The Department of Labor released the unemployment claims statistics for the week ending April 25, 2020, reporting 3,839,000 new claims. This number marks “a decrease of 810,000 from the previous week’s revised level . . . [which had been revised upward] by 15,000 from 4,427,000 to 4,442,000. The 4-week moving average was 5,033,250, a decrease of 757,000 from the previous week’s revised average.” Over 30 million workers have filed unemployment claims during the past 6 weeks. Estimates for April 2020’s unemployment rate have prompted comparisons to peak rates during the Great Depression.
Section 2102 of the CARES Act established a temporary federal program called Pandemic Unemployment Assistance (PUA) that provides up to 39 weeks of unemployment benefits, and provides funding to states for the administration of the program. An individual receiving PUA benefits who meets certain eligibility requirements may also receive the $600 weekly benefit amount under the Federal Pandemic Unemployment Compensation (FPUC) program. The April 27 guidance from the Employment and Training Administration provides states with additional instructions and FAQ guidance for implementing the emergency unemployment relief. The FAQ provides, for example, that an individual who “refuses to return to work when called back by the employer because he or she wanted to receive unemployment benefits” is not eligible for PUA. Furthermore, the FAQs provide that once the regular 2019-2020 school year is over, individuals eligible for PUA as primary caregivers for children unable to attend school should rely on “their customary summer arrangements for caring for their children.” Absent “some other qualifying circumstances,” such individuals will not be eligible for PUA once the school year has ended.
The Municipal Liquidity Facility (MLF) will provide up to $500 billion in lending to states and municipalities to help manage cash flow stresses caused by the coronavirus pandemic. The expanded scope permits purchase of short-term notes issued by U.S. states and counties with a population of at least 500,000 residents, and U.S. cities with a population of at least 250,000 residents. The reduce population thresholds permit substantially more entities to borrow directly from the MLF. The expansion also permits certain multistate entities to participate. The termination date for the facility has been extended to December 31, 2020.
This afternoon, H.R. 266, the Paycheck Protection Program and Health Care Enhancement Act, became law. The new legislation adds $310 billion of new funding to the Payroll Protection Protection Program (the small business loan/grant program) introduced in the CARES Act, which ran out of funds in under two weeks. In addition, the new legislation allocates $75 billion for health care related costs, and $25 billion for testing.
The guidance seeks to address borrower and lender questions concerning the implementation of the Paycheck Protection Program (PPP), established by section 1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). The additional guidance as of April 23rd seeks to clarify whether “businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan.”
The Joint Committee on Taxation released its explanation of the CARES Act on Wednesday April 22, 2020, and includes an appendix with the estimated revenue effects originally prepared on March 26, 2020.
The Department of Labor released the unemployment claims statistics for the week ending April 18, 2020, reporting 4,427,000 new claims. This number marks “a decrease of 810,000 from the previous week’s revised level . . . [which had been revised downward] by 8,000 from 5,245,000 to 5,237,000. The 4-week moving average was 5,786,500, an increase of 280,000 from the previous week’s revised average.”
Estimates suggest that “[e]merging markets and developing countries have about $11 trillion in external debt and about $3.9 trillion in debt service due in 2020.” A Brookings Institution posting highlighting these numbers argued that the debt problem is not limited to a few countries: “One indication that the problem is widespread is that already 90 countries have approached the IMF to access emergency financing instruments. It seems clear that this is not just a low-income or an African country problem.” The posting advocates immediate, comprehensive and coordinated action. The major global financial players share similar concerns. At their April 15, 2020 virtual meeting, G20 Finance Ministers and Central Bank Governors agreed, among other actions, to suspend debt service for the poorest countries. The World Bank and IMF have announced their own relief actions. Others have advocated stronger relief measures including cancellation, not merely suspension of certain debt payments.
The Executive Order signed by California’s governor on April 16th states that “workers who are sick are more likely to go to work if they do not have paid leave, thereby increasing health and safety risks for their fellow workers and other members of the public with whom they, or the products of their work.” Whereas the federal Families First Coronavirus Response Act (“FFCRA”) extends emergency paid sick leave requirements only to employers with fewer than 500 employees, the executive order applies to entities with 500 or more employees in the United States. The order provides two weeks of supplemental paid sick leave to certain food sector workers — including farmworkers, agricultural workers and those working in grocery stores, fast food chains and delivery drivers — if they are subject to a quarantine order, advised by a health care provider to self-quarantine, or prohibited from working by the employer due to health concerns related to the potential transmission of COVID-19.
The Congressional Budget Office has released preliminary estimates of the budgetary impact of the CARES Act, reporting that: “On a preliminary basis, CBO and JCT estimate that the act will increase federal deficits by about $1.8 trillion over the 2020-2030 period.” The CBO estimate includes:
• “A $988 billion increase in mandatory outlays;
• A $446 billion decrease in revenues; and
• A $326 billion increase in discretionary outlays, stemming from
emergency supplemental appropriations.”
On Wednesday April 15, 2020, U.S. Treasury Secretary Mnuchin and SBA Administrator Carranza announced that the Payroll Protection Program, introduced by the CARES Act has exhausted its $349 billion appropriation in fewer than 14 days, noting that “[b]y law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations . . . .[and] urg[ing] Congress to appropriate additional funds for the Paycheck Protection Program . . . at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks.”
The OECD has released a report tracking and reviewing countries’ tax and fiscal responses to the COVID-19 crisis. In this April 15, 2020 report, the OECD makes a series of observations and recommendations for the future, noting that “some are already suggesting the need for a new kind of ‘Marshal Plan’ to support the poorest countries.”
The Department of Labor released the unemployment claims statistics for the week ending April 11, 2020, reporting 5,245,000 new claims. This number marks “a decrease of 1,370,000 from the previous week’s revised level [which had been revised upward] by 9,000 from 6,606,000 to 6,615,000. The 4-week moving average was 5,508,500, an increase of 1,240,750 from the previous week’s revised average.”
The FAQ guidance from the Small Business Administration, in consultation with the Department of the Treasury, provides guidance to address borrower and lender questions concerning the implementation of the Paycheck Protection Program (PPP), established by section 1102 of the CARES Act.
The CFPB interpretive rule states that the stimulus payments will not be considered “government benefits,” and as such, not subject to the restrictions in the Electronic Fund Transfer Act and Regulation E.