[co-author: Taylor Daly, Policy Specialist]

Yesterday, Senate Majority Leader McConnell (R-KY) unveiled a proposal for Phase 3 of the Coronavirus response, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In response, Senate Democrats have released a document outlining their considerations on the Republican package, which they have dubbed a “nonstarter,” asserting that the proposal provides relief for corporations but fails to provide sufficient support for workers or to the public health threat on the ground.

For workers, Senate Democrats have particularly voiced concerns that the CARES Act does not provide for any expansion of unemployment insurance. In addition, they have strong concerns that it does not provide any funding for the Department of Defense to purchase personal protective equipment (PPE) for medical workers or funding for state and local governments, first responders, health care workers and law enforcement to procure PPE. Democrats have also requested increased funds to support programs for vulnerable populations such as Head Start, food banks and nutrition assistance, as well as increased assistance to homeless populations and veterans. Additionally, they have emphasized the need for additional funding for the Federal Emergency Management Agency (FEMA), educational institutions, tribal communities and airports and public transit systems.

Majority Leader McConnell has established an informal goal of reaching agreement on Phase 3 among the Senate negotiators tonight, March 20, so that legislative counsel can put whatever deal is reached into legislative text over the weekend and prepared for a final vote in the Senate on Monday. Whether such an ambitious timeline can be met depends on the success of the negotiations, though the need to act quickly has not been publicly doubted by any of the negotiators.

As federal, state and local governments continue to escalate their responses to the pandemic, the latest actions and developments may be found below, and Akin Gump will continue to provide regular policy developments related to COVID-19.

Stimulus Update: Senate Democrats Express Concerns about Republican Phase 3 Proposal, Senate Continues Negotiation on Phase 3, Additional Phases Likely

• Phase 3: Leader McConnell (R-KY) released his proposal for Phase 3 of the COVID-19 response (Bill Text). In response, Democrats released a document outlining their concerns about the package. Republican negotiators have begun to engage with Senate Democrats in order to find a path forward on Phase 3.
• In light of the guidance issued by the Centers for Disease Control and Prevention (CDC), the House will be adjusting its schedule moving forward and is also expected to adjust its voting procedures to adhere to these recommendations.

Section-by-Section Summary of GOP Phase 3 CARES Act

• Division A – Small Business Interruption Loans: Would increase the maximum 7(a) loan amount to $10 million for eligible businesses with 500 employees or less from March 1, 2020 to December 31, 2020 and expands allowable uses of 7(a) loans to include payroll support. The bill includes provisions for entrepreneurial development which authorize the Small Business Administration (SBA) to provide additional financial rewards to resource partners. The measure also provides loan forgiveness equal to the payroll cost from March 1, 2020 to June 30, 2020 and directly appropriates $299.4 billion for loan guarantees, $300 million for salaries, and $240 million for small business development centers. The proposal authorizes $10 million for the Minority Business Development Agency and waives prepayment penalties for loans made during the covered period.
• Division B – Relief for Individuals, Families, and Businesses: Would provide up to $1,200 recovery checks directly to individuals, extend the tax filing deadline by two months to July 15, waive early withdrawal penalties from qualified retirement accounts for coronavirus-related purposes, and alter regulations on charitable contribution deductions in 2020. Additionally, the CARES Act includes several measures of relief for businesses, providing for a delay in estimated tax payments for corporations and allowing employers to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees.
• Division C – Assistance to Severely Distressed Sectors of the Economy: Would provide a total of $208 billion in collateralized loans and loan guarantees to impacted entities, including up to $50 billion for passenger air carriers, up to $8 billion for cargo air carriers, and up to $150 billion for other eligible entities. The measure would also repeal Federal Excise Taxes collected in relation to commercial aviation through the end of the year.
• Division D – Health Care Response: Would provide permanent liability protection for manufacturers of personal respiratory protective equipment in the event of an emergency, and require the Food and Drug Administration (FDA) to expedite the review of drug applications and inspections to mitigate a drug shortage. In an aim to increase access to COVID-19 care, the bill would clarify that all testing for COVID-19 be covered by private insurance plans without cost sharing and provide $1.32 billion in supplemental funding to community health centers to test and treat patients for COVID-19. The measure aims to speed up innovation by removing the cap on other transaction authority (OTA) and extending the FDA’s priority review voucher program. The package’s education provisions would waive the institutional matching requirement for campus-based aid programs and allow institutions to transfer unused work-study funds to supplemental grants. Under the measure, employers would not be required to pay more than $200 per day and a total of $10,000 for paid family and medical leave or more than $511 per day and a total of $5,110 for sick leave.
• Division E – Temporary Permit Use to Guarantee Money Market Mutual Funds: Would temporarily suspend the statutory limitation on the use of the Exchange Stabilization Fund for guarantee programs for the money market mutual fund industry.
• Division F – Budgetary Provisions: Emergency designation.

Administration Updates

Coronavirus Task Force Briefing Highlights

On Friday morning, March 20, the White House Coronavirus Task force conducted a briefing from the White House Press Briefing Room. Highlights of the discussion include:

• President Trump is in conversation with Senate Majority Leader McConnell and Minority Leader Schumer regarding “various elements” of the Phase 3 stimulus deal. The President said he is opposed to stimulus money being used for stock buybacks.
• The President praised the aggressive actions being taken by Gov. Newsom in California and Gov. Cuomo in New York, while stating that a “national lockdown” is unlikely.
• Secretary of State Mike Pompeo announced that Mexico and the U.S. will restrict nonessential travel across the southern border as of midnight tonight.
• In addition, the Centers for Disease Control and Prevention (CDC) and Customs and Border Protection (CBP) will bar the entry of any individuals without proper documentation seeking to enter the U.S. from Canada or Mexico. Individuals will be returned to their country of origin and will not be housed in CBP or Immigration and Customs Enforcement (ICE) facilities.
• According to Vice President Pence, many businesses have been donating supplies or volunteering to manufacture ventilators and respirators for health workers. In addition, the government is working with anesthesiologists to identify tens of thousands of ventilators that can be converted to care for patients with COVID-19.
• Over the weekend, the Administration will announce a “major procurement” of N95 respirators.
• ADM Brett Giroir, Assistant Secretary for Health, will make an announcement tomorrow regarding the status of testing.
• Data from Italy suggest significantly higher mortality for men than women across all age groups.
• The Department of Education will not enforce standardized testing requirements during the outbreak.
• The Treasury Department is extending the tax filing deadline to July 15.

Relevant Links

• Phase 2: H.R. 6201, the Families First Act, as signed into law by President Trump
• Phase 3: Senate GOP Proposal
• Phase 3: High-Level List of Senate GOP COVID-19 Relief
• Phase 3: Finance Republican Health Section-by-Section
• Phase 3: One pager of the Rubio/Collins RESCUE Business Act
• Phase 3: Blue Dog Recommendations for Coronavirus Economic Support and Stimulus Package
• Phase 3: Problem Solvers Caucus Health Crisis and Economic Revival Package
• Phase 3: Leader Schumer Memo to Senate Democrats providing more details around his policy goals for the third COVID-19 response package
• Phase 3: Senate Democrats public health and economic emergency proposal presentation
• Phase 3: Department of Treasury Recommendations
• Phase 3: Speaker Pelosi’s Dear Colleague Letter on Preparation for Next Coronavirus Response Bill
• Phase 3: Senate Minority Leader Schumer calls for a “Marshall Plan for our hospitals,” employment insurance and free medical treatment for anyone who contracts coronavirus
• Rep. Diaz-Balart Tests Positive for Coronavirus
• Rep. McAdams statement on COVID-19 illness
• DOD Poised to Provide Masks, Ventilators, Labs for Coronavirus Fight
• Treasury and IRS Issue Guidance on Deferring Tax Payments Due to COVID-19 Outbreak
• FDIC Chairman Urges FASB to Delay Certain Accounting Rules Amid Pandemic
• Federal Bank Regulatory Agencies Issue Interim Final Rule for Money Market Liquidity Facility
• EU’s Brexit negotiator Michel Barnier announces he has tested positive for the coronavirus
• Updated Medicaid & CHIP COVID-19 FAQs
• Medicare Fee-for-Service (FFS) Response to the Public Health Emergency on COVID-19

Akin Gump Alerts and Other Resources Related Content

• Defense Production Act – What Does the March 18th Executive Order Mean?
• Overview of Federal Coronavirus (COVID-19) Stimulus Measures
• President Trump and Congress Move to Make Small Business Loans Available in Wake of COVID-19
• Insurance Coverage Questions In Light of Coronavirus
• Federal Legislation Summary for Public Interest Organizations and Individuals
• SEC Guidance for Public Companies and Investment Advisers
• Tax Filing Extensions Due to Coronavirus
• Federal Income Tax Payment Deadline Delayed to July 15 Amid COVID-19 Crisis
• United States Suspends Visa Services Abroad, Cancels ESTA Entry Authorizations for European Visitors and Closes USCIS Field Offices, in Response to the Novel Coronavirus (COVID-19) Pandemic
• Coronavirus and the Workplace by Richard J. Rabin, Grace Margaret O’Donnell.
• SEC Permits Late Filing of Form ADV due to COVID-19
• The March to Cancel: Contract and Insurance Implications of Coronavirus-Related Event Cancellations
• COVID-19 Impact on Annual Shareholder Meetings
• COVID-19’s impact on global corporate transactions

Tweets

U.S. Department of Health and Human Services (HHS):

• Tweet at 10:15 AM, March 19, 2020 (Link)
  • “CMS announced recommendations on delaying elective surgeries, non-essential medical, surgical, and dental procedures during the 2019 Novel Coronavirus (COVID19) outbreak. Read more here.”

Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma:

• Tweet thread at 9:41 PM, March 18, 2020 (Link)
  • “CMS is taking action to help remove financial barriers for COVID19 testing & treatment by announcing that enforcement action will not be taken against issuers of catastrophic health plans that cover testing & treatment, at no cost before enrollees meet their deductible.”
  • “Catastrophic health plans are plans w/ more affordable premiums that are available to people < 30 ys old or for people who have a hardship/affordability exemption, but these plans generally may not provide & pay for benefits before an enrollee meets the plan’s deductible.(Press Release)”

The Federal Reserve:

• Tweet at 11:30 PM, March 18, 2020 (Link)
  • “Federal Reserve broadens program of support for the flow of credit to households and businesses by establishing a Money Market Mutual Fund Liquidity Facility (MMLF): (Press Release)”

• Tweet at 8:34 AM, March 19, 2020 (Link)
  • “Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency announce interim final rule ensuring financial institutions can effectively use the recently announced Money Market Mutual Fund Liquidity Facility: (Press Release)”

• Tweet at 9:02 AM, March 19, 2020 (Link)
  • “Federal Reserve, other central banks announce establishment of temporary U.S. dollar liquidity arrangements: (Press Release)”

The Federal Deposit Insurance Corporation (FDIC):

• Tweet at 1:00 PM, March 19, 2020 (Link)
  • “FDIC Chairman Jelena McWilliams encouraged the Financial Accounting Standards Board to take much needed actions that will allow banks to help their communities through the coronavirus pandemic. Read the letter here.”

U.S. Food and Drug Administration (FDA) Commissioner Dr. Stephen Hahn:

• Tweet thread at 7:05 PM, March 18, 2020 (Link)
  • “For the well-being of our staff & those who conduct inspections for the agency under state contract, & because of industry concerns about visitors, we have temporarily postponed all domestic surveillance facility inspections during the COVID19 pandemic. (Press Release)”
  • “Importantly, all domestic for-cause inspection assignments will be evaluated & will proceed if mission critical. We will continue to respond to natural disasters, outbreaks, & other public health emergencies involving FDA-regulated products.”

Senate Majority Leader Mitch McConnell (R-KY):

• Tweet at 1:00 PM, March 19, 2020 (Link)
  • “This crisis is moving fast. Our health system is under strain and our economy is hurting. It is critical that we act swiftly and boldly to stabilize our economy, preserve Americans’ jobs, get money to workers and families, & keep up our fight on the health front.”

• Tweet at 3:34 PM, March 19, 2020 (Link)
  • “We know our economy won’t bounce back to normal tomorrow. An underlying medical reality is driving this disruption. This about immediately helping workers, families, small businesses, and positioning us to thrive on the other side. America is strong and we will beat this virus.”

• Tweet at 4:37 PM, March 19, 2020 (Link)
  • “We are crafting a major plan to help small business survive this crisis and help workers continue to get paid. A rapid injection of cash to help small businesses through this turmoil. Let’s help small businesses and workers endure this and emerge from it ready to thrive.”

Senate Minority Leader Chuck Schumer (D-NY):

• Tweet at 11:55 AM, March 19, 2020 (Link)
  • “We don’t want bailouts unless they’re used for workers, unless the industries keep all their employees, unless they don’t cut salaries of their employees, and unless they are not allowed to buy back their own stocks or raise corporate salaries.”

• Tweet at 12:46 PM, March 19, 2020 (Link)
  • “Big for America’s students right now. Senator Patty Murray, Senator Sherrod Brown, Senator Elizabeth Warren, and I are announcing our bold new plan to cancel student debt for the duration of the coronavirus emergency and provide a minimum $10k payoff for federal student loan borrowers.”

• Tweet at 3:32 PM, March 19, 2020 (Link)
  • “We need to help the millions of workers who are adversely affected by this severe crisis: Service industry workers, gig workers, freelancers, bartenders, retail workers, airline attendants, and so many others. Congress must help these Americans NOW.”

• Tweet at 4:38 PM, March 20, 2020 (Link)
  • “When I talked to President Trump today: I said we need to put workers first—we don't want bailouts unless they're used for workers. He explicitly told me he would oppose companies using bailouts on stock buybacks—even though that's not in Senator McConnell’s bill. This is vital.”

Former U.S. Food and Drug Administration (FDA) Commissioner Dr. Scott Gottlieb:

• Tweet thread at 10:58 AM, March 19, 2020 (Link)
  • My paper today with Mark McClellan. We can sharply reduce the #COVID19 threat with technology and have the chance to develop and deploy these tools right away. We need to take some new policy steps to achieve these goals. We outline those steps here.”
  • “1. We need to launch two task forces dedicated to development of therapeutics and vaccines inside FDA. We can implement a master protocol that allows broad access to promising therapies for patients in need while continuing to collect rigorous data on safety and effectiveness.”
  • “We need dedicated focus on developing drugs, antibody prophylaxis and vaccines. A large treatment protocol, where patients are randomized to receive therapies that meet initial threshold for safety, effectiveness, can allow broad access while continuing to evaluate drugs.”
  • “2. We need to develop a point of care diagnostic like the Cepheid GenXpert or a swab that produces a readable result in doctors office to screen much more broadly and detect cases early, contain spread. Case-based strategies can work when properly resourced, done at massive scale”
  • “3. We’ll have broad screening capability after initial epidemic passes. We must repurpose these tools into a massive sentinel surveillance system nationwide, that will hunt for cases of coronavirus among those presenting with flu symptoms, so we can detect outbreaks immediately.”
  • “For therapeutics, we should invest in securing manufacturing now for promising drugs, so if one works, we can produce it at massive scale immediately. We should not do these thinks in a linear way. We must do it all at once. Ramp up manufacturing now for the experimental drugs.”
  • “We must continue the mitigation steps to reduce death and disease until we have broader access to a truly effective drug. The number of cases will start to rise a lot now. We must keep the cases low enough so our front line providers can do what they do so well: preserve life.”
  • “These steps are, in part, how we win. We use technology to vanquish this threat or make it a pathogen we can live with. We must also support each other through this difficult moment. It will pass. We will solve this with our compassion, perseverance, and our great technology.”