House Financial Services Chairwoman Maxine Waters released a set of proposals Wednesday evening for the next fiscal stimulus bill that Congress plans to take up to soften the huge damage the coronavirus is inflicting on the economy.
Waters' six-page plan would go much farther than other proposals, including the administration’s proposal that would potentially exceed $1 trillion in direct payments to households and loans to businesses. She didn't put a total price on the proposal, but its reach may be a hint of the legislative battle ahead as lawmakers from both parties try to find relief for favored constituencies. Unlike other proposals being floated, Waters' memo is silent on any help for specific industries.
She released her plan shortly after the Senate cleared a second coronavirus package that provides free COVID-19 testing, paid sick leave and expanded food program aid. An $8.3 billion appropriations supplemental was also enacted earlier this month.
Majority Leader Mitch McConnell, R-Ky., said the Senate would remain in Washington to pass a third package focused on providing a fiscal stimulus to the economy.
Waters' proposal, described in a memo to House Democrats, calls for direct cash payments — larger and longer lasting than in other proposals — and suspension of nearly all consumer and small business debt payments, supported by reimbursements to creditors through the Federal Reserve.
It calls for billions of dollars in grants to small businesses, boosting emergency homelessness assistance funds by billions, cutting all federal student loans by $10,000, and pumping $100 billion into public housing to kickstart the economy after the COVID-19 pandemic passes.
Waters, D-Calif., is calling for $2,000 a month in cash payments to most adults, and $1,000 a month for each child, for the duration of the pandemic. Treasury Secretary Steven Mnuchin has floated a $500 billion direct cash injection, but as a one-time offer, not the continuing monthly payments Waters proposes.
Democratic Sens. Cory Booker of New Jersey, Michael Bennet of Colorado and Sherrod Brown of Ohio have also proposed $2,000 per person, with additional payments on a quarterly basis until unemployment drops below a set level. Reps. Ro Khanna, D-Calif, and Tim Ryan, D-Ohio, also proposed sending one-time checks between $1,000 and $6,000 to every American who earned less than $65,000 last year.
Waters proposes financing the payments through the Fed and making them available to individuals through banks or the IRS. Like Mnuchin, Waters wants some kind of means test on the payments, as the proposal would “prevent payments from going to millionaires and billionaires.”
Some economists have criticized means-testing initial direct payments, which would delay checks from being mailed.
Mnuchin told Senate Republicans on Tuesday that the earliest direct payments could go out would be at the end of April. Sen. Mitt Romney, R-Utah, on Monday proposed a one-time $1,000 payment.
Suspending consumer bills
Waters also wants to suspend almost all consumer and small-business credit payments, listing mortgages, auto loans, student loans and credit cards among that bills that could go unpaid during the health crisis without penalty or accruing interest.
That would all but stop the daily flow of billions to banks and other financial firms. To keep them afloat, Waters proposes the creation of a facility by either the Federal Reserve or Treasury to reimburse creditors and loan servicers for lost revenue and expenses during the debt-payment holiday.
She also suggests requiring the Fed to establish a program for supporting state and local debt issuance.
The proposal would similarly suspend all penalties from non-payment, pausing all foreclosures, evictions, repossessions and wage garnishment during the health crisis.
Earlier Wednesday, the Federal Housing Finance Agency announced suspension of evictions and foreclosures for about 8.1 million mortgages backed by Fannie Mae and Freddie Mac. The Housing and Urban Development Department also suspended foreclosures and evictions at HUD-supported properties, which are home to 4.7 million residents.
Waters would expand this to cover private-market evictions and foreclosures. She would also suspend all rent and utility payments for residents in public and federally assisted housing. She suggests suspending commercial rental payments to help small business and non-profit organizations to stay open.
The coronavirus plan would additionally suspend all negative consumer credit reporting during the pandemic.
Waters would give the Small Business Administration $50 billion to distribute as grants to small businesses. Sen. Marco Rubio, R-Fla., told CNBC earlier on Wednesday he would sponsor legislation authorizing a similar amount for the SBA’s existing loan program.
The Waters proposal includes spending for small businesses. It would reauthorize the State Small Business Credit Initiative, which was created in 2010 to spur recovery from the Great Recession, and provide it $10 billion. Another $10 billion would go to HUD’s Community Development Block Grant program, which mostly supports affordable housing. HUD told public housing authorities earlier this month that they could use existing CDBG grants to respond to the crisis.
Another $5 billion would go to emergency homeless assistance, so state and local agencies could put up homeless individuals at hotels and motels, which have emptied due to the pandemic.
Waters also wants to offer payroll tax rebates to small businesses while the pandemic lasts — a rare echo of a Trump administration proposal for the outspoken critic of the president.
The proposal also draws upon a number of existing bills introduced earlier this year by Democrats on Waters’ committee.
It calls for $100 billion to build new public and affordable housing, matching a bill Waters advanced out of the Financial Services Committee earlier this year.
The massive bailouts offered after the 2008 financial crisis largely came without strings, and the year after the banks were saved by taxpayers, many of them paid record bonuses. Waters, like many Democrats, wants to prevent that from happening again.
She would place restrictions on “executive compensation, golden parachutes, stock buybacks, and dividend payments” on “large corporate beneficiaries,” and require them to make disclosures on environmental, social and governance matters, outsourcing, and political campaigns. Those last three restrictions echo bills advanced by the committee this year from Reps. Cindy Axne, D-Iowa; Sean Casten, D-Ill.; and Bill Foster, D-Ill.
Consumer advocacy groups praised the Waters plan.
"This plan is a responsible and comprehensive response to help struggling families across the country — particularly families of color and low-income workers — who are suffering through this public health pandemic,” said Ashley Harrington of the Center for Responsible Lending.