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COVID-19: Federal Update (8/12)

Quick Takes

— BIDEN TAPS HARRIS AS 2020 RUNNING MATE. The junior senator from California and former 2020 presidential candidate was long viewed as the front-runner to be Vice President Biden's choice by political insiders and forecasters.

— TRUMP'S COVID ORDERS TOO LITTLE, TOO LATE TO HELP U.S. ECONOMY, EXPERTS SAY. Even if he can overcome the legal questions surrounding his actions, the efforts may not pack much punch, economists say.

— FUNDING FOR $300-A-WEEK UNEMPLOYMENT BENEFITS COULD RUN OUT IN SIX WEEKS. Based on the current number of unemployment benefit recipients, the official said the $44 billion in funds allocated for the enhanced benefits could be spent in five or six weeks.

— FEDERAL RESERVE LOWERS RATES FOR MUNICIPAL LENDING FACILITY. The Federal Reserve announced yesterday that it will reduce its pricing rates for cities and states seeking short-term loans from the Municipal Lending Facility.

— USDA EXPANDS ELIGIBILITY FOR CORONAVIRUS FOOD ASSISTANCE PROGRAM. The Department is also extending the deadline to apply for the program to Sept. 11. 

Washington Insider: What We're Reading

U.S. President Donald Trump’s weekend attempt to sidestep stalled congressional negotiations over the next coronavirus aid package will do little to boost the economy, experts said. Trump’s executive order and presidential memoranda, introduced on Saturday, would temporarily extend enhanced unemployment benefits at a reduced amount of $400 a week, defer payroll taxes for some workers, suspend federal student loan payments and potentially provide eviction relief. Even if he can overcome the legal questions surrounding his actions, the efforts may not pack much punch, economists say

An extra $300 a week in federal unemployment benefits is likely to take a couple of weeks to reach workers and funding could be exhausted a month and a half later, a senior Labor Department official said. The official said states should be able to begin delivering the payments after applying for funding with the Federal Emergency Management Agency and making technical changes to systems to distribute the money. Based on the current number of unemployment benefit recipients, the official said the $44 billion in funds allocated for the enhanced benefits could be spent in five or six weeks, if all states participate.

Spending cuts by state and local governments grappling with the coronavirus pandemic pose a headwind to the U.S. economic recovery as lawmakers consider how much federal aid to provide. Moody’s Analytics estimates that without additional federal aid, state and local budget shortfalls will total roughly $500 billion over the next two fiscal years. That would shave more than 3 percentage points off U.S. gross domestic product and cost more than 4 million jobs, said Dan White, head of fiscal policy research at Moody’s.

A government assessment recently obtained by an environmental group appears to link a well the group says is used in U.S.-Mexico border wall construction to low water levels in wildlife habitats at an Arizona refuge with endangered species. Defenders of Wildlife on Monday published the June government assessment that found the Glenn Ranch Well “is significantly impacting wells located at San Bernardino National Wildlife Refuge.”

COVID-19: What We're Hearing

PANDEMIC EXECUTIVE ORDERS. With negotiations on the next round of COVID-19 relief legislation at a standstill, President Donald Trump issued a series of executive orders on pandemic-related priorities over the weekend. The orders seek to restore the enhanced federal unemployment benefits at a rate lower than the CARES Act allocation, defer payroll taxes until early 2021, renew the moratorium on evictions, and continue deferring student loan payments and accrued interest under the CARES Act Statute. The executive actions do not touch on any health-specific priorities such as testing and treatment, nor does it address liability-related issues — leaving employers at-risk of litigation until a compromise deal is hammered out.

  • Context and Next Steps. The orders come as Congress and the White House remain gridlocked on the next round of pandemic relief aid, with no plans to resume the negotiations as of now. The two sides are very far apart on several provisions pertaining to the size and scope of the overall package, with the enhanced unemployment insurance benefits, additional aid for state and local governments, and liability protections standing out as the most contentious issues at play. However, the president’s ability to allocate and manage funding for COVID-19 relief efforts is complicated due to Article I, Section 9 of the Constitution, which gives Congress the “power of the purse.” As such, the effectiveness and standing of these executive orders is precarious as future legal action against the administration is expected.

Details on the orders include: 

  • Unemployment Insurance. This order seeks to extend the pandemic unemployment assistance (PUA) established by the CARES Act, lowering the weekly bonus from $600 to $400. The administration calls on states to front 25 percent of the cost — equivalent to $100 toward the weekly benefit — with the federal government covering the remaining 75 percent. To fund the revamped PUA, the White House outlined hundreds of billions in federal funding that the administration plans to “reprogram” in a manner similar to the way it has diverted Pentagon funding for wall construction on the U.S.-Mexico border. The president says he will tap into roughly $80 billion in unallocated money from the CARES Act State, Local, and Tribal Coronavirus Relief Fund, as well as more than $40 billion from the Federal Emergency Management’s (FEMA) Disaster Relief Fund, to fund these efforts.

  • Payroll Tax. This order directs the Treasury Department to allow employers to defer payment of employee-side Social Security payroll taxes through the end of 2020 for employees earning less than about $100,000 annually. While the text of the EO states that the intended deferral period would start Sept. 1, President Trump suggested that it could be retroactive to Aug. 1, saying that he hopes to forgive the deferred payroll taxes and make permanent payroll tax cuts if he is reelected in November. While the tax code does give the Treasury secretary authority to delay tax filing and collection amid presidentially-declared disasters, it remains to be seen whether employers will stop withholding payroll taxes given the risk of future liability. Critics of this particular order have also expressed concerns about the impact this action could have on both the short and long-term solvency of the Social Security and Medicare trust funds.

  • Housing. This EO outlines potential policy actions that federal agencies could take to address housing evictions during the balance of the pandemic, but does not offer an explicit pause on evictions. Specifically, the order instructs agencies to: (1) consider whether halting evictions will help stem the spread of COVID-19 across state lines; (2) identify available funds available to provide temporary financial assistance to renters and homeowners; (3) promote the ability of renters and homeowners to avoid eviction or foreclosure by encouraging and providing assistance to public housing authorities, affordable housing owners, landlords, and recipients of Federal grant funds in minimizing evictions and foreclosures; and (4) review all existing authorities and resources that may be used to prevent evictions and foreclosures for renters and homeowners. Congressional Democrats reportedly agree that the president does have the authority to address housing evictions via executive order, but are unlikely to be satisfied with what they would consider to be the administration’s watered-down approach in this executive action.

  • Student Loans. This order directs the Department of Education to take the necessary steps to continue the CARES Act policy that temporarily pauses payments and waives interest on student loans held by the Department until Dec. 31. The EO does not, however, specifically reference student loan debt collection or counting non-payments toward public service loan forgiveness, both of which were included in the CARES Act. Additionally, the EO does not offer coverage for federal student loan borrowers whose debt is held by private lenders or their colleges — a priority that Congressional Democrats have sought in the COVID-19 relief talks.

— HEALS Act. Senate Republicans officially introduced their opening offer proposal 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


— FEDERAL RESERVE LOWERS RATES FOR MUNICIPAL LENDING FACILITY. The Federal Reserve announced yesterday that it will reduce its pricing rates for cities and states seeking short-term loans from the Municipal Lending Facility.

— TRUMP ADMINISTRATION ANNOUNCES 'WARP SPEED' AGREEMENT WITH MODERNA. The Departments of Health and Human Services (HHS) and Defense (DoD) announced an "Operation Warp Speed" agreement with Moderna to manufacture and deliver 100 million doses of the company’s COVID-19 vaccine candidate.

— USDA EXPANDS ELIGIBILITY FOR CORONAVIRUS FOOD ASSISTANCE PROGRAM. The U.S. Department of Agriculture announced yesterday that it has expanded eligibility for additional commodities under the agency's Coronavirus Food Assistance Program (CFAP). The Department is also extending the deadline to apply for the program to Sept. 11.


— TREASURY UPDATES STATE AND LOCAL CORONAVIRUS RELIEF FUND FAQS. On Aug. 10, the Treasury Department updated its list of frequently asked questions on the state and local Coronavirus Relief Fund. The new questions pertain to the President's new executive order on unemployment insurance, as well as loan programs to support businesses.

— HHS ANNOUNCES JULY-DECEMBER COVID-19 STATE TESTING PLANS. HHS announced that the agency posted its state COVID-19 testing plans for July-December.

  • Each state plan is required to include details of critical parameters for state testing strategies, including target numbers of tests per month, as outlined in the Centers for Disease Control and Prevention's (CDC's) Epidemiology and Laboratory Capacity for Prevention and Control of Emerging Infectious Diseases (ELC) guidance.

— HHS REOPENS APPLICATION PROCESS FOR CERTAIN PROVIDER RELIEF FUNDS. HHS announced the reopening an application process to allow certain Medicare providers another opportunity to receive additional Provider Relief Fund payments.

  • Providers must submit their application by August 28, 2020, which aligns with the extended deadline for other eligible providers, such as Medicaid, Medicaid managed care, CHIP, and dental providers.

— TRP MEMO: POST-CORONAVIRUS TELEHEALTH EXPANSION LEGISLATION. Over the past weeks, four groups of lawmakers in the House and Senate have introduced legislation aimed at making permanent some of the emergency Medicare telehealth flexibilities implemented in response to the COVID-19 pandemic. Click here to read TRP's comprehensive memo on these legislative efforts.

— HHS ANNOUNCES PLAN TO LINK PROVIDER RELIEF FUNDS TO NURSING HOME PERFORMANCE. HHS announced the details of the $5 billion nursing home Provider Relief Fund (PRF) distribution, which was first announced in July.

  • This distribution will provide approximately $2.5 billion in upfront funding to support increased testing, staffing, and PPE needs in mid-August. There will also be funding available for those establishing COVID isolation facilities. The balance of the $5 billion will be linked to nursing home performance.

— NIH ROLLS OUT FUNDED PROJECT TO IDENTIFY CHILDREN AT RISK FOR MIS-C. The National Institutes of Health (NIH) announced a new $20 million funding project that seeks to identify children at high risk for developing Multisystem Inflammatory Syndrome in Children (MIS-C), thought to be a severe complication of COVID-19.

— TRUMP SIGNS EO TO STRENGTHEN DOMESTIC MEDICAL SUPPLY CHAIN. President Trump signed an executive order (EO) aimed at increasing domestic manufacturing and onshoring supply chains for pharmaceuticals and medical supplies to decrease the likelihood of potential shortages. Click here to read TRP's summary of the EO.

— NIH LAUNCHES NEW AI-BASED NETWORK FOR COVID-19 DIAGNOSIS, TREATMENT, AND MONITORING. The National Institutes of Health (NIH) announced the launch of the Medical Imaging and Data Resource Center (MIDRC). This new multi-institutional collaboration will seek to leverage artificial intelligence and medical imaging as new tools that physicians can use for early detection and personalized therapies for COVID-19 patients.

— CMS ANNOUNCES TEMPORARY POLICY FOR PREMIUM REDUCTIONS. The Centers for Medicare and Medicaid Services (CMS) announced that the agency is temporarily exercising enforcement discretion to allow issuers, when consistent with state law, to offer premium reductions for one or more months for 2020 coverage. This temporary policy will be in effect until the end of 2020.

— CRAPO FLOATS PROPOSAL ON EXPANDED EMERGENCY LENDING, RELAXED BANK CAPITAL RULES. Senate Banking Committee Chairman Mike Crapo (R-ID) rolled out a proposal that would give the Treasury Department and Federal Reserve more flexibility to take risks in emergency lending with the goal of keeping the economy stable during the balance of the pandemic. The measure was filed as an amendment to the Senate's COVID-19 legislative vehicle that's currently pending before the upper chamber.

  • The proposal would provide the central bank with temporary authority during "unusual and exigent circumstances" to ease a set of bank capital requirements established by the 2010 Dodd-Frank law's Collins amendment.

  • It would also provide Treasury with the authority to approve loans and other investments even if it appears they "may incur losses," thus providing more flexibility for the $454 billion in emergency lending authority Congress provided Treasury and the Federal Reserve.

— TRUMP EO SEEKS TO MAKE PANDEMIC-RELATED TELEHEALTH FLEXIBILITIES PERMANENT. President Trump signed an executive order on August 3rd aimed at improving rural health and boosting access to telehealth, while also amplifying the administration’s work to codify some of the telehealth flexibilities offered through the COVID-19 public health emergency. 

  • The order also instructs HHS and the Center for Medicare and Medicaid Innovation (CMMI) to develop new value-based payment models for telehealth that will provide flexibilities from existing Medicare rules and establish predictable financial payments.

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