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House Democrats Ponder Smaller Relief Package

Posted on Sep. 24, 2020

House Democrats will likely release a smaller coronavirus relief package the week of September 28 if they don’t agree to a deal with Republicans before then, as pressure increases to extend the Paycheck Protection Program. 

The new relief package could cost around $2.4 trillion and act as an updated version of the House-passed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800), according to several Democrats.

Republicans have been trying to coax Democrats to join them in passing a discharge petition — a parliamentary procedure that bypasses a committee vote — to extend the PPP and allow borrowers to qualify for a second round of loans.

The process, started by Rep. Jaime Herrera Beutler, R-Wash., incorporates a bill (H.R. 8265) introduced by Rep. Steve Chabot, R-Ohio, and one (H.R. 7664) by House Ways and Means Committee member Jackie Walorski, R-Ind., to expand the use of PPP loans to some nonprofit organizations. 

Beutler said that several Democrats have expressed interest in the maneuver, putting pressure on their own leadership to act. House Majority Leader Steny H. Hoyer, D-Md., told reporters that the best way forward  is “to get an alternative [bill] sent to the Senate that is a compromise.” 

Ways and Means Committee ranking member Richard E. Neal, D-Mass., agreed. “Let’s shorten the time frame, and we’ll go from $3.4 trillion to $2.4 trillion,” he told Tax Notes.

Ways and Means Committee member and Deputy Whip Daniel T. Kildee, D-Mich., said it wasn’t immediately clear what needs to be addressed in the new bill, but said funding for opening schools has changed since the HEROES Act was passed and that restaurants will need more help. He said Democrats will negotiate with Republicans until the end of the week of September 28 but will likely offer their own, smaller bill that week if nothing comes from the negotiations. 

Any package would almost certainly include an extension of the PPP that would allow for small businesses to apply for a second loan and an expansion of the employee retention tax credit, Kildee said.

Some lawmakers, like Ways and Means Committee member Bill Pascrell Jr., D-N.J., said they were encouraged that a deal can still be forged with Republicans after House lawmakers agreed to a continuing resolution funding the government through mid-December. Pascrell said Democrats would continue to push for what they deem necessary to help taxpayers and would not hesitate to offer their own smaller package before leaving for their districts in October. 

Too Much SALT 

One question remaining is whether a smaller package would eliminate the $10,000 cap on state and local deductions. The provision was part of the HEROES Act but would cost an estimated $136.6 billion over the next three years. For some Democrats, like Pascrell and taxwriter Thomas R. Suozzi, D-N.Y., its inclusion is necessary to help their constituents. 

Pascrell, who wrote legislation last year to remove the cap and has been one of the most outspoken critics of the tax change, said he will continue to argue for it to be part of a COVID-19 relief package. But the provision is a poison pill for Republicans, and some Democrats don’t think it should be included in the negotiations for pandemic relief. “It’s been our position that we need to resolve that. Whether we do it in this vehicle is another question,” Kildee said.

Neal was similarly noncommittal on whether another relief package offered by Democrats would remove the SALT cap. “Let’s see if we can get it in,” he said.

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