WASHINGTON, DC – SEPTEMBER 01: U.S. Treasury Secretary Steven Mnuchin testifies at a House … [+] subcommittee hearing on September 1, 2020 (Nicholas Kamm-Pool/Getty Images)
Republican Senators are honing in on a scaled-down stimulus package to address narrow economic relief for targeted sectors of the economy.
According to Bloomberg News, Treasury Secretary Steve Mnuchin has indicated that the latest stimulus proposal would be geared towards providing economic relief to major airlines and the travel industry, which has been hit hard by the pandemic and recession. United Airlines recently warned that over 16,000 employees would be indefinitely furloughed, reducing its workforce by 25%. American Airlines and Delta Airlines announced similar workforce reductions through furloughs, layoffs, and buyouts.
Mnuchin also suggested that the stimulus proposal would shore up the troubled Paycheck Protection Program (PPP), which has provided critical economic assistance to small businesses. However, an estimated $130 billion or more in allocated PPP funding remains unused. Lawmakers and watchdogs have uncovered millions of dollars in PPP-related fraud in the last several months.
The proposed Republican stimulus package would reportedly include no further relief for student loan borrowers, following President Trump’s extension of the CARES Act’s suspension of student loan payments and interest through December 31. Consumer advocacy groups had previously criticized the President’s executive action on student loans as insufficient, calling on more widespread relief that covers all student loans (the CARES Act limits relief to only government-held student loans), as well as broad student loan forgiveness. “The President’s action on student debt falls short of what Americans need to stay afloat through this unprecedented health and economic crisis,” said the Student Borrower Protection Center in an earlier statement.
The proposal would also not include any direct stimulus payments to taxpayers, and would reportedly have scaled-down federal unemployment benefits of $300 per week.
The Republican-led plan would cost an estimated $500 billion, substantially less than the $2-3 trillion in economic relief proposed by congressional Democrats. House Democrats passed the HEROES Act in May, largely on a party-line vote. The bill would continue enhanced unemployment benefits of $600 per week, and provide additional economic relief to states, cities, and hospitals. The HEROES Act would also extend the CARES Act’s student loan payment and interest suspension to September 30, 2021 (a full 12 months), and would expand those protections to include commercially-issued FFEL-program federal student loans and Perkins loans. Notably, the bill would provide $10,000 in federal and private student loan forgiveness to borrowers experiencing economic distress.
Republicans have so far rejected those proposals, and the two sides remain at an impasse. House Speaker Nancy Pelosi earlier suggested that there will be no deal if Republicans don’t compromise.
Even the latest narrow stimulus proposal may not garner enough votes to pass the Republican-controlled Senate, however. Republican leaders have repeatedly suggested that a substantial portion of their Senate caucus opposes any new stimulus relief, even if it is pared down. Nevertheless, Senate leaders have suggested that a vote could happen as early as this week.
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