COVID-19: Where Things Stand in Washington, D.C.

Please note: This alert will be updated periodically with new developments. This was last updated on March 18, 2020.

World health officials are responding to an outbreak of a new respiratory disease called coronavirus disease 2019 (COVID-19). The virus that causes COVID-19 was first detected in China in the final days of 2019, and has now affected individuals across the world, including in the United States. As of the date of this Holland & Knight alert, there are more than 207,000 known cases globally, with over 8,000 related deaths.¹ These include over 7,000 cases and nearly 100 deaths in the United States.²

Globally, COVID-19 has caused not only illness and death but also major economic uncertainty, as supply chains are brought to a standstill, flights, classes and conventions are canceled, and markets are roiled with uncertainty. As known cases and deaths grow in the U.S., policymakers are searching for solutions to the serious public health crisis and the growing economic crisis. 

Policy Reaction to Date

President Donald Trump on March 6, 2020, signed into law legislation providing $8.3 billion in funding to combat the spread of the coronavirus, including $3.1 billion for the Office of the Secretary of Health and Human Services, $950 million for state and local health departments, $1 billion for small business disaster loans and $1.25 billion for international efforts. The new authority was substantially higher than the Administration's original request of $1.25 billion from two weeks prior, reflecting a growing sense of urgency and need among Congress.

Since the appropriation was signed into law, the number of infected Americans has quadrupled and the Dow Jones Industrial Average suffered its worst single-day drop in more than a decade, which also triggered a rare halt in trading activity. This has led U.S. policymakers to grow increasingly concerned over COVID-19's effect on the American economy and given rise to several possible policy responses.

In his televised address to the nation on March 11, 2020, President Trump announced a 30-day suspension of travel from Europe, while allowing exemptions for travel from the United Kingdom and for Americans seeking to return home. The suspension goes into effect at midnight on March 13, 2020. The president also said that he would take "emergency action" to provide financial relief for workers who are ill, quarantined or caring for others because of the virus and will instruct the U.S. Department of the Treasury to defer tax payments, without interest or penalties, for certain individuals and businesses affected by the outbreak.

Policy Options Going Forward

While policymakers on both sides of the aisle and both ends of Pennsylvania Avenue agree that action is required to guard against the economic effect of the crisis, there is currently no agreement on the path forward. If and when they reach agreement – and what that agreement will look like – will depend in large part on developments over the following weeks and days. House Speaker Nancy Pelosi (D-Calif.) is releasing legislation shortly that will present the Democratic priorities for a legislative response that will include paid sick leave, enhanced unemployment benefits and free virus testing. The Trump Administration is reportedly considering several measures, including those that it could take through regulation or executive order.While a bipartisan path forward remains unclear, below are the options currently under consideration.

Employment-Related

• Paid Sick Leave. House Democrats and the Administration are discussing paid sick leave proposals for workers out sick because of the virus. Roughly 30 percent of private sector workers lack paid sick leave through their employers, including many hourly wage workers who may be forced to miss work. Several proposals are currently under consideration in Congress and in the states, and the Trump Administration is reportedly considering options to expand paid sick leave through executive order. Expanding paid sick leave appears to be a policy with the broadest political support.
• Unemployment Insurance. Democrats are seeking an expansion of unemployment insurance for those affected by the virus and its economic effects. Unemployment insurance is a joint federal-state program that provides income support for up to 26 weeks, and was previously expanded to as many as 99 weeks following the 2008 great recession.
• Telework Policy. The U.S. Office of Personnel Management is instructing federal agencies to prepare eligible employees to telework if necessary, and a group of Senate Democrats has urged the Administration to ensure that federal employees and contractors will be able to work from home without being penalized. There is also a bipartisan resolution in the House to allow members to vote and participate in hearings remotely.

Industry-Specific Relief

• Among the more widely discussed, but also controversial, proposals is for direct relief to industries affected by COVID-19, including tax relief and direct cash spending. Current talks within the Administration and on Capitol Hill have included economic relief for the airline, hotel, cruise ship and shale drilling industries. Which industries would receive relief – and in what form – continues to be under discussion by the Administration and congressional Republicans. The proposals have also met with skepticism among congressional Democrats and several Republicans. Any action on industry-specific relief is likely to wait until the economic effects of the virus are better understood.
• Secretary of the Treasury Steven Mnuchin has said that the Administration is considering tax relief and loan guarantees specifically for the airline industry.

Tax

• Payroll Tax Holiday. The Trump Administration has urged congressional Republicans to seek a payroll tax reduction through the election. The payroll tax, which funds Social Security, is currently a 12.4 percent tax on wages up to $137,700 that is split equally between employers and employees. It was last reduced by 2 percentage points for a limited period in 2011 and 2012. The proposal has met with mixed reaction on Capitol Hill, with Sen. Lisa Murkowski (R-Alaska) indicating that any payroll tax cut would have to be paid for to prevent weakening of Social Security.
• Extension of Filing Deadlines. The Trump Administration reportedly plans to delay the April 15 tax deadline for most individual taxpayers and small businesses.

Infrastructure

The Trump Administration and congressional Democrats have long discussed infrastructure spending as an area of possible agreement, and that discussion has returned as possible economic stimulus in response to economic effects of the virus. Current proposals from the White House include $1 trillion in new spending over 10 years, while House Democrats have proposed $760 billion over five years. How to fund this spending – whether through other cuts or deficit spending – remains unclear.

Trade

Some in Congress have called for tariff relief as a way to boost U.S. businesses in the event of a recession, though the option has met resistance from Secretary Mnuchin.

Financial

• Financial Regulators. The Securities and Exchange Commission (SEC) has extended filing deadlines for certain reports from publicly traded companies, and a number of regulators recently issued a joint statement urging financial institutions to work constructively with borrowers and others affected by the outbreak.
• Federal Reserve. President Trump has indicated that he wants "more easing and cutting" from the Federal Reserve, which will have limited options given the recent half percentage point reduction.

Healthcare and Economic Support

• Free COVID-19 Testing. Congressional Democrats have called for free virus testing, and to lower the cost for testing and treatment when not covered by health insurance and for those without insurance.
• Food Programs. Congressional Democrats have also called for expansions to food programs such as the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Policymakers are also discussing nutrition assistance to children who rely on the national school lunch program but may be forced to miss school.

Conclusion

Holland & Knight will continue to provide updates on the above-considered policy options. For additional questions, contact the authors or members of our Public Policy & Regulation Group.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact the author or your responsible Holland & Knight lawyer for timely advice.

Notes

¹ Johns Hopkins University & Medicine Coronavirus Resource Center