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GOP Virus Aid Plan Stalls Despite Deal On PPP, Taxes, Checks

By Andrew Kragie · July 23, 2020, 7:55 PM EDT

Senate Republicans left town Thursday without unveiling their proposal for a new pandemic relief bill, as disagreements among senators and the White House persisted despite broad agreement on issues such as more forgivable small business loans, a liability shield for employers and another round of direct payments to most Americans.

After days of shuttle diplomacy with Republican senators and the Trump administration, Majority Leader Mitch McConnell took to the Senate floor Thursday afternoon.

"We have an agreement in principle on the shape of the package," the Kentucky Republican said. "The administration has requested additional time to review the fine details, but we will be laying down this proposal early next week."

McConnell gave a general overview of a proposal with liability protections for employers and other institutions along with around $1 trillion for direct payments, unemployment benefits, reopening schools, more small business loans, virus testing and vaccine development. A draft summary obtained by Law360 gave a more detailed accounting.

The majority leader said his top priority was "legal protections to prevent our historic recovery efforts from simply lining the pockets of trial lawyers." The liability shield would put all coronavirus-related cases in federal courts and create a high national bar for plaintiffs, as detailed in the draft summary Law360 obtained last week.

"We will preserve accountability in cases of actual gross negligence or intentional misconduct, but we're going to make sure that nurses and doctors who fought an unknown enemy are not swamped by a tidal wave of malpractice suits," he said. "We'll make sure that school districts, colleges, churches, nonprofits and employers that obey official guidance do not have to delay reopening because they're afraid they'll spend 10 years in court."

Sen. Marco Rubio, R-Fla., said the plan will be a starting point for bipartisan negotiations. Democrats have lined up behind the Heroes Act, a sprawling $3 trillion plan that passed the House in May.

"We're just trying to create a baseline starting point, because we're going to obviously have to work something out," Rubio told reporters Thursday. "The Democrats are going to have something to say about it."

He remained optimistic even though Republicans had to push back their proposal's release.

"We all want things to move faster, [but] we have to have something that can get through the House and Senate [and] signed by the president," he said. "It's going to be loud, messy, appear to be almost doomed on many occasions. I still have faith we'll get there at the end of it."

Rubio, who chairs the Small Business Committee, described nearly finalized plans for the Paycheck Protection Program, which has over $130 billion still available. He said to expect perhaps another $100 billion for the forgivable loans to small businesses.

He also outlined a more limited process to allow a second round of loans, as Democrats proposed last month. Businesses with up to 300 workers would qualify if they can document a 50% revenue drop, or if they operate in poor communities, perhaps including "opportunity zones." Rubio said $50 billion or more could be reserved for "a long-term, low-interest loan program for small businesses located in underserved neighborhoods."

The second round of loans would have more flexibility in timing, allowing businesses to decide their own covered period, Rubio said, but would retain the requirement that at least 60% of funds cover payroll to qualify for complete loan forgiveness.

A source familiar with negotiations told Law360 that Republicans would not propose any new money for state and local governments, which have seen tax revenue drop and expenses grow. Democrats proposed over $1 trillion in aid in the Heroes Act.

Sen. John Kennedy, R-La., said leaders had agreed to his plan giving states more flexibility in using the billions allotted in earlier relief bills. However, some in the party oppose that provision: "I'm going to do everything I can to get that out of the bill," Sen. Rick Scott, R-Fla., told reporters Thursday.

The spending plan includes billions for health care, according to an unofficial draft summary obtained by Law360: $26 billion more for vaccines, $25 billion for testing, $15.5 billion for the National Institutes of Health, and another $25 billion for hospitals and other providers.

Meanwhile, Sen. Lamar Alexander — the Tennessee Republican who chairs the Committee on Health, Education, Labor and Pensions — told reporters there was an agreement on $105 billion for schools. Half of that would be distributed to all public and private schools on a per-student basis. The other half would only go to schools that have in-person classes. This comes after President Donald Trump threatened to cut funding for school districts that don't reopen.

Another $30 billion would go to colleges and universities.

Alexander added that Republicans would propose deferring payments on federally backed student loans for those who have no income, while limiting total student loan payments to 10% of income "after you deduct rent and food."

One of the time-sensitive issues is beefed-up unemployment benefits, which expire next week.

Sen. Mike Rounds, R-S.D., told reporters the party seemed on track to support dropping the $600-a-week bonus to $200, although another senator said it could be a scaled approach proportional to income. Many Republicans and some Democrats have expressed concern about workers receiving more from unemployment than from their salary, creating a disincentive to return to work.

McConnell said there would also be another round of direct payments to millions of Americans; Treasury Secretary Steven Mnuchin said earlier in the day that they would be "exactly the same" as the first round of $1,200 checks to adults making less than $75,000.

Rubio said he had not yet secured a commitment to include his proposal allowing payments to U.S. citizens with noncitizen spouses, who are currently barred but suing over the policy.

Mnuchin also said Trump was dropping his demand for a payroll tax cut, which lawmakers in both parties argued would have little stimulus effect while weakening Social Security.

The GOP proposal's other tax provisions are not yet clear, but McConnell said to expect "bold policies to incentivize retention, encourage rehiring of laid-off Americans, and help businesses obtain PPE, testing and supplies to protect their employees and entice customers." Republicans are discussing a slew of tax incentives for child care, research and testing, chipmakers, and charitable deductions.

The majority leader closed his speech Thursday by saying Democrats needed to "come to the table" to hammer out a final deal.

Sen. Mazie Hirono, D-Hawaii, took the floor after him and said Democrats had been waiting for Republicans to come to the table since May 17, when the House passed the Heroes Act and many GOP senators were questioning the need for another massive relief package. The virus has spread in Southern and Western states since then.

The week began with hopes to have something in place before beefed-up unemployment benefits expire next week, but that goal now appears unlikely. Lawmakers will race to reach a deal before leaving town for the traditional August recess. This relief bill is expected to be the last major package until at least the November elections.

--Editing by Philip Shea.

For a reprint of this article, please contact reprints@law360.com.