Policymakers raced this week to complete a massive economic response to stem the spiraling public health and economic toll of the Coronavirus pandemic. As infection and death rates continued to grow, jobless claims soared, hotels and malls temporarily closed world-wide, and President Trump invoked rarely used emergency powers to fight what he called a “medical war.” (NYTimes and BBC, March 19)
- Roundtable President and CEO Jeffrey DeBoer said today, “While the world’s experts work around the clock to solve the health related issues related to the COVID-19 pandemic, Washington must take dramatically more bold policy actions then it has to date to prevent this health emergency from igniting an immediate liquidity crisis or much longer-term economic repercussions. We are actively helping develop a variety of policy responses."
- DeBoer added, “We are focused on helping employers maintain their payrolls, helping businesses access new or restructured debt , encouraging banking and other regulators to exercise discretion in loan examinations, seeking new credit facilities (like the Term Asset-Backed Securities Loan Facility (TALF) used during the 2008 crisis) to assist the CMBS market, and working with federal tax authorities to ease transaction deadlines, lower tax penalties in debt modification, broaden the ability to use operating losses and many other areas. Our policy committees are hard at work and our team is coordinating with all the industry and many outside our industry.”
- Three phases of public policy responses have been assembled to date as the medical community rushes to develop treatments for the virus.
Phase 1, enacted on March 6, is a $8.3 billion packaged focused on public health measures to bolster vaccine development and research, increased equipment stockpiles, and support for state and local health responses to the virus. (Roundtable Weekly, March 6).
Phase 2, signed into law by President Trump on March 18, is the $104 billion Families First Coronavirus Response Act (H.R. 6201), which includes paid leave provisions for employees, free COVID-19 testing, expansion of unemployment insurance, food assistance, and other provisions aimed at immediate relief for affected individuals. (Joint Committee on Taxation, March 16)
Phase 3, a $1 trillion-plus bill introduced yesterday by Senate Majority Leader Mitch McConnell (R-KY), will focus on (1) general economic stimulus, (2) small business and individual relief, (3) airline and travel industry concerns; and (4) health care matters.
- Security Act’’ (CARES Act) – which includes cash payments to individuals, an expanded SBA loan program and other small business lending facilities, tax relief, substantial aid to airlines, direct and substantial supplemental appropriations to address the pandemic. (CBS News, March 19)
- Small Business Administration (SBA) loan provisions supported by a broad coalition of business groups, including The Roundtable, are included in the Keeping Workers Paid and Employed Act, which is “Division A” of the Senate GOP’s CARES Act. (Coalition letter support letter, March 19)
- Sens. Marco Rubio (R-FL), Susan Collins (R-ME) and Lamar Alexander (R-TN) developed the $300 billion SBA relief plan to provide loans for businesses and non-profit organizations with up to 500 employees. A portion of the loans, to cover payroll and payments on pre-existing debt, would be forgiven until June 30. (Section-by-section summary of the legislation can be found here and a one-pager can be found here.)
- After GOP Leaders released the legislative text of the Phase 3 bill, McConnell acknowledged the legislation was likely to change as the White House, Senate Democrats and House leaders weigh in. "The legislation I’ve just laid out will not be the last word,” McConnell said, adding that he will keep the Senate in session until a Phase 3 coronavirus package passes the chamber.
- McConnell, Senate Minority Leader Chuck Schumer (D-NY) and Treasury Secretary Mnuchin will lead negotiations starting today in an attempt to hash out a compromise plan by Monday – as applications for unemployment benefits intensify and may top 2 million, according to Goldman-Sachs. (CBS News, March 20)
- In a memorandum to House Democrats, Chairwoman Waters outlined her wide-ranging proposals, which would go farther than measures floated in the Senate. Her approach would include larger monthly payments to all Americans via the Federal Reserve, suspension of consumer debt and a new federal insurance backstop.
- Her proposed plan also includes suspension of private-sector commercial rental payments, evictions and foreclosures – along with suspension of negative credit ratings during the pandemic.
- At the White House, President Trump today invoked rarely used emergency powers under the 1950 Defense Production Act (DPA) to marshal private-sector production for medical supplies. “I invoked the Defense Production Act, and last night we put it into gear,” Mr. Trump said today. “We are invoking it to use the power of the federal government to help the states get things they need like masks and ventilators.” (AP, March 18 and Wall Street Journal, March 20)
- The DPA empowers the federal government to order private businesses and U.S. manufacturers to prioritize government contracts to produce “critical materials and goods” in return for purchase loans or guarantees. (The Hill, March 20)
The Roundtable Urges Focused Policy Actions
The Real Estate Roundtable, along with 113 other organizations, wrote to the Administration and congressional leadership on March 18 to urge swift and unprecedented action to confront the fallout from COVID-19.
- The coalition letter states that Washington’s response needs to minimize the number of businesses that could close and workers who may lose their jobs by ensuring all businesses have the resources necessary to ride out the pandemic. The coalition notes that a focused, massive response should:
- Immediately provide readily accessible, unsecured credit to businesses of all sizes to ensure they have the cash to pay their workers, rent, and other costs during this crisis.
- Suspend the filing of business returns and the payment of all business taxes to the federal government for the duration of the pandemic. These suspended taxes should include taxes owed for the 2019 Tax Year, estimated payments for 2020, and all payroll tax obligations.
- Amend the Tax Code to, among other items, restore the ability of businesses to carryback any net operating losses against previous year tax payments; suspend the application of the Section 163(j) limitation on interest expense deductions for tax year 2020 to avoid penalizing businesses for borrowing during this crisis; and suspend the Section 461(l) loss limitation on pass-through businesses to allow the owners of pass-through businesses to fully deduct any losses they incur this year.
- The Roundtable during the past few weeks of the crisis has also worked closely with its board of directors and 18 national real estate organization partners to develop specific policy recommendations that would help contain the repercussions of the pandemic, stabilize the economy and reinforce the industry.
- The Roundtable’s policy advisory committees – tax, credit and capital, and homeland security – continue to hold frequent conference calls with industry specialists to analyze market developments and discuss government policy responses (e.g., H.R. 6201, House Financial Services Committee proposal)
- Additionally, Real Estate Roundtable President and CEO Jeffrey DeBoer on March 9 notified all Roundtable members that the organization’s March 31 Spring Business Meeting was canceled “in light of health and safety issues surrounding COVID-19.”
As policymakers intense efforts to mitigate the effects of the pandemic, The Roundtable will continue to communicate unified industry policy recommendations in the short-term crisis or addressing longer-term stimulus of the U.S. economy, infrastructure investment, workforce development and efforts to stabilize capital markets.
# # #