Amid the COVID-19 outbreak, Congress is advancing a giant stimulus package to give employers tax breaks, unemployed workers cash and pump trillions into efforts to withstand a shutdown of public life.
The U.S. Senate on Wednesday unanimously passed a $2 trillion bill that would give most Americans a $1,200 check, beef up unemployment benefits and establish a fund to help businesses affected by the economic shockwaves of a broad shutdown of public life. Wisconsin’s senators, Democrat Tammy Baldwin and Republican Ron Johnson even found common ground in their support for the stimulus.
Construction interests have generally been supportive of the steps that Congress is taking. But in a statement on Thursday, Stephen Sandherr, CEO of the Associated General Contractors of America, warned that lawmakers have plenty of work ahead of them.
“Congress has provided the industry with a much-needed lifeline that will help firms and workers over the coming days and weeks,” Sandherr said. “But the industry will not be able to truly recover until federal officials pass measures designed to stimulate new demand for construction, make contractors whole for losses incurred because of the coronavirus and protect employee retirement and health plans.”
Stimulus largest-ever relief bill
The biggest question in coming days is whether the U.S. House of Representatives will be able to overcome partisan differences to advance the $2 trillion stimulus package — the largest proposed in American history.
House Speaker Nancy Pelosi said the bill would get a vote on Friday and President Trump said he would sign it immediately. The bill contains a number of provisions intended to flood the economy with cash and forestall some of the worst effects of the freeze caused by the virus.
Here are some key provisions intended to help employers, workers, states and local governments weather the emergency.
Federal unemployment booster: One key provision of the act would tack on an additional $600 month for four months to state unemployment checks that those out of work are receiving. In Wisconsin, beneficiaries can get a maximum of $370 a week in unemployment and won’t need to show they’re looking for a job after Gov. Tony Evers signed an executive order waiving that requirement. The state has seen a big spike in recent unemployment filings. More than 100,000 have filed for the benefit in nine days.
Tax credit for keeping idle workers: The bill would allow companies to claim a tax credit if they keep idle workers on their payrolls. Companies could claim as much as 50% of what they spend on wages, as much as $5,000 for each worker. Businesses, however, would need to prove that their revenue fell 50% from the same quarter a year before to claim the credit, and couldn’t take out a loan from the U.S. Small Business Administration if they claimed the tax credit.
Cash for state and local government: State and local governments could draw on the $150 billion that the CARE act would set aside to keep them afloat. Some states worry that skyrocketing unemployment claims could cause deep financial trouble in coming weeks, for instance.
Social security tax deferred: Employers would be able to put off paying the 6.2% tax on wages for social security. Instead, companies would need to pay this back, putting up half by Dec. 31, 2021 and the other half by Dec. 31, 2022.
Operating loss ‘carry back’: Employers would be allowed to ‘carry back’ a net operating loss for five years, which would give struggling businesses an influx of cash
Pass-through business deduction: The bill would pause the current limit on pass-through business losses, which would allow the owners of such companies to deduct losses they post in 2020.
‘Retail glitch’ eliminated: The stimulus would also patch up the so-called ‘retail glitch’ that was part of the 2017 Tax Cut and Jobs Act. An error in that law meant retailers could only deduct 2.5% of the cost of a remodeling project in the year the project occurred, instead of 100%. The mistake cost the industry hundreds of billions of dollars a year and dissuaded new construction.
Break for business borrowing: The bill would also pause a limit on interest-expense deductions, which will avoid penalizing companies that borrow money.
AGC: More federal action needed
AGC in a letter to congressional leaders broadly praised the stimulus package the House was to take up on Friday but cautioned that the size of the COVID-19 outbreak means more needs to done to back up the construction industry.
Some construction interests also raised concerns about a provision in the stimulus package that would require employers to remain neutral in union organizing efforts. That provision, however, only applies to companies with between 500 and 10,000 employees and isn’t likely to affect many contractors.
AGC’s Sandherr said Congress in the coming weeks should take up measures to bolster infrastructure nationally, compensate contractors for losses on federally funded projects due to delays or cancellations and take action to protect the retirement and health plans of construction workers in multi-employer pension programs.
“The coronavirus relief measure the Senate passed last night will provide construction employers and employees with critically needed access to capital, expedited cash flow, worker benefit protection and critical tax relief, among other measures,” Sandherr said. “These measures will provide construction firms and their employees with a needed lifeline to help them cope with a rapidly deteriorating business environment.”Follow @natebeck9