April Issues Preview

April 6, 2020

QUICK FIX

— April is when the money starts flowing back into the U.S. economy: Household stimulus checks will clear, small-business loans are getting approved, airlines will receive their bailout money and the $100 billion in hospital funds will make its way into the health care system.

 

— The unemployment rate, which is likely already in double digits, will start to drag the long-term outlook on the economy, putting pressure on Republicans to join Democrats in the "phase four" of coronavirus stimulus.

 

— Parts of Washington are trying to keep business as usual: The EPA is still deregulating fossil fuels; the FCC is voting on spectrum; and the Department of Education is still issuing sweeping rules.

 

— The fundamental question by month's end is whether President Donald Trump will forge ahead with efforts to reopen America, regardless of advice from public health officials. That's not just a public policy question, but a political issue for a president looking for a comeback narrative for his reelection.

FOLLOW THE MONEY

Show us the stimulus checks: The IRS faces a major test of its resources this month, with the agency expected to start distributing stimulus payments to individuals and families under the third coronavirus-response package. IRS and Treasury Department officials have told lawmakers that they expect to send the first payments via direct deposit in mid-April. Paper checks would start flowing in May — and it could take up to five months to get them all out.

 

The agency will also implement other tax elements of the rescue packages, including tax credits to keep workers on the payroll at struggling businesses and to help employers pay for sick and family leave. Industries affected by those provisions and others will work on shaping the rules and regulations to their liking. — Toby Eckert

 

Small-business bailout blues: Banks are beginning to offer $350 billion in small-business loans this month as part of the $2 trillion economic rescue package. But the Paycheck Protection Program, which forgives the loans if a business maintains its payroll, got off to a rocky start Friday as banks scrambled to process applications based on guidelines the Trump administration published just hours earlier. — Mark McQuillan

 

Airlines' money comes with strings: Congress included $58 billion for airlines in its most recent coronavirus relief package, known as the CARES Act. The questions now are which airlines will apply for the money and what exactly will the Treasury Department require from them in return. The law gives Secretary Steven Mnuchin until today to start cutting checks for the $29 billion in grants that represent half of the total amount of airline aid and that have to be used to pay employees. Airlines can separately apply for $29 billion in loans. Unlike the grants, the law doesn't impose deadlines on the Treasury Department for making loans. — Brianna Gurciullo

 

Administration dips into hospitals' bailout: The Trump administration is diverting a portion of the $100 billion set aside for health providers in the latest stimulus bill to cover treatments for uninsured coronavirus patients, after refusing to reopen Obamacare insurance marketplaces to help that population. HHS Secretary Alex Azar said hospitals will be paid Medicare rates to cover treatment costs, with more details coming. HHS has wide latitude to divvy up the $100 billion, which hospitals overwhelmed by the pandemic are expected to use to cover the costs of treating the virus and help fill the financial hole left by the wide-scale cancellation of elective surgeries.

 

Rescuing mortgage companies: The Financial Stability Oversight Council — an interagency body consisting of all the top regulators — is rolling out a plan to prevent mortgage servicers from going under amid the widespread suspension of payments by homeowners, with 2 million homeowners expected to be allowed to suspend mortgage payments by the beginning of May. — Mark McQuillan

 

Higher education looking for direction: Colleges and universities are also anxious for their slice of more than $14 billion in direct aid from the coronavirus stimulus package as revenues decline, but they are still waiting to hear from the Education Department on how and when it plans to distribute the funding. The department said Saturday it would provide guidance "in the near future." — Bianca Quilantan

 

Keep medical supplies flowing: Additional trade actions could arrive in April as the administration scrambles for medical supplies. The stimulus includes $1 billion for buying equipment made under the Defense Production Act. But the administration so far has taken what some critics say is an ad hoc approach in deciding when to invoke the powerful emergency law to step up production of medical supplies and halt export of the critical equipment.

 

The White House also has been working on a new "Buy American" executive order to encourage more domestic production of medical supplies and pharmaceuticals. Trump trade adviser Peter Navarro said that remains a priority, but finalizing that order has taken a back seat to more immediate coronavirus concerns. — Kayla Sharpe and Doug Palmer

 

More aid for agriculture: The $2 trillion relief package added nearly $16 billion to the food stamp program and almost $9 billion for child nutrition initiatives such as school meals. Anti-hunger groups are urging Congress to pass another emergency aid bill with additional food stamp benefits because the $16 billion covers only the applicants newly eligible after losing their jobs.

 

It's been an expensive year for farm aid for Trump. USDA was given an additional $24 billion to support the ag industry in the latest stimulus bill, with $14 billion going to replenish the Commodity Credit Corporation that has been tapped for Trump's trade bailout for farmers and ranchers. And a $9.5 billion fund was established for emergency aid for the agriculture sector. Expect jockeying among various farm sectors in the coming weeks to ensure that their members