. This amount could eventually be available to USPS if the borrowing restrictions contained in the CARES Act are repealed.

PROBLEM SOLVERS ROLL OUT COVID-19 PROPOSAL. The bipartisan Congressional Problem Solvers Caucus outlined their roughly $2 trillion proposal for the next round of pandemic relief aid amid mounting concerns from rank-and-file lawmakers about the lack of progress on leadership-level negotiations. The proposal reflects an effort to find a bipartisan compromise on several emerging and existing needs related to the COVID-19 public health emergency, including state and local aid, health care, liability protections, unemployment insurance, and child care. It also includes provisions on small business relief, broadband funding, agriculture aid, and postal service support. Click here to read TRP's analysis of this proposal.

— HEALS Act. Senate Republicans officially introduced their opening offer for the next round of COVID-19 relief legislation following days of intraparty negotiations between GOP Senators and White House officials. The legislative package was officially released as multiple pieces of legislation, with six total sections:

Click here to view TRP's side-by-side of the Senate GOP HEALS Act and the House Democratic HEROES Act.

COVID-19 Legislative & Regulatory Trackers


— TRP MEMO: THE PROVIDER RELIEF FUND AND ITS DISTRIBUTIONS. TRP has updated its comprehensive memo on the CARES Act Provider Relief Fund. This includes the distributions to date under the $175 billion funds, the distribution that is ongoing, and what is on the table for future funding. Click here to read the updated memo.

— TRUMP ADMINISTRATION ANNOUNCES NEW 'WARP SPEED' INVESTMENT INTO COVID-19 ANTIBODY TREATMENT. The Trump administration announced a new Operation Warp Speed agreement with AstraZeneca for late-stage development and large-scale manufacturing of the company's COVID-19 antibody treatment.


— SBA ANNOUNCES SIMPLIFIED PPP LOAN FORGIVENESS FOR SMALLER LOANS. The Small Business Administration (SBA) and Treasury Department released a simplified forgiveness application for Paycheck protection Program (PPP) loan recipients. The new form applies to loans worth $50,000 or less.

  • Click here to view the simpler loan forgiveness application.

  • Click here to view the instructions for completing the simpler loan forgiveness application.

  • Click here to view the Interim Final Rule on the simpler forgiveness process for loans of $50,000 or less.

— CMS DETAILS REPAYMENT CHANGES FOR PROVIDER LOAN PROGRAM DURING COVID CRISIS. The Centers for Medicare and Medicaid Services (CMS) announced amended terms for payments issued under the Accelerated and Advance Payment (AAP) Program during the COVID crisis. CMS issued $106 billion in payments to providers and suppliers in order to alleviate the financial burden healthcare providers faced while experiencing cash flow issues in the early stages of combating the COVID-19 Public Health Emergency.

  • Repayment will now begin one year from the issuance date of each provider or supplier’s accelerated or advance payment, as required by Continuing Appropriations Act, 2021 and Other Extensions Act. 

— SBA ANNOUNCES PPP LOAN FORGIVENESS PAYMENTS, ISSUES NEW FAQS. SBA announced that it has begun remitting PPP loan forgiveness payments to lenders. The Paycheck Protection Forgiveness Platform can be accessed here.

  • SBA also issued an updated list of frequently asked questions on the PPP, adding a new question on the deferral period for borrower payments of principal, interest, and fees on PPP loans.

— HHS ANNOUNCES NEW PROVIDER RELIEF FUNDING TRANCHE. The Department of Health and Human Services (HHS) announced a $20 billion funding opportunity for health care providers though the CARES Act Provider Relief Fund. The application period is Oct. 5 through Nov. 6. Updated FAQs can be accessed here. HHS will hold a webcast for providers on Oct. 15. Register here.

  • HHS expanded this funding opportunity to additional groups of behavioral health providers and providers who began practicing in 2020.

  • Providers that already received payments of 2 percent of their revenue may apply for an “add-on payment.”

— FDA PUBLISHES NONBINDING RECOMMENDATIONS ON COVID-19 VACCINE EUA. The Food and Drug Administration (FDA) published its nonbinding recommendations on a future emergency use authorization (EUA) for COVID-19 vaccines.

  • The document, which contains stricter guidance that the White House has not signed off on, comes ahead of an Oct. 22 advisory committee meeting on vaccines.

— TRUMP EO SEEKS TO ADDRESS PANDEMIC-RELATED MENTAL HEALTH ISSUES. President Trump issued an executive order that seeks to address increased mental-and behavioral-health needs and challenges stemming from the pandemic.

  • Specifically, the administration is establishing a cabinet-level working group to assess the mental health needs of the most vulnerable, including the elderly, minorities, children, veterans, and people with disabilities.

  • The order also encourages grant funding to support mental health treatment services including telehealth, peer-to-peer, and safe in-person therapeutic services.

— IRS EXTENDS STIMULUS PAYMENT DEADLINE TO HELP NON-FILERS. The Internal Revenue Service (IRS) has extended the deadline to register for an Economic Impact Payment (EIP) to November 21, 2020 with the goal of assisting those who typically don't file a tax return.

— NIH AWARDS FUNDING TO IMPROVE COVID-19 TESTING FOR UNDERSERVED POPULATIONS. The National Institutes of Health (NIH) has awarded nearly $234 million to improve COVID-19 testing for underserved and vulnerable populations as a part of the Rapid Acceleration of Diagnostics (RADx) initiative.

— BANKING AGENCIES FINALIZE RULE ON COVID-19 FACILITIES. Federal banking agencies finalized a rule aimed at facilitating banks’ participation in the Paycheck Protection Program and Money Market Mutual Fund Liquidity Facilities. The final rule formally adopts three interim final rules issued earlier this year that allows banks to neutralize the effects of their participation for purposes of the liquidity coverage ratio.

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