PROVIDENCE, R.I. (WPRI) — A roughly $2 trillion bipartisan economic rescue package announced overnight will provide $1.25 billion for Rhode Island’s state budget as well as checks for many residents, new funding for hospitals and a host of other programs that will be felt locally.
“The size and scope of this emergency funding is unprecedented, but so is the severity of this pandemic and the economic trauma that families, businesses, and communities are facing,” U.S. Sen. Jack Reed, who was part of the 20-member group of senators that negotiated the legislation, said Wednesday morning
“At last, we have a deal,” Senate Majority Leader Mitch McConnell, R-Kentucky, wrote Wednesday morning on Twitter. “After days of intense discussions, the Senate has reached a bipartisan agreement on a historic relief package for this pandemic. We’re going to pass this legislation later today.”
The full text of the bill — dubbed the Coronavirus Aid, Relief and Economic Security (CARES) Act — had not yet been released at midday Wednesday.
Reed, a Democrat and senior member of the Senate Appropriations Committee, said he worked closely on a $150 billion state stabilization fund along with the Trump administration and Senate Minority Leader Chuck Schumer. He said they agreed to include a provision requiring a mandatory minimum amount for small states like Rhode Island.
The $1.25 billion — a sum equal to roughly 12% of the entire $10 billion annual state budget — is likely to be welcome news to state leaders, who are facing a budget nightmare as sales and income tax revenue collapses while expenses surge due to the coronavirus outbreak.
A draft of the legislative language says the money must be used to cover “necessary expenditures incurred due to the public health emergency” between March 1 and Dec. 30 that “were not accounted for in the budget most recently approved.”
Reed told WPRI 12 the state stabilization fund was his “key issue” in the negotiations, and the final text is supposed to require the federal government to make the money available to the states within 30 days.
“It’s designed to recognize the fact that their tax revenues have really fallen off a cliff, and that’s not just Rhode Island, that’s everywhere,” he said. “So in order for liquidity, just so they have cash on hand, it has to be dispensed quickly, because what you don’t want is the states to be at the point where they can’t function — they’re the first line of defense.”
Reed said the mandatory minimum for small states was one of his demands behind the scenes.
“These large grant programs are population-based, and we don’t have a lot of population,” he said. “But we, like every state, have fixed costs — and it applies not just to Rhode Island, but you go out to a place like Montana, where they have to have a statewide highway patrol and everything else, and yet they have fewer people.”
The bill also gives the Federal Reserve authorization to buy state debt, another provision Reed said is aimed at helping stabilize state finances. He said it adds $10 billion in Community Development Block Grant funds that are supposed to flow through to municipalities.
Gov. Gina Raimondo lavished praise on Reed and the entire congressional delegation during her daily news conference, saying many of the provisions in the deal are badly needed.
House Speaker Nicholas Mattiello also thanked Senator Reed and the other lawmakers for securing the money. “I welcome the federal assistance that will help struggling Rhode Island small businesses and families affected by this crisis,” he said.
However, Mattiello added, “At this point, it is uncertain how these funds specifically impact state finances. We are awaiting more information.” (The obscure Disaster Emergency Funding Board is set to meet Thursday to discuss authorizing up to $300 million in short-term state borrowing.)
Another headline-grabbing element of the bill is its direct cash payments to Americans.
According to Reed’s office, the agreement calls for all Americans who made $75,000 or less in 2018 to receive rebate checks for $1,200, with smaller checks for those who made up to $99,000 and no checks for those who made more than that. Married couples who made up to $150,000 would receive $2,400. Many families will also receive $500 per child.
For those who made more than the base thresholds, the amount of the rebate check will be reduced by $5 for every $100 of income above $75,000, according to a bill summary circulated by Senate Republican aides. The calculations for the rebate checks will be based on a taxpayer’s adjusted gross income in 2018.
Rebates will be provided “even for those who have no income, as well as those whose income comes entirely from non-taxable means-tested benefit programs, such as [Supplemental Security Income] benefits,” according to the GOP summary.
Reed says he expects the checks to go out in early April, and most people should get them automatically. The checks will not be taxable income because they are structured as tax credits, according to Reed’s office.
For those who are out of work, the deal includes provisions to expand unemployment benefits. In a letter to colleagues, Schumer said it would increase the maximum unemployment benefit by $600 a week “and ensures that laid-off workers, on average, will receive their full pay for four months.”
The bill would also create a temporary Pandemic Unemployment Assistance program that would continue through the end of this year, making jobless benefits available “to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency,” according to the GOP summary.
However, three Senate Republicans — Tim Scott, Ben Sasse and Lindsey Graham — issued a joint statement criticizing the changes to unemployment insurance, arguing it would incentivize workers to get themselves laid off rather than stay on the job. They suggested they might delay passage of the measure if the language wasn’t changed.
The bill would let individuals withdraw up to $100,000 from their retirement accounts without facing the usual 10% penalty if they do so for a coronavirus-related reason, which could include being diagnosed with COVID-19 or losing a job because of the downturn it caused.
For small businesses, the agreement includes $10 billion for the U.S. Small Business Administration to make emergency grants of up to $10,000 to cover small business operating costs, as well as loan forgiveness if they retain their workers, Reed’s office said.
For big businesses, another element of the deal is a $500 billion fund managed by Treasury Secretary Steven Mnuchin to provide loans and loan guarantees to businesses hard hit by the economic downturn.
The rules governing that money had been a key sticking point in the negotiations between Democrats and Republicans in recent days. Reed said the final version includes more oversight than initially proposed, including an inspector general, and the bill will reportedly bar President Trump and his family members from benefiting financially from the fund.
“I think the changes are in the right direction,” Reed said. “I was specifically engaged with Secretary Mnuchin and asked, repeatedly, why can’t we restrict this by law to United States companies that are paying U.S. taxes? And he said, well, it’s too complicated — and clearly he didn’t have that appetite.”
Reed said he expects the final legislation will also include a new version of a provision he included in the 2008 financial bailout law that gave the federal government stock warrants in companies that received assistance; those were later sold for roughly $10 billion when the companies recovered.
All businesses are expected to be eligible for a tax credit to subsidize keeping employees on the payroll during the downturn.
A list published by Schumer’s office ticked off a host of other provisions that Democrats got added to McConnell’s original bill, including $55 billion for a so-called “Marshall Plan” for hospitals and other health care facilities; $30 billion for education; $25 billion for transit; and $30 billion for FEMA’s Disaster Relief Fund.
Schumer defended Senate Democrats’ decision to filibuster McConnell’s initial version twice, despite widespread criticism from Republicans. “All of this progress would not have been possible without us standing together to reject Leader McConnell’s partisan first draft,” he said. “Our unity strengthened our hand in these difficult negotiations.”
Reed and U.S. Sen. Sheldon Whitehouse both supported Schumer’s strategy, though one of Whitehouse’s priorities for the bill — provisions supporting green energy and combating climate change — did not make the final cut.
“During negotiations for billions in proposed bailouts for big oil companies and pollution-heavy industries, we also asked for clean energy tax policies and reasonable emissions limits to ensure we’re not accelerating the climate crisis in our effort to address the current crisis,” Whitehouse said in a statement.
“While those items didn’t make it into the final package, neither did the polluter bailouts, and I am very pleased with our priorities, including the significant help we were able to secure for Rhode Island hospitals and for the many families who are hurting right now,” he said.
President Trump has already signed two spending bills related to coronavirus this month, the first an $8 billion measure to deal with the virus spread and the second an over $100 billion package that funded free testing and expanded paid leave. So far Rhode Island has been steered over $7 million from those two bills.
Asked whether he thinks Congress will have to pass more legislation, Reed said, “I suspect we’ll do more. The question is the scale and scope.”
Ted Nesi (firstname.lastname@example.org) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook