Appropriations Stall in the Senate
Negotiations between Senate Appropriations Chairman Richard Shelby (R-AL), and Ranking Member Pat Leahy (D-VT) over how to achieve agreement on the 12 annual funding bills have been ongoing for several weeks, with an expectation that the full Senate appropriations committee would mark up as many as three bills (including T-HUD) during the week of June 25. That effort fell apart on Thursday afternoon, as Democrats requested that amendments pertaining to COVID-19 and policing reforms be considered during the appropriations process. Having just unveiled the Justice Act in response to the tragic death of George Floyd, Republicans stated that if Congress was going to approve additional spending for the COVID-19 pandemic, it should be done in line with the previous four aid packages, which were all emergency supplemental spending measures.
In the other chamber, the House Appropriations Committee is currently on track to begin its appropriation markups the week of July 6. Appropriation negotiations in the House are unlikely to run into similar issues as their counterparts in the Senate because Democrats can process all 12 spending bills in committee and on the floor without Republican support. House Majority Leader Hoyer stated he wants to pass all 12 appropriation bills before leaving Washington, D.C. for the August recess. However, lacking a compromise in the Senate, there will likely be a need for at least one stopgap funding bill to get the government past the end of the fiscal year on September 30 and possibly another continuing resolution to get past the November elections.
OCC Congressional Review Resolution Introduced in the House
House Financial Services Chairwoman Maxine Waters (D-CA) and Rep. Gregory Meeks (D-NY) have introduced a Congressional Review Act resolution to rescind the Community Reinvestment Act (CRA) final rule to modernize the Community Reinvestment Act promulgated by the Office of the Comptroller of the Currency (OCC). In April, the OCC finalized the CRA rule without the support of the Federal Deposit Insurance Corporation and the Federal Reserve, despite publishing a joint notice for proposed rulemaking to modernize the CRA together in January. Banks whose prudential regulator is the Federal Deposit Insurance Corporation or the Federal Reserve will continue to be subject to the existing CRA regulations. The final rule aimed to increase bank CRA-related lending, investment, and services in low- and moderate-income communities where there is a significant need for credit, more responsible lending, and greater access to banking services. The final rule implements changes to the CRA’s activity eligibility, assessment area definition, performance measurement and reporting requirements and takes effect October 1, 2020. The Congressional Review Act resolution, introduced in the House on June 11, would allow Congress (within 60 days of meeting since the rule was reported to Congress or published in the Federal Register) to reject implementation of the OCC final rule by a majority vote in each chamber, followed by the president’s signature.
$1.5 Trillion Infrastructure Bill Outlined by House Ways and Means
On June 19, the House Ways and Means Committee released an outline of their $1.5 trillion infrastructure proposal, the Moving Forward Act, H.R. 2. The House proposal includes investment for highways, bridges, transit, rail, airports, ports/harbors; schools and child care; local financing and community development; housing; broadband; drinking water and wastewater; clean energy; health care; U.S. Postal Service; and environment/public lands. With regards to funding for housing infrastructure, the proposal would increase federal investment in affordable housing by expanding the Low-Income Housing Tax Credit with housing incentives for rural and tribal communities as well as individuals who are at risk of becoming homeless. The bill would also create a new tax credit through the Neighborhood Homes Investment Act, which would subsidize certain development costs to encourage the rehabilitation of vacant homes or construction of new homes in economically distressed areas. The Moving Forward Act would also invest more than $100 billion to create or preserve 1.8 million affordable homes and increase the environmental sustainability of the available housing stock. The proposal also includes investment in local financing and community development, and would expand and make permanent the New Markets Tax Credit as well as promoting investments in tribal communities. The House Ways and Means fact sheet on the Moving Forward Act can be viewed here.
Congress Seeks Paycheck Protection Program Extension
Senators Ben Cardin (D-MD) Chris Coons (D-DE) and Jeanne Shaheen (D-NH) are planning to introduce the Prioritized Paycheck Protection Program (P4) Act, which would extend the deadline to apply for a forgivable Paycheck Protection Program loan from June 30 to December 30. It would also create a new option for a second loan for borrowers with 100 employees or fewer that have lost at least half their revenue due to the pandemic. The Paycheck Protection Program, which offers loans of as much as $10 million that can become grants if the proceeds are spent mostly on payroll, is set to expire June 30. As of June 12, the program still had almost $130 billion in funds remaining and any unused funds would be sent back to the Treasury unless Congress approves another use. The proposed bill would use existing Paycheck Protection Program funding to make additional targeted loans–publicly traded companies would be ineligible for the loans; hospitality and lodging businesses with multiple locations would be limited to an aggregate loan amount of $2 million; and the bill would reserve the lesser of $25 billion or 20 percent of PPP funds for employers with 10 or fewer employees, as well as small businesses in underserved and rural communities. The bill would also direct the Small Business Administration to issue guidance to give priority to businesses with 10 employees or fewer in the processing and disbursement of P4 loans, and would require the Small Business Administration to request demographic information of P4 loan recipients. A companion bill is scheduled to be introduced in the House as well.
The Small Business Administration has already approved more than 4.6 million loans totaling more than $513 billion but some Senators and groups representing small businesses have said that more help is needed for independent contractors, the self-employed and minority-owned businesses. On June 5, the Paycheck Protection Program Flexibility Act (PPPFA) was signed into law, which amended various aspects of the CARES Act regarding Paycheck Protection Program loan forgiveness, payroll tax deferral, and loan maturity dates. In response, on June 17, the Small Business Administration and the Department of Treasury released an updated version of SBA Form 3508, which implements the changes to the Paycheck Protection Program made by the PPPFA. A new simplified forgiveness application, SBA Form 3508EZ is also now available.
Federal Reserve Chairman Testifies Before House Finance Committee
On June 17, Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee on U.S. monetary policy, the economy and efforts towards an economic recovery in the midst of the COVID-19 pandemic. During the hearing, Chairmen Powell urged members of the Committee to prevent a steep drop in income for millions of unemployed Americans who may be unable or unwilling to return to work during the coronavirus pandemic and asked lawmakers to extend enhanced unemployment insurance “in some form” after a $600 increase to current benefit levels expires on July 31. The Chairman did not specify how Congress should act, but warned lawmakers not to let unemployment benefits revert back to their pre-pandemic levels. With the current unemployment rate at 13.3 percent, Chairman Powell warned that some jobs (those employed in the travel, leisure and hospitality, dining and certain entertainment industries) will not be coming back anytime soon. Chairman Powell’s full testimony can be viewed here. The Monetary Policy Report can be read here.
White House Opportunity and Revitalization Council Issues Report
Secretary of HUD and Chairman of the White House Opportunity and Revitalization Council, Dr. Ben Carson, recently delivered a report to President Trump that outlined best practices and examples of community revitalization in Opportunity Zones. The Council was established to support the Trump Administration’s pledge to encourage public and private investment in urban and economically distressed areas, including Opportunity Zones. The report includes case studies and best practices taken by State governments, local governments, foundations and non-profits, Qualified Opportunity Funds, public-private partnerships, and others that created and spurred revitalizing investments in areas of most economic need. The report is divided into five sections and makes references to the Council’s Community Toolkit, which is available at www.opportunityzones.gov website. The Opportunity Zones Best Practices Report to the President from The White House Opportunity and Revitalization Council can be read here.