Congress finalizing economic stimulus, airline bailout

Senate Majority Leader Mitch McConnell at press conference.

A massive emergency stimulus package totaling $1.8 trillion is stalled in the U.S. Senate – and with it $58 billion in aid for airlines – with Republicans and Democrats finger pointing over who is to blame as the pandemic brings the economy to its knees.  But a new round of talks Tuesday has improved prospects for a bipartisan deal, according to news reports.

The disagreement centers on $500 billion for loans to big businesses, transparency over how the money is distributed and used, and money for hospitals and state and local governments.

A second procedural vote to move the legislation failed on Monday, further shaking financial markets.

Democrats say the Republican plan doesn’t have sufficient protection for workers or oversight for money aimed at corporations. Conditions prohibiting stock buybacks and limiting executive pay for two years can be waived by the Secretary of the Treasury, who also has the power to decide how to distribute the money without having to disclose recipients for up to six months, according to the New York Times. Another provision would give the Federal Reserve access to $425 billion for loans to various industry sectors with little input from Congress.

Democrats also want to include money for election security and allowing mail-in ballots because of potential difficulties opening polling places due to the COVID-19 virus. 

Republicans counter that Democrats are pursuing a partisan political agenda to load up the bill with special-interest provisions that have nothing to do with the pandemic, including a requirement that airlines cut their overall emissions by half by 2050.

“Democrats won’t let us fund hospitals or save small businesses unless they get to dust off the Green New Deal,” Majority Leader Mitch McConnell complained on the floor of the Senate. “I’d like to see Senate Democrats tell New York City doctors and nurses, who are literally overrun as we speak, they’re filibustering hospital funding and more masks because they want to argue with the airlines over their carbon footprint.”

Meanwhile, House Democrats proposed their own version of an economic stimulus package that treats the airlines differently. The House bill includes $40 billion in grants for airlines and contractors, as well as up to $21 billion in loans. The Senate plan only offers $50 billion in loans. Airlines are requesting $50 billion for passenger carriers and $8 billion for cargo carriers in grants and loans, plus tax abatements, and warn that without grants they will be forced to furlough workers

The House bill also includes $10 billion for airport grants, about $1 billion for Amtrak and $3 million for a new Office of Airline Industry Financial Oversight. But Roll Call is reporting that House Speaker Nancy Pelosi is now siding with a Senate deal being hashed out between Senate Minority Leader Charles Schumer, D-N.Y., and Treasury Secretary Steve Mnuchin, with better oversight of the loan fund for industries A final bill could be before the Senate this evening.

In a letter to Senate leaders and key chairmen on March 23, the Airforwarders Association asked that the economic rescue plan include protections for its members, the middlemen between transportation providers and companies with goods to ship.

The trade association asked that forwarders have access to direct cash payments and guaranteed low-interest loans to compensate for reduced revenues with terms for delayed loan repayment and long-term payment options. It also asked for:

  • The ability for logistics companies to defer the payment of payroll tax deposits and employment taxes
  • Extension of the corporate tax filing deadline
  • Deferral or reduction in income taxes to date in 2020
  • Waiver of any government-imposed levies
  • Delays in deadlines for filings or registrations
  • Extended response periods to government requests for information or cases involving proposed fines or penalties

Most businesses are “no longer shipping products, resulting in over 40% of our members indicating that employee layoffs are underway or imminent. As the coronavirus crisis continues, this number is likely to significantly increase without government financial help,” AfA Executive Director Brandon Fried wrote. 

The economic stimulus plan currently includes $350 billion to create lending programs for small businesses.

Airline groups in other nations are also seeking financial help from their governments. But Britain has told airlines that state investment will only be considered once they have exhausted options for raising capital from existing investors, Reuters reported.