The US Congress has been busy this year attempting to provide a financial lifeline to the nation’s economy since the COVID-19 pandemic began spreading across the country (see “Legislative Spotlight,” p. 12, for a detailed summary of the COVID-19 relief packages). Congress typically does not move that quickly on bills containing such large programs and price tags. The nation, however, is obviously facing a crisis during which the playbook is being written on the fly, and the Senate and House are doing their best to provide solutions.
Since passage of H.R. 266, the Paycheck Protection Program and Health Care Enhancement Act, the Senate has remained in session to work on previously scheduled, non-COVID–related legislation. While the House decreased its days in session following passage of H.R. 266, on May 15, the chamber passed the Health and Economic Recovery Omnibus Emergency Solutions, or HEROES, Act, a new $3 trillion relief package. The roughly 1,800-page bill includes $875 billion for state and local governments, $75 billion for mortgage relief, $100 billion in assistance for renters, $25 billion for the US Postal Service, $3.6 billion to shore up elections, and $10 billion for small businesses.
Congress is now debating policy priorities for a CARES Act 2.0, a COVID-19 relief package that many assume to be Congress’s last attempt at financial assistance for the pandemic. While the HEROES Act was the House’s opening bid for what the CARES Act 2.0 package could look like, Senate Republicans have largely dismissed the legislation.
Senate leaders are moving cautiously on CARES Act 2.0, stating their desire to see if the relief packages previously passed by Congress are working as intended. On Jun. 5, the US Bureau of Labor Statistics reported that the economy added 2.5 million jobs in May. Republicans are pointing to these job numbers in a renewed push for a slimmed-down approach to CARES Act 2.0.
Minimalist approach or not, Republican leaders have noted the importance of CARES Act 2.0. Senate Leader Mitch McConnell (R-Ky.) recently indicated that Congress will likely need to pass another round of COVID-19 relief legislation, and President Donald Trump has also expressed support.
Republicans are discussing different policy priorities to include in the CARES Act 2.0 that would address liability protections for employers who reopen their businesses and tax incentives to encourage businesses and events to resume. The next COVID relief bill to be signed into law will likely include and exclude provisions from both bills.
The two chambers will have a heavy workload to process in a severely compressed congressional time frame, as the coronavirus has disrupted the schedule in an already-packed year. Historically, during election years, Congress extends the August recess and considerably decreases the number of days it will be in session for the remainder of the calendar year, especially in presidential cycles such as this one. This allows lawmakers facing reelection the time to campaign in their respective districts and states. However, the COVID pandemic has the potential to change this norm and add days if not weeks to the legislative calendar.
Also on the Congressional Agenda
In addition to providing pandemic relief, Congress faces an abbreviated time line to pass all 12 appropriations bills before the Sep. 30 deadline in order to fund the government and avoid another shutdown.
Other major issues Congress plans to address in this session include:
- Defense authorization
- Surface transportation reauthorization
- The Foreign Intelligence Surveillance Act reauthorization
- Federal health-care programs, now set to expire Nov. 30
- Pandemic-response programs, many of which expire at the end of 2020
- Tax extenders, which expire Dec. 31.
Fiscal Year 2021 Appropriations
Congress is also working on the fiscal year 2021 appropriations numbers. The current plan is for House appropriators to hold subcommittee and full committee markups on funding bills during the first two weeks of July, with floor consideration likely occurring the last two weeks of July. The Senate Appropriations Committee is tentatively planning to begin marking up spending bills the third week of June.
Funding for transportation, housing, and urban development will vary based on whether infrastructure and housing aid are addressed in a CARES Act 2.0 COVID relief package. For context, President Trump has called on Congress to invest $2 trillion in infrastructure, while Democrats have proposed a $760 billion, five-year package that includes surface transportation, airports, water, broadband, ports, and more.
On top of this unprecedented round of activity, of course, 2020 is a national election year. Posturing and campaigning—all while figuring out how to do so amid a pandemic—are sure to bring new dynamics to the work of Congress. Although it’s unclear what August campaigning will look like, we highly encourage you to reach out and engage your elected officials during this campaign season.
As Congress debates a CARES Act 2.0 and addresses other pressing legislative deadlines, HAI will focus on ensuring that the vertical flight industry’s priorities are included in a potential relief package as well as the appropriations process. Stay up-to-date on congressional action and access the latest government resources at HAI’s members-only Legislative Action Center.
Legislative Spotlight: COVID-19 Relief Packages
OVER THE PAST FEW MONTHS, we’ve all witnessed the impact the novel coronavirus outbreak has had on nearly every aspect of life. The imposition of stay-at-home orders in a majority of US states has had devastating effects on most sectors of the economy, including many segments of the vertical flight industry. Even as states begin implementing phased reopening plans, the economic disruption caused by the pandemic may have lasting effects for business. These unprecedented times have prompted unprecedented measures in Washington, DC. Specifically, five COVID-19 relief packages have been enacted since the virus reached US soil.
Phase 1: H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act, passed with near-unanimous support in both the House and Senate and was signed into law by President Donald Trump on Mar. 6. The bill provided $8.3 billion in emergency funding for a number of purposes, including vaccine development and medical treatment, grants for state and local governments, loans for small businesses, and preparedness activities at US government facilities.
Phase 2: H.R. 6201, the Families First Coronavirus Response Act, passed in both chambers shortly after the White House declared COVID-19 a national emergency and was signed into law by the president on Mar. 18. The bill authorized $192 billion worth of aid and provided paid leave, tax credits, expanded unemployment and nutrition assistance, and free COVID-19 testing.
Phase 3: H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in both chambers without a single dissenting vote and was signed into law by the president on Mar. 27. The legislation provides more than $2 trillion in funding for individuals, small businesses, large corporations, state and local governments, and public services.
H.R. 266, the Paycheck Protection Program (PPP) and Health Care Enhancement Act, passed in both chambers shortly after the PPP funding provided in the CARES Act had been depleted and was signed into law by the president on Apr. 24. The legislation provided an additional $310 billion in lending authority for the PPP, $60 billion for Economic Injury Disaster Loans (EIDL) and grants, $75 billion for hospitals, and $25 billion for COVID-19 testing.
H.R. 7010, the Paycheck Protection Program Flexibility Act (PPPFA), passed in both chambers one month after additional PPP funding was provided in H.R. 266 and was signed into law by the president on Jun. 5. The legislation gives borrowers more freedom in how and when loan funds are spent while retaining the possibility of full forgiveness.
The CARES Act
The CARES Act became the largest economic stimulus bill in modern US history, amounting to 10% of the total US gross domestic product and more than doubling the funds stipulated in the 2009 Recovery Act, a stimulus package enacted in response to the Great Recession.
When the CARES Act was originally introduced, the proposal included $500 billion in direct payments to Americans, $208 billion in loans to major industries, and $300 billion in Small Business Administration (SBA) loans. As a result of bipartisan negotiations, the bill grew to more than $2 trillion in the version signed into law (see Figure 1).
The CARES Act included several provisions specifically for the aviation industry, including direct grants, loans, loan guarantees, and tax relief. The legislation also provided relief for small businesses by creating new programs such as the PPP and by expanding existing programs such as EIDL.
Targeted Relief to Passenger and Cargo Air Carriers (Air Carrier and Critical Businesses Relief)
One of the key provisions of Title IV of the CARES Act provides $500 billion to support “eligible businesses.” The legislation defines eligible businesses as both passenger and cargo air carriers and businesses that have not otherwise received adequate economic relief in the form of loans or loan guarantees under the act.
The $500 billion is allocated in the following manner:
- $25 billion in loans and loan guarantees for passenger air carriers, including general aviation operators that conduct flights under Part 135 and eligible businesses that are certified under Part 145 to perform inspection, repair, replacement, or overhaul services
- $4 billion in loans and loan guarantees for cargo air carriers
- $17 billion in loans and loan guarantees for businesses critical to maintaining national security
- $454 billion for loans, loan guarantees, and investments in support of facilities established by the Federal Reserve to support lending to eligible businesses, states, and municipalities.
Targeted Relief to Aviation Employees (Air Carrier Payroll Support Program)
In addition to relief for air carriers, the CARES Act also provides financial assistance targeted to air carrier and aviation industry workers. More specifically, the act allocates funds to air carriers and certain contractors on the condition that the money be used to continue wages, salaries, and benefits for air carrier and aviation industry employees (excluding corporate officers). The funds are allocated in the following amounts:
- $25 billion for passenger air carriers
- $4 billion for cargo air carriers
- $3 billion for certain contractors and subcontractors.
HAI strongly advocated for general aviation air carriers as the Treasury Department implemented the payroll support program. On Apr. 20, Treasury made the first payroll support program payments to approved applicants, among them many Part 135 charter operators.
Air Transportation Tax Relief
The act suspends all federal air transportation excise taxes that apply to commercial operations (Part 135 flights) effective Mar. 27, 2020, through Jan. 1, 2021. The suspension includes all taxes that a commercial operator normally pays, including the 7.5% tax on amounts paid, applicable domestic and international segment fees, and the 4.3-cents-per-gallon portion of the fuel tax.
The CARES Act includes $10 billion in funds to be awarded as economic relief to eligible US airports affected by the prevention of, preparation for, and response to the COVID-19 pandemic. The law provides funds to increase the federal share to 100% for the Airport Improvement Program and supplemental discretionary grants already planned for fiscal year 2020. Of the $10 billion in grants, $100 million is designated for general aviation airports.
Financial Assistance to Small Businesses
The PPP and EIDL programs, both administered by the SBA, are the two main options small businesses and nonprofits have to obtain financial support during the coronavirus outbreak. Organizations can receive loans from both programs, and an EIDL loan can be refinanced into a PPP loan. Visit sba.gov to learn about other programs funded in the CARES Act that are available to small businesses.
Paycheck Protection Program (PPP)
The main driver of small-business stimulus in the CARES Act is contained in the PPP. The $349 billion provided under the SBA Business Loans Program Account will fund loans of up to $10 million that qualifying businesses can spend to cover payroll, mortgage interest, rent, and utilities.
As noted earlier, Congress provided an additional $310 billion for the program in H.R. 266, the PPP and Health Care Enhancement Act, after the initial funding was exhausted in less than two weeks. The SBA temporarily stopped accepting new applications from participating lenders on Apr. 16 but resumed on Apr. 27.
As of Jun. 6, the SBA reported the following statistics on PPP:
- 4,531,883 million loans approved, totaling roughly $511.3 billion
- $113,000 is the average loan size
- 64.9% of loans were approved at $50,000 and under
- $130.6 billion in funding remains.
No additional PPP funds have been appropriated by Congress since H.R. 266 was signed into law on Apr. 24, but several significant changes were made to the program in H.R. 7010, the PPPFA, that would make it easier for current PPP borrowers to use the loans and receive forgiveness (see Figure 2).
Most notably, the PPPFA includes the following PPP changes:
- Extends the expense forgiveness period
- Reduces the 75% payroll ratio requirement
- Extends the loan repayment requirement for future borrowers
- Allows payroll tax deferment for PPP recipients
- Extends the rehiring deadline.
Economic Injury and Disaster Loans (EIDL)
This long-standing SBA loan program provides working-capital loans of up to $2 million to help small businesses overcome a temporary loss of revenue (see Figure 3). Part of the EIDL program, created in the CARES Act, is the EIDL Emergency Advance, which provides companies that successfully submit an EIDL application a $10,000 loan advance that does not need to be repaid. However, recent guidance reduced this program from $10,000 per company to $1,000 per employee (up to 10 employees). The SBA’s website indicates only that the funds will only be made available “within days following a successful application.”
Similar to the temporary freeze in PPP loan approvals, a lapse in appropriations prevented the SBA from processing new EIDL and EIDL Emergency Advance applications from Apr. 16 to Apr. 27. H.R. 266 increased the EIDL program account by $50 billion and added another $10 billion to the EIDL Emergency Advance program, allowing the agency to resume issuing loans under the program. H.R. 266 also modified eligibility for the EIDL program to include “agriculture enterprises.” As a result, the SBA has been accepting EIDL and EIDL Emergency Advance applications on a limited basis only to provide relief to US agricultural businesses.
As of Jun. 6, the SBA had approved 1,130,731 loans totaling $79.98 billion through the EIDL program, and by May 8, the agency had approved 3,009,934 advances totaling $9.88 billion through the EIDL Emergency Advance program.
Many HAI members may still be eligible under the new and/or temporary requirements and are encouraged to check rotor.org/LAC for details.