Washington Snapshot: Analysis of the Paycheck Protection Program Flexibility Act of 2020
In This Week's Edition of Snapshot...
The Council has released its analysis of the Paycheck Protection Program Flexibility Act of 2020, passed on June 3. Find it in the Council’s Comprehensive Coronavirus Legislation Guide for the Charitable Sector.
- A bipartisan effort seems to be taking shape in the discussions about the next COVID-19 legislative package to allow businesses to take advantage of both the employee retention credit and the Paycheck Protection Program run by the Small Business Administration. Thus far the Trump Administration has opposed this “double dipping.” But Politico is reporting that there have been bipartisan talks about whether to include this change in the next COVID-19 response.
- Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza appeared before the Senate Small Business Committee on Wednesday to answer questions about the coronavirus relief programs for small businesses. Mnuchen told lawmakers:
- He supports targeted additional aid to businesses that have been hit hardest by the coronavirus pandemic that could include changes to the small business-focused Paycheck Protection Program and tax credits.
- He believes they need to put more money into the economy.
- Most of the Paycheck Protection Program (PPP) loans will be forgiven in the next few months.
- Administration officials believe more economic incentives are needed because of high unemployment.
- The Administration plans to release guidance this week related to PPP restrictions on borrowers with criminal records, modifying their position of barring business owners with felony convictions within the previous five years from seeking loans, shrinking it to three years. (Note: there is bipartisan support for loosening the restriction even further and Mnuchen said he was open to this.)
Carranza assured lawmakers there would be progress on a large backlog of applications for the program by next week, and that 45 percent of PPP loans, volume and total value, were disbursed in low-income areas.
- On Tuesday, June 9, the Joint Economic Committee held a hearing on Supporting Charitable Giving during the COVID-10 Crisis. Chaired by Senator Mike Lee (R-UT) and Vice Chairman Don Beyer (D-VA), the Committee heard from witnesses about the importance of charitable giving, especially focused on how the charitable deduction can help to encourage giving. Witnesses included Senators James Lankford (R-OK) and Jeanne Shaheen (D-NH); Bill Crim, President and CEO of the United Way of Salt Lake; and Dr. Una Osili, Professor of Economics and Philanthropic Studies and Associate Dean for Research and International Programs at Indiana University Lilly Family School of Philanthropy.
- The Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing to discuss how schools are preparing to reopen in the fall. Witnesses raised concerns about budget challenges among other issues.
- House Majority Leader Steny Hoyer (D-MD) announced a change to the House floor calendar with votes now expected on June 25 and June 26. One of the bills that is expected to be considered that week is the recently introduced Justice in Policing Act (H.R. 7021) introduced by Congresswoman Karen Bass (D-CA), Chair of the Congressional Black Congress. On June 10, the House Judiciary Committee held a hearing titled Oversight Hearing on Policing Practices and Law Enforcement Accountability. More information on the bill can be found on the House Judiciary Committee webpage.
- Politico reports that the Senate Appropriations Committee will begin markups for fiscal 2021 spending bills the week of June 22. The Senate leadership has been aiming to start markups before the Fourth of July and complete them sometime after the holiday. The House, meanwhile, plans to hold subcommittee and full committee markups on fiscal 2021 spending bills during the weeks of July 6 and July 13, with floor votes as soon as the weeks of July 20 and July 27.
- Congressional Budget Office: CBO Director Phillip Swagel sent a letter to House Speaker Nancy Pelosi (D-CA) on Tuesday suggesting that further assistance to states and localities would be as helpful as the more narrowly tailored assistance to those governments in the earlier CARES Act, H.R. 748 (116). Pelosi has requested the analysis about the economic outlook since the start of the 2020 coronavirus pandemic, including impacts of the coronavirus legislation on the GDP. Swagel indicated that more aid to the states is a bigger help than both tax breaks for businesses and increases in refundable tax credits, with the caveat that this would depend on the details of how Congress would offer this assistance. He suggested that more state and local aid would have different impacts than other relief in the CARES package. Essentially, more aid equals fewer tax hikes and fewer spending cuts that state legislatures would have to make although the additional federal spending increases the national debt.
Department of Commerce
- On May 27, the U.S. Census Bureau reported responses to the 2020 Census are on track as more than 60% of U.S. households have responded to the 2020 Census, with approximately four out of every five households that responded on their own choosing doing so online at 2020census.gov.
- A new 2020: In Focus Story on Rural Communities has been published on the 2020 Census website. For those who work with rural communities, this may be especially helpful with challenges counting historically undercounted communities.
National Telecommunication Information Administration
NTIA’s BroadbandUSA will host a webinar - Utilizing Federal Data to Measure the Digital Divide - on June 17, 2:00-3:00pm ET. Attendees will learn about federal data sources, current trends, and where to access local information. NTIA will present the findings from their 2019 Internet Use Survey and the U.S. Census Bureau will highlight the broadband and connectivity data available in their American Community Survey.
The Federal Reserve
On Wednesday, June 10, the Federal Reserve projected that the U.S. economy will contract by 6.5 percent this year but rebound in 2021 as the nation continues to battle the coronavirus pandemic. The central bank expects to keep an extraordinary level of support for the economy in place for years, estimating that interest rates will stay near zero at least through the end of 2022. But central bank officials signaled that they believe unemployment will one day fall to as low as 4 percent, though it will take longer than the next couple of years to reach that point. According to the Fed’s forecasts, the U.S. economy will grow at 5 percent next year and 3.5 percent the year after.
Department of Homeland Security
Federal Emergency Management Agency
FEMA and the Department of Health and Human Services (HHS) continue to lead the federal COVID-19 response and recovery efforts. As of June 9, they reported:
- In addition to their agencies, Department of Defense, the Veterans Administration, and Centers for Disease Control have activated 37,586 personnel
- Nationwide testing stands at 21,693,633
- U.S. meatpacking facilities for beef, pork and poultry are operating at more than 95% of their average capacity compared to the same time last year
Department of Treasury
- On Friday, June 5, Treasury and the IRS issued proposed regulations about an excise tax on remuneration above $1 million and any excess parachute payment paid by an applicable tax-exempt organization to any covered employee. The provision was passed under section 4960 of the Tax Cuts and Jobs Act (TCJA). The excise tax, and the proposed rules, can affect not only the tax-exempt organizational unit but also certain entities that are related to those organizations. The proposed regulations are intended to provide comprehensive guidance with regard to the section 4960 excise tax and now include helpful exceptions and clarification for volunteer board service in response to comments from the Council and others.
- On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 was signed into law, amending the CARES Act. On June 10 , the SBA’s interim final rule from April 2, 2020, was revised by changing key provisions, such as the loan maturity, deferral of loan payments, and forgiveness provisions, to conform to the Flexibility Act. SBA also is making conforming amendments to the use of PPP loan proceeds for consistency with amendments made in the Flexibility Act. Several of these amendments are retroactive to the date of enactment of the CARES Act, as required by section 3(d) of the Flexibility Act.
- In an effort to transform the experience of customers, improve both efficiency and mission delivery, and to increase accountability, the IRS is seeking public input on improving customer service. Comments are due by July 13.
Exclusive from our colleagues at the National Council of Nonprofits.
Nonprofits Focusing on Relopening and Liability Litigation
Nonprofits are taking steps to return to normal operations post-COVID-19, including health and risk mitigation, as well as promoting liability protections. State associations of nonprofits in Delaware, Maine, Maryland, Nebraska, North Carolina, Oklahoma, Tennessee, and other states have developed guides on best practices and considerations for nonprofit re-engagement. As for reducing liability, lawmakers in Tennessee are moving legislation to create the Tennessee Recovery Safe Harbor Act that would provide protections against excessive litigation for employers reopening after closure due COVID-19. Since the pandemic, significant financial and human resources have been spent by nonprofit organizations to implement protective measures for employees, clients, and communities so that they can continue or restart providing vital services. Strong advocacy by a coalition of nonprofit leaders in the Volunteer State sought to explicitly include nonprofit organizations. In response, the chair of the relevant committee assured that 501(c)(3) entities “are included in the protection that this bill will give,” and referenced language expressed in both the House and Senate versions that covers all types of nonprofits. Testimony by Momentum Nonprofit Partners in Memphis applauds policymakers for providing “the most comprehensive and effective legislative measure.” Passage of the legislation is expected soon.