The latest chapter in the Chronicles of the Next Stimulus Package is a proposal by a bipartisan group of 50 lawmakers in the House of Representatives. They call themselves the Problem Solvers Caucus and they are set to unveil a $1.52 trillion proposal that would come close to the $1.5 trillion price tag that the White House has said it would accept.
Led by Representatives Josh Gottheimer (D-NJ) and Tom Reed (R-NY), the proposal is called the “March to Common Ground” and it includes a lot of items friendly to both sides, including:
- $500 billion in aid to state and local governments
- Federal unemployment supplement of $450 per week for eight weeks followed by a cap of 100% of previous wages or $600 per week, whichever is lower
- $1,200 stimulus checks for most Americans plus $500 per child
- Additional funding for the Paycheck Protection Program
- $100 billion for testing, contact tracing, and other health initiatives
- $25 billion for mortgage and rental assistance
- $130 billion for schools
- $15 billion for the beleaguered Postal Service
- Funding for rural and urban broadband, 2020 census, the 2020 election, and food assistance programs
- Liability shield for employers and workers
Another potentially costly item in the bill is automatic triggers that extend the federal unemployment benefit as well as additional checks if the pandemic continues, which may increase the total cost.
The text of the proposal has not yet been released but Rep. Gottheimer appeared on CNBC to say that he sees this as a framework to get negotiators back to the table to face the toughest of differences. With flu season coming up, Gottheimer stressed that Congress cannot afford to do nothing.
What is the $1,200 Stimulus Check?
Based on what Rep. Gottheimer said on his appearance on CNBC, it appears that the “direct check to taxpayers” will be a stimulus check similar to the Cares Act. In talking about the check, he specifically said that dependents were “dependent child[ren].”
The Heroes Act and the Heals Act proposed a stimulus check of $1,200 for each American ($2,400 for joint filers) who earned less than $75,000 ($150,000 for joint filers). If you earned more than the limit, your check would be reduced by 5% of the amount you earned over the limit. Both structured the check as an advance on a refundable tax credit so you would not have to pay it back later.
I would expect this proposal to have a similar structure.
Both proposals also included additional money for dependents. The Heroes Act included $1,200 for each dependent with a limit of three. The Heals Act included $500 per dependent but no limit.
In both cases, the dependent was any dependent regardless of age.
The “March to Common Ground” appears to propose $500 per child, similar to the Cares Act. A child is defined as a dependent age 16 and younger.
Both sides have been in favor of a stimulus check and only recently did the Senate GOP exclude it from any proposals.
How Would Unemployment Work?
This proposal’s federal unemployment supplement would offer $450 per week for the first eight weeks, then transition into a payment based on previous wages. The eight weeks would give state unemployment departments enough time to upgrade their systems to support this calculation.
After eight weeks, you would get up to 100% of your lost wages or $600, whichever is lower. This is similar to the Heals Act in its structure though higher in its amount.
The Heals Act proposed a similar roll-out period to give states enough time to upgrade their systems. During that roll-out period, federal unemployment benefits were set at $200 per week. $450 just about splits the difference for the flat benefit.
As for the percentage-based supplement, the Heals Act called for a cap of 70% when state and federal benefits were combined. This bill may increase that cap to 100% and the benefit would be for an additional five weeks for a total supplement period of 13 weeks.
Will This Pass?
It’s extremely unlikely that this proposal will pass.
However, this bill appears to be a solid compromise that gives each side what it wants. If you want to benchmark what the next relief package will be, this is closer than what Senate GOP proposed in their skinny bill.
Many of the sticking points remain.
The bill includes $500 billion in aid to state and local governments, an item that many Republicans do not like. While there is no argument that state and local governments are feeling the pinch of drastically lower tax revenue as a result of shutdowns, Republicans see this as a bailout of previous financial mismanagement.
There’s also the issue of the structure of the liability protections for employers. The previous liability shield proposed by the GOP in the Heals Act was considered too friendly to businesses. The fear is that workers could be forced back to dangerous working conditions and businesses would be shielded from lawsuits unless they demonstrated gross negligence. We will have to see the wording of this version to see whether it’s palatable to Democrats.
The only shining light is that this was a bipartisan proposal that doesn’t look like a political stunt. We will have to see how leadership responds and whether it will restart negotiations.