A lobbying blitz on the Senate-passed $2 trillion economic relief package yielded wins for airlines, corporations, banks, unions, hospitals and a slew of other special interests who pressed lawmakers for targeted relief and protections.
The lobbying push by airlines was especially intense, with CEOs calling senators directly and warning of bankruptcy.
One Democratic senator who requested anonymity to discuss the behind-the-scenes frenzy said airlines usually send their lobbyists to speak to staffers to ask for legislative provisions. In this case, one CEO called personally to warn his company would be in “big trouble” without a direct grant.
A Republican senator said he also got calls from airline CEOs warning of “looming bankruptcy.”
The all-out push resulted in the Senate setting aside $25 billion in loans and loan guarantees for passenger airlines and $4 billion in loans and loan guarantees for air cargo carriers.
The bill also provides $25 billion in direct grants to passenger airlines, $4 billion in grants to air cargo carriers and $3 billion in grants to air contractors, despite strong Republican opposition to the grants, which GOP lawmakers considered a bailout.
Airlines also secured a suspension of the 7.5 percent airline excise tax.
In return, airlines will have to accept restrictions on stock buybacks and issuing dividends if they receive aid. The Treasury secretary, however, has the ability to waive those restrictions.
Any decision to waive limits on buybacks and dividends, however, must be explained to the Senate Banking and House Financial Services committees.
Democrats for their part secured language stating that air carriers, cargo carriers and contractors “shall refrain” from furloughing workers and reducing pay rates and benefits through Sept. 30 — a win for labor unions.
The airlines trade association hailed the legislation as a victory Thursday, with Airlines for America CEO Nicholas Calio saying the group was hopeful the “federal government will expeditiously release these funds with as few restrictions as possible.”
Corporations also won big with a $4.5 billion expansion of the Federal Reserve’s ability to make low-interest or no-interest loans and loan guarantees. Companies do not have to make any promises about maintaining payroll to gain access to credit.
The Fed’s lending power will be greatly expanded with a $454 billion appropriation to the Treasury Department, which could cover the central bank’s losses. It was more money than even what business advocates asked for.
The International Franchise Association initially asked for the creation of a smaller $300 billion fund to provide liquidity. Robert Cresanti, the CEO of the trade association, said without government-guaranteed loans and tax credits, 30,000 franchise owners may have had to close.
Cresanti said 330,000 workers could have been fired from franchises without the help.
The tourism industry had pressed for help give the suspension of most travel. The U.S. Travel Association and the American Hotel and Lodging Association called for $150 billion in assistance last week. The bill gives $377 billion in loans and loan forgiveness for small travel businesses.
“No legislative package was ever going to erase 100% of the pain from the economic catastrophe being caused by coronavirus, but this deal gives the travel economy a fighting chance to weather the eye of the storm and prepare to quickly lead the recovery,” U.S. Travel CEO Roger Dow said in a statement.
Banks won a change to the 2010 Dodd-Frank Wall Street Reform Act to allow the Fed to guarantee loans to avoid the possibility of a future credit freeze at local banks.
Senate Banking Committee Chairman Mike CrapoMichael (Mike) Dean CrapoThe Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks GOP senators say Biden COVID-19 strategy has 'exacerbated vaccine hesitancy' The Energy Sector Innovation Credit Act is an industry game-changer MORE (R-Idaho) noted that the Fed had to step in last week to insure liquidity in the commercial money market, where corporations obtain operating capital through short-term debt instruments. He noted that similar intervention may be required in the future at Federal Deposit Insurance Corporation-insured banks.
“A lot of what we were doing in our bill is prospectively looking at what may come up,” he said, warning that “a freezing up of liquidity could occur in other parts of the market.”
Companies also won significant tax relief, including a two-year delay in employer-side payroll taxes, giving businesses a payroll tax holiday through the election.
They also secured a long-desired fix to a drafting error in the 2017 Tax Cut and Jobs Act that barred retailers and restaurants from writing off the full cost of renovations in the year they were made. Without the fix, the businesses were faced with writing off the costs of renovations over 39 years. Democrats had blocked the technical fix for years in hopes of winning other changes to the 2017 tax reform law.
Another key tax provision gives companies the ability to write off operating losses from 2018, 2019 and 2020 against profits earned in the previous five years, which could allow businesses to shrink their tax bills by potentially hundreds of billions of dollars. Congress limited deductions on operating losses in 2017 to pay for President TrumpDonald TrumpGraham says he hopes that Trump runs again Trump says Stacey Abrams 'might be better than existing governor' Kemp Executive privilege fight poses hurdles for Trump MORE’s tax reform law, which cut the corporate tax rate significantly.
Senate Finance Committee Chairman Chuck GrassleyChuck GrassleyGrassley announces reelection bid The Hill's Morning Report - Presented by Alibaba - Democrats argue price before policy amid scramble Congress facing shutdown, debt crisis with no plan B MORE (R-Iowa), who authored the tax provisions, said companies pressed for tax relief because they needed more liquidity to ride out the economic slump caused by coronavirus.
“It’s the easiest way to keep liquidity for the corporations,” he said. “It was very necessary to preserve those jobs just like it was for small business.”
Grassley noted that the business tax provisions will be temporary except for the fix to the drafting error in the 2017 tax law, which will be permanent.
One business tax provision specifically grants relief to distillers who make spirts used for hand sanitizer.
Chris Swonger, the president and CEO of the Distilled Spirits Council, applauded the change, noting that “hundreds of U.S. distillers are stepping up to produce hand sanitizer” and shouldn’t be “hit with a huge tax bill.”
Labor unions won a substantial increase in unemployment benefits. Under the measure, the federal government will pay the full salary of an average worker for up to four months — and in some cases more than 100 percent of salary — in case of a layoff.
Unions also won language requiring mid-sized businesses receiving low-interest loans and loan guarantees through the Fed to adhere to collective bargaining agreements for the term of the loan and for two years after completing repayment.
Hospitals and doctors, who are at forefront of the battle against the coronavirus, will reap tens of billions of dollars in benefits from the bill.
The American Hospital Association estimates hospitals will get around $117 billion from the legislation.
Rick Pollack, the president of the American Hospital Association (AHA), called the bill “an important first step” and predicted “more will need to be done to deal with the unprecedented challenge of this virus.”
The legislation freezes a scheduled cut in doctors’ Medicare payments. The AHA wrote a letter to Congress earlier this month calling for the cut to be suspended.
“Suspending the sequester and restoring those payments will provide a much-needed jolt of confidence not just for hospitals, but for physicians, post-acute providers,” the group wrote in a letter to McConnell and Speaker Nancy PelosiNancy PelosiPelosi: House must pass 3 major pieces of spending legislation this week Sunday shows preview: Pelosi announces date for infrastructure vote; administration defends immigration policies GOP should grab the chance to upend Pelosi's plan on reconciliation MORE (D-Calif.).
— Last updated at 11:16 a.m. Friday. Naomi Jagoda contributed. This story was corrected to reflect that airlines and air cargo carriers that accept federal grants must refrain from furloughing workers and cutting worker benefits.