The ink from President Trump’s pen had barely dried after signing the CARES Act when lawmakers started to publicly float ideas for a fourth coronavirus relief bill. Talks are still in early stages and any bill is unlikely to come together before both chambers of Congress return to DC – currently slated for April 20 – but Democrats say they are moving quickly, while Senate Republicans appear to favor a wait-and-see approach. 

Over the past week Speaker Nancy Pelosi (D-CA) told reporters that she talked with Treasury Secretary Steven Mnuchin. While President Trump tweeted about tackling infrastructure, Senate Republicans are backing away from the talk about an accelerated timeline.  Here are five things being discussed as part of a “Phase IV” bill:

Infrastructure

The White House is seizing on a massive infrastructure package, Washington’s perennial “pie in the sky” policy issue, as they discuss next steps for Congress. Lawmakers in both parties have talked for years about doing a substantial bill but haven’t been able to find a deal on the main sticking point: how to pay for it. House Democrats have discussed their own plan that they say would include new funding for water, broadband, schools and other infrastructure systems in a move that they argue could also create jobs amid record unemployment claims. President Trump has also endorsed legislation, tweeting on March 31 that “this is the time” and “it should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country!”  But the idea of doing infrastructure as part of the response to the coronavirus has run into a Senate Republican roadblock. Senate Majority Leader Mitch McConnell (R-KY) shot down the idea, recently saying, “There is a reality of how you pay for it. We just passed a $2 trillion bill, and it would take a lot of convincing to convince me that we should do transportation in a way that’s not credibly paid for after what we just passed last week.”

State and local help

Democrats say they will push for more in stabilization funding for states and local governments. They were able to get $150 billion into the third bill, but that is significantly less than the $750 billion requested during the negotiations by Democrats.  Senate Minority Leader Chuck Schumer (D-NY) signaled they would return to the issue, and Governor Andrew Cuomo (D-NY) argued that the CARES Act did not provide enough funding for state governments.  Additionally, a group of 20 Senators said that any future legislation needs to fix how the District of Columbia was treated in the stimulus package since it was grouped with territories, instead of as a state, and therefore missed out on approximately $700 million in federal support. 

Gaps

Senate Republicans, while not committing to their own fourth bill, say Congress is likely to need to include “fixes” to the $2.2 trillion bill passed on March 27 as part of whatever lawmakers do next.   Some lawmakers expect there will need to be changes to the third bill, which came together extremely quickly, or areas that Congress missed altogether as the coronavirus continues to hammer the economy and the number of reported cases continues to rise. 

To date the changes have mainly been handled by regulators or through agencies as the Administration tries to provide guidance and rules for implementing key parts of the bill, including hundreds of billions in assistance for small businesses and checks to individuals.

More cash payments

Democrats have warned that the one-time payment provided in the CARES Act for individuals will not be enough if Americans continue to struggle making monthly payments.  They are expected to ask for additional cash payments as part of the next bill. The Administration did initially float two rounds of payments, but Republicans argued Congress should wait to make sure a second injection of funding was needed. Opponents to the idea of cash payments, meanwhile, argue they do little to stimulate the broader economy. 

Healthcare 

Lawmakers say more needs to be done to bolster the healthcare system as the number of cases in the U.S. continues to grow. Senator Schumer has called for retroactive “hazard pay” for all front-line workers. Senator Pat Toomey (R-PA) is pushing for Americans to wear masks in public and has told reporters that Congress would need to look at if it needs to fund masks for the general public given shortages around the country. (On April 3 the CDC issued a recommendation for Americans to wear cloth face coverings in public settings where other social distancing measures are difficult to maintain, especially in areas of significant community-based transmission.)  Democrats are also urging for the next bill to include free treatment for the coronavirus, with both Speaker Pelosi and presidential candidate Senator Bernie Sanders (I-VT) expressing major concern that Congress had provided free testing but was not covering the treatment required to combat the virus.

Despite all the chatter about what to include in Phase IV, Senate Republicans want to give the Federal Reserve and Treasury Department some time to see how the programs Congress appropriated funds for in Phase III get set up operationally, issue further guidance, and get money out the door to consumers and businesses before starting work on another bill.  Over the last week, Speaker Pelosi maintained her interest in expanding direct payments and unemployment insurance but pivoted away from supporting a broad infrastructure package.  So, while Phase IV is likely on the horizon, at this point the accelerated timing of its drafting may be more posturing by House Democrats to make sure they retain control of legislative origination this time around.

As noted above, Congress is in recess until April 20 and that timeline could slip based on health and safety guidelines around the spread of the COVID-19 virus.  Furthermore, this year’s legislative calendar is already truncated given that it is a presidential election year.  But, House Majority Leader Steny Hoyer sent a note advising Members that flexibility may be required as district work periods and the length of the work week may be subject to change.  Members of Congress are on standby, as is the rest of the country as it concerns movement on Phase IV.

While we watch for signs of new legislation, please know SFA remains particularly focused on the financing of forbearance plans mandated by the CARES Act and are pressing for a solution as soon as possible.  We also continue to work with regulators on the establishment of TALF and the need to include other assets as well as existing securities.  Please reach out if we can be of assistance on these or any other issues.

By: Leslie Sack