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BPAA Federal Policy Update - March 26, 2021

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COVID-19 Relief Updates 

  • Restaurant rescue to open in April, SBA says The Biden administration is planning to launch the new $28.6 billion restaurant grant program next month, after Senate Majority Leader Chuck Schumer and other lawmakers pressed for a rapid rollout. A top official with the Small Business Administration, which is running the program, told the Senate Small Business Committee that the agency planned to begin a "phased launch" in April. "We're focused like a laser on standing it up as quickly as possible," SBA Associate Administrator Patrick Kelley told lawmakers. 
    • SBA also said they will be providing additional information in the next week. 
    • Why it matters: Until today, the SBA had not set a public timeline for offering the restaurant industry grants, even as it faced growing pressure to do so from lawmakers who pushed for its inclusion in President Joe Biden's $1.9 trillion economic relief package. Before the Senate confirmed SBA Administrator Isabel Guzman last week, Schumer told her "you've got to get this moving fast." 
      • The restaurant grant program, as well as a live venue grant program Congress authorized in December, is unprecedented for the SBA, which typically offers small business relief in the form of government-backed loans 
    • What's next: Kelley cautioned that the timing also depended on the SBA working with the Office of Management and Budget and selecting a vendor to scale up a grant platform to deploy "what we expect to be hundreds of thousands of grants." Kelley said the SBA planned to partner with point of sale services used by restaurants because they have sales data that will be needed for the grant applications. He said food trucks, for example, often use Square's point of sale services. 
    • "By drafting off them as well as posting our own web application, we believe we can reach the broadest market segment fast," he said. 
    • Kelley said he expected the launch to unfurl over 30-45 days. Congress told the SBA to initially give priority to giving grants to businesses owned by women and veterans as well as to socially and economically disadvantaged restaurants. He said the SBA would focus on those businesses first before opening grants more widely. 
       
  • SBA Announces Increase to Maximum Borrowing Amount for COVID EIDL On Wednesday, March 24, the Small Business Administration (SBA) announced it is increasing the maximum amount small businesses and non-profit organizations can borrow through its COVID-19 Economic Injury Disaster Loan (EIDL) program. Starting the week of April 6, 2021, the SBA is raising the loan limit for the COVID-19 EIDL program from 6-months of economic injury with a maximum loan amount of $150,000 to up to 24-months of economic injury with a maximum loan amount of $500,000
    • Businesses that receive a loan subject to the current limits do not need to submit a request for an increase at this time.  SBA will reach out directly via email and provide more details about how businesses can request an increase closer to the April 6 implementation date.  Any new loan applications and any loans in process when the new loan limits are implemented will automatically be considered for loans covering 24 months of economic injury up to a maximum of $500,000. 
    • Extended Deferment: This action builds on SBA’s March 12, 2021 announcement that the agency would extend deferment periods for all disaster loans, including COVID-19 EIDLs, until 2022 to offer more time for businesses to build back. In order to shift all EIDL payments to 2022, SBA will extend the first payment due date for disaster loans made in 2020 to 24-months from the date of the note and to 18-months from the date of the note for all loans made in the calendar year 2021.  
    • BPAA's Government Affairs Committee will continue to send updates on relief programs for bowling proprietors. 

 

Labor & Minimum Wage Updates 

  • Senate Democratic moderates push for minimum wage compromise Moderate Senate Democrats are pushing their leaders for a more modest approach to the party’s signature minimum wage hike, arguing for a compromise that can attract broader support after the defeat of a $15 hourly wage proposal. 
    • Senate Majority Leader Chuck Schumer convened a meeting on the topic Tuesday afternoon that includes the eight Democratic caucus members who opposed Sen. Bernie Sanders’ (I-Vt.) $15 hourly wage plan earlier this month. Several of those members opposed that proposal because it eliminates the tipped wage, a lower minimum wage for restaurant workers and other employees who receive gratuities. 
    • Given the differences between Sanders and Sen. Joe Manchin (D-W.Va.) on the issue, attendees expected a collision between the uncompromising liberal wing of the party and the centrist wing that recently voted down one of the party's longtime goals. But the meeting was promising, Democrats said. Manchin described it as a "wonderful conversation, and I don't think anyone will talk to you, it was so good." 
    • In the meeting, Manchin seemed steadfast about his support for an increase to $11 an hour, according to one attendee. Sen. Kyrsten Sinema (D-Ariz.) suggested that if the wage was raised to $11 now and was indexed at a rate faster than inflation, it wouldn't be far off from Sanders's goal of $15 an hour by 2024. Read more at Politico. 
       
  • President Biden’s DOL Tip-Pooling Proposed RulesPresident Biden’s DOL has now issued two proposed rules on the issue, and the GA Committee plans to submit public comments on behalf of BPAA.  
    • BPAA submitted public comments in December 2019 on President Trump’s DOL’s proposed rule, addressing problems for bowling proprietors that result from DOL applying the executive duties test to tip pools, prohibiting managers from receiving tips or participating in the employer-mandated tip pool. Before leaving office, President Trump’s DOL issued their final rule on the subject, which would allow businesses to pay tipped workers the lower minimum wage of $2.13 per hour regardless of how much time they spend on tasks that don’t generate gratuities.  
    • The rule was set to take effect in March 2021, but on February 26, President Biden put a halt on this final rule, delaying it until April 30 for further review. 
    • On March 23, Biden’s DOL announced that several portions of the 2020 final rule will go into effect on April 30, including the definition of managers and supervisors, recordkeeping requirements and: 
      • A prohibition on employers keeping tips received by workers, regardless of whether the employer takes a tip credit. 
      • The ability of an employer that does not take a tip credit to include non-tipped workers, such as cooks and dishwashers, in nontraditional tip-sharing agreements and, by doing so, ensure their earnings. 
    • However, on March 23, President Biden’s DOL released its own proposed rules on the issue. The first rule proposes to withdraw and re-propose two portions of the rules that address the assessment of civil money penalties to better align them with the language of the FLSA. DOL is seeking comments on whether to revise the portion of the 2020 rule that addresses “managers or supervisors” to better understand those who also engage in tipped work.  The second rule proposes to further extend the effective date of three portions of the 2020 rule to December 31: 
      • The two portions that address the assessment of civil money penalties, and the portion of the final rule that addresses the application of the FLSA tip credit to tipped employees who perform both tipped and non-tipped duties. DOL invites public comment on the decision. 
    • BPAA will be submitting public comments to address the interests of bowling proprietors and to ensure that DOL understands the nature of the work for bowling center managers who perform tipped duties. 

 

Tax Updates 

  • Biden Eyes First Major Tax Hike Since 1993 in Next Economic Plan President Joe Biden is planning the first major federal tax hike since 1993 to help pay for the long-term economic program designed as a follow-up to his pandemic-relief bill, according to people familiar with the matter. 
    • Unlike the $1.9 trillion Covid-19 stimulus act, the next initiative, which is expected to be even bigger, won’t rely just on government debt as a funding source. While it’s been increasingly clear that tax hikes will be a component -- Treasury Secretary Janet Yellen has said at least part of the next bill will have to be paid for, and pointed to higher rates -- key advisers are now making preparations for a package of measures that could include an increase in both the corporate tax rate and the individual rate for high earners. 
    • With each tax break and credit having its own lobbying constituency to back it, tinkering with rates is fraught with political risk. That helps explain why the tax hikes in Bill Clinton’s signature 1993 overhaul stand out from the modest modifications done since. The following are among proposals currently planned or under consideration, according to the people, who asked not to be named as the discussions are private: 
      • Raising the corporate tax rate to 28% from 21% 
      • Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships 
      • Raising the income tax rate on individuals earning more than $400,000 
      • Expanding the estate tax’s reach 
      • A higher capital-gains tax rate for individuals earning at least $1 million annually. (Biden on the campaign trail proposed applying income-tax rates, which would be higher) 
    • Read more at Bloomberg.  
       
  • Politico reporting, Progressives Pushing More Tax Increases in Congress It’s become a regular occurrence during the first two months-plus of this Congress — progressive lawmakers introducing expansive proposals seeking to squeeze more revenues out of the rich and corporations. 
    • Take two examples from just last week — Sen. Brian Schatz (D-Hawaii) rolled out a financial transactions tax, S. 817 (117), while Senate Budget Chair Bernie Sanders (I-Vt.) pushed a measure that would raise taxes on big companies where the chief executive makes at least 50 times more than the median employee, S. 794 (117) (Sanders introduced that bill the same week he sought, unsuccessfully, to get Amazon chief executive Jeff Bezos to testify before his committee.) 
    • Now, it’s fair to point out that this isn’t the first time those kinds of measures have been introduced. But there are still some interesting takeaways to this year’s activity. 
    • First up, there undoubtedly is plenty of progressive energy for raising taxes — and their proposals frequently complement the proposed tax hikes from President Joe Biden, even as they go in different directions. (Biden largely has focused on ideas like increasing the corporate rate from 21 percent to 28 percent, hiking the rate on capital gains, enacting a minimum tax on corporations’ book income and beefing up the 2017 tax law’s levy on companies’ global intangible low-taxed income, or GILTI.) 
      • Plus, there is far from any harm in having a revenue-raising measure out there as Democrats continue to grapple with whether to raise taxes in something like an infrastructure package, and just in general with their legislative priorities for the coming months. 
    • To wit: House Democrats already are trying to figure out what policy priorities they might want to put in a next budget reconciliation measure, given that Republicans won’t be going along with raising taxes, as our Sarah Ferris reports. (Depending on the state of the economy, Democrats also could decide to put some of their favored tax increases into a reconciliation measure.) 

 

Political Updates 

  • Pelosi defends possible expulsion of Iowa Republican who won by 6 votes House Speaker Nancy Pelosi claims she “has the authority” to possibly expel Iowa Republican Rep. Mariannette Miller-Meeks, despite state officials certifying her victory by six votes — after saying that it was her “right as speaker” to not seat Miller-Meeks in the House. 
    • Pelosi (D-Calif.) leads the House with a narrow, eight-seat advantage, making it appealing to add another ally, even though Democrats recently called Republicans “seditious” for objecting to electors for President Biden from two states. 
    • Several centrist Democrats are uneasy with a potential vote to oust Miller-Meeks in favor of Democratic candidate Rita Hart. But Pelosi cast the election challenge as a matter of fairness. Read more here at the NYPost.  
  • Two Republicans Considering Bids to Replace Tom Reed Early primary fields are beginning to take shape in a pair of safe Republican seats, while a proposed Wyoming law that might have further imperiled Republican Conference Chair Liz Cheney failed.  
    • AL-05. Madison County Commissioner Dale Strong (R) filed with the FEC to run in the open seat held by Rep. Mo Brooks (R), who is running for the Senate. (FEC
    • NY-23. The field is starting to form to replace Rep. Tom Reed (R) after he announced his retirement from public office following allegations of sexual misconduct. Chemung County Executive Chris Moss (R) said he “is preliminarily considering a run for the seat,” and former state Sen. Cathy Young (R) has also fielded inquiries. State Assemblyman Joe Giglio (R) said he “might consider” the seat depending on redistricting. (WROC)  
    • WY-AL: A state election bill championed by Donald Trump Jr. “failed to capture enough support from the Senate on Wednesday.” The proposed legislation would “require a runoff election after a primary election if no single candidate captured the majority of votes.” There are fears that the high volume of Republican candidates challenging Cheney after she voted to impeach President Trump would splinter the protest vote, delivering her the seat. (Casper Star Tribune
  • Missouri Senate: State Attorney General Eric Schmitt (R) made his campaign to replace retiring Sen. Roy Blunt (R) official during an appearance on Fox & Friends this morning. Schmitt joins former Gov. Eric Greitens (R) as the only declared candidates in the race, which could become crowded. (St. Louis Public Radio
  • TEXAS: Both Parties Stake Claims in South Texas Battlegrounds  
    • After spending “the last two elections duking it out in the suburbs” Democrats and Republicans have set their sights on South Texas, setting up the region as the “epicenter of the state's political universe in 2022” and the GOP’s efforts to retake the House.  
      • DEMS THE BREAKS. With Republicans holding the reins of the state’s redistricting process and President Biden underperforming in South Texas, Democrats are on defense. Vulnerable members “have split from their party under Biden,” and asked the administration to “rescind his executive order temporarily halting fracking on federal lands.” They have also called on Biden to address the growing crisis at the southern border. 
      • PRIMARY PROBLEMS. “Democrats will also have to navigate a primary for” retiring Rep. Filemon Vela’s (D-34) open seat “as well as potentially another serious primary challenge to” Rep. Henry Cuellar (D-28). (Texas Tribune
    • TX-06. Rep. Elise Stefanik’s (R-NY 21) E-PAC endorsed state legislative aide Susan Wright (R) in the May 1 special election to replace her late husband, former Rep. Ron Wright (R). (release) 
  • CA GOV: 2020 presidential candidate Tom Steyer (D) is polling the recall effort against Gov. Gavin Newsom (D) and “has included his own name among the list of possible contenders to succeed” him.  
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