CRS Reports

Required Minimum Distributions from Retirement Accounts Under the Economic Stimulus Proposals Related to the Coronavirus (COVID-19)

On March 22, 2020, the Senate released an updated version of the Coronavirus Aid, Relief, and Economic Security (CARES) Act containing a provision for suspending the penalty for failure to make the required minimum distribution (RMD) from retirement accounts for 2020. A similar provision was included in a proposal in the House released on March 23, the Take Responsibility for Workers and Families Act. What Are Required Minimum Distributions? Under current law, required minimum distributions must be withdrawn from individual retirement plans to avoid a 50% penalty on the required minimum distribution (RMD) amount. The required distribution amount is the minimum amount that must be withdrawn each year after the account holder reaches a certain age. These requirements apply to traditional IRAs and plans set up by employers, such as 401(k) plans. (They do not apply to individual Roth IRAs, although they do apply to Roth 401(k) plans.) Account holders are not required to take distributions from 401(K) plans if they are still working. Distributions must begin in the year when an individual turns 72 (70½ for individuals attaining that age before January 1, 2020). The increase in the age at which minimum distributions must be made to avoid the penalty was changed by recent legislation, the Setting Every Community Up for Retirement Enhancement (SECURE) Act, part of the Further Consolidated Appropriations Act, 2020 (P.L. 116-94). The penalty is imposed to prevent individuals from keeping funds in their retirement accounts, without paying taxes, indefinitely. For the first year that distribution requirements apply, distributions can be delayed until April 1 of the following year. The amount of the distribution is based on life expectancy and the account balance at the end of the previous year. For singles and spouses whose ages are less than 10 years apart, the uniform lifetime table is used to determine the RMD. The share of retirement assets that must be distributed increases with age. For example, the uniform life table indicates that 3.6% of the balance will be distributed at age 70, 5.3% at age 80, and 8.8% at age 90. Other life tables are used in other circumstances. Why Suspend Required Minimum Distributions? The primary rationale for suspending the penalty appears to be to protect assets, not to stimulate spending, in retirement accounts from the effects of the decline in the stock market. For example, in 2020, the Dow Jones Industrial Average declined by 31% (through March 20). Under current law, a minimum distribution may cause a larger share of current assets to be distributed, occurring when the stock market is at a (presumably temporary) low value. Because the RMD is based on asset values at the end of the previous year, the required distribution will be a percentage of the larger asset value at that time. In addition, individuals who were required to make their first distributions in 2019 could defer the distribution until April 1, 2020, and will have to make two distributions in 2020, an issue that has also raised some immediate concerns. (Some institutions make distributions at the beginning of the year, and these distributions would have already occurred, although they would not have been affected by the recent stock market decline.) Assets distributed (net of tax) could still be re-invested in the stock market in a taxable account (there is no requirement to spend the RMD) but a tax would be paid (if the taxpayer does not have other funds available) based on the sale of assets at a low point in their value. A similar provision was enacted in 2008 in the Worker, Retiree, and Employer Recovery Act of 2008 (P.L. 110-458) when the stock market also fell during the Great Recession. RMDs were suspended for 2009. One study of the 2009 one-year suspension found that approximately one-third of those affected by RMD rules in 2008 suspended their RMDs in 2009, following this policy change (Brown, Poterba, and Richardson; 2017). This study also observed that older taxpayers were less likely to suspend RMDs in 2009. Those with more financial resources were somewhat more likely to suspend RMDs. The suspension of the required minimum distributions would have a greater effect on higher-income households because lower- and middle-income households are less likely to have accounts with required distributions and less likely to be able to defer distributions.

Mar 24, 2020

Congressional Oversight Provisions in P.L. 116-127, the Families First Coronavirus Response Act

President Donald Trump signed P.L. 116-127 (H.R. 6201), the Families First Coronavirus Response Act, on March 18, 2020. The act provides supplemental appropriations for nutrition assistance programs and public health services and authorizes the Internal Revenue Service to implement tax credits for paid emergency sick leave and expanded family medical leave that the act requires certain employers to provide. In addition, the law adjusts the unemployment insurance program to waive temporarily certain eligibility requirements and provide more federal financial support to the states. P.L. 116-127 is the second supplemental appropriation enacted that specifically addresses the COVID-19 pandemic following the enactment of P.L. 116-123 (H.R. 6074) on March 6, 2020. As was the case for P.L. 116-123, P.L. 116-127 includes oversight provisions designed to support Congress’s ability to monitor and evaluate the executive branch’s implementation of the act. As Congress continues to play a significant role in the federal government’s response to the COVID-19 pandemic, maintaining a consistent flow of useful information to Congress from the executive branch may be crucial for Congress’s ability to exercise its oversight responsibilities. Including statutorily mandated oversight mechanisms in legislation may be a particularly important tool for Congress following reports of the White House’s decision on Tuesday March 17, 2020, to stop participating in ongoing hearings on the subject through the end of March. This Insight details selected oversight provisions included in P.L. 116-127 that mandate reporting to Congress. All of CRS’s materials on the COVID-19 pandemic, its impact, and the federal government’s response are available here. Congressional Reporting Requirements in P.L. 116-127 P.L. 116-127 establishes the following reporting requirements: Section 1701 of Division A requires the head of each executive agency that receives a supplemental appropriation in the bill to provide a report on anticipated uses of those funds to the Appropriations Committees within 30 days of enactment (i.e., April 17, 2020). The provision also requires that each agency provide the Appropriations Committees updated reports every 60 days thereafter. Section 2302(c) of Division B requires the Secretary of Agriculture to submit a report to the Agriculture Committees on the flexibilities the act provides in the Supplemental Nutrition Assistance Program (SNAP). The report is to discuss the measures taken by the Department of Agriculture to “address the food security needs of affected populations during the emergency,” provide any available supporting data related to SNAP waivers granted to states under the act, and disclose any “measures that States requested that were not granted.” In addition, the report is to include recommended changes to the Food and Nutrition Act of 2008 that would assist preparations for future health emergencies. The report is to be submitted within 18 months of termination of the public health emergency declaration related to COVID-19. Section 4102(a) of Division D amends Section 903 of the Social Security Act (42 U.S.C. §1103) to include, among other things, a requirement that each state receiving emergency administration grant funding for its unemployment insurance program under the act submit a report to the House Committee on Ways and Means and the Senate Committee on Finance (as well as the Secretary of Labor). These reports are due within one year of enactment of the act (i.e., March 18, 2021) and are to include “an analysis of the recipiency rate for unemployment compensation in the State as such rate has changed over time” and “a description of the steps the State intends to take to increase such recipiency rate.”

Mar 24, 2020

The Take Responsibility for Workers and Families Act: Division T—Revenue Provisions

A number of recently introduced legislative proposals seek to alleviate the adverse economic effects of the COVID-19 outbreak. One such proposal, the Take Responsibility for Workers and Families Act (H.R. 6379), was introduced in the House on March 23, 2020. The proposal includes a number of provisions that would make changes to the tax system, including modifications that would provide a one-time payment to households; temporarily expand the earned income tax credit, child tax credit, and dependent care tax credit; provide employer payroll tax credits for certain hospital expenses and for expanded sick and family leave programs; modify the tax treatment of certain retirement fund withdrawals; and allow net operating loss carrybacks for businesses. This report briefly summarizes the major provisions included in Titles I through IV of Division T of H.R. 6379. Title I makes a number of tax changes affecting health-related activity; Title II includes economic assistance provisions for individuals and businesses; Title III modifies tax filing deadlines; and Title IV makes changes to the tax treatment of retirement funds. Links to CRS resources that offer additional information are provided as relevant. Legislative discussions concerning this legislation and other stimulus proposals are ongoing. The Senate has considered a separate proposal, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. More on the CARES Act can be found in CRS Report R46279, The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief for Individuals and Businesses, coordinated by Molly F. Sherlock. This is the latest in a series of legislative packages addressing the COVID-19 outbreak. Two bills have already been enacted into law: the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123) and the Families First Coronavirus Response Act (P.L. 116-127). [Suppressed]

Mar 24, 2020

COVID-19 and Federal Procurement Contracts

Mar 24, 2020

Senior Nutrition Programs’ Response to COVID-19

Many older adults rely on federally funded programs that provide nutrition and other supportive services in order to live independently in their communities. Amidst the ongoing Coronavirus Disease 2019 (COVID-19) pandemic, older adults as well as those with certain chronic conditions are at higher risk for severe illness if infected with the virus. The President's Coronavirus Guidelines (March 16, 2020) recommends older adults stay home and away from other people and, like others, avoid eating at public establishments. Some state and local officials have released more stringent guidance that older adults self-isolate at home. These recommendations may affect nutrition programs that many older adults rely on for their daily nutrition intake. For example, nutrition services at group meal sites may no longer be available or accessible. Alternatively, other nutrition services, such as home-delivered meals (e.g., “meals on wheels”), may be in greater demand as older adults adhere to recommendations to stay at home. This CRS Insight provides information on the COVID-19 response for nutrition programs authorized under the Older Americans Act (OAA) and administered by the Administration for Community Living (ACL) under the U.S. Department of Health and Human Services (HHS). For information on COVID-19 and food assistance under the U.S. Department of Agriculture (USDA), see CRS Insight IN11250, USDA Domestic Food Assistance Programs’ Response to COVID-19: P.L. 116-127 and Related Efforts. Older Americans Act Nutrition Programs The OAA Nutrition Services Program provides grants to states and U.S. territories under Title III of the act to support home-delivered and congregate nutrition programs (i.e., meals served at group sites such as senior centers, community centers, schools, churches, and senior housing complexes) for individuals aged 60 and older. In addition, the Nutrition Services Incentive Program (NSIP) provides funds to states, U.S. territories, and Indian tribal organizations to purchase food or to cover the costs of food commodities provided by the USDA for the congregate and home-delivered nutrition programs. A separate program under Title VI of the act provides funds for supportive and nutrition services to older Native Americans through funds awarded to tribal organizations. The Nutrition Services Program is designed to address problems of food insecurity, promote socialization, and promote the health and well-being of older persons through nutrition and nutrition-related services. As the largest OAA program, the Nutrition Services Program received $936.8 million in FY2020, which accounted for 45% of the act’s total funding of $2.1 billion. Of that, home-delivered nutrition services received $266 million, congregate nutrition services received $510 million, and NSIP received $160 million. States and territories receive separate funding allotments for each program based on a statutory funding formula. In 2016, the Older Americans Act Reauthorization Act of 2016 (P.L. 114-144) extended the act’s authorizations of appropriations through FY2019. On March 11, 2020, Congress passed H.R. 4334, the Supporting Older Americans Act of 2020, which extends the act’s authorizations of appropriations through FY2024, among other changes. This legislation has been sent to the President. Under OAA, states and U.S. territories have authority to transfer up to 40% of their allotments between congregate and home-delivered nutrition services and can request waivers to transfer of up to 10% of additional funding between these programs. In addition, OAA provides states authority to transfer up to 30% of program funding from the Supportive Services Program to the Nutrition Services Program. COVID-19 Response On March 13, 2020, the President declared that the ongoing COVID-19 pandemic is of sufficient severity and magnitude to warrant an emergency determination under §501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act; 42 U.S.C. 5121-5207). The emergency exists nationwide. Under the declaration, states, U.S. territories, and tribes may consider requests for a declaration of a “major disaster” under §401(a) of the Stafford Act. A major disaster declaration under the Stafford Act triggers disaster relief authority in the OAA should a state (including a U.S. territory) or tribe (OAA Title VI grantee) request and receive such declaration. Specifically, OAA §310 (42 U.S.C. 3030) provides authority for states to use any portion of funding made available under any and all sections of the act for disaster relief provided to older individuals. According to ACL, OAA §310(c) allows states to use existing funding made available under Title III Part B, Supportive Services; Part C-1, Congregate Nutrition; Part C-2, Home-Delivered Nutrition; Part D, Preventive Services; and Part E, National Family Caregiver Support for disaster relief without the need for states to submit a separate application, transfer request, or request for a waiver. ACL states, This means that a state may use Title III-B, C-1, C-2, D, and/or E funds for any disaster relief activities for older individuals or family caregivers served under the OAA, which may include, but are not limited to: -- providing drive through, take out, or home-delivered meals, -- providing well-being checks via phone, in-person, or virtual means, and -- providing homemaker, chore, grocery/pharmacy/supply delivery, or other services. Similarly, according to ACL guidance, OAA §310(c) provides authority for tribes to use any portion of funds made available under any and all sections of the act for disaster relief for older individuals without the need to submit a separate application, transfer request, or request for a waiver. States and tribes are required to track certain expenditures and number of persons and units served. OAA §310 also provides limited amounts of disaster assistance to reimburse states and tribes for responding to presidentially declared major disasters (see funding announcement). On March 16, 2020, ACL stated that the agency is not accepting applications for disaster assistance related to COVID-19 through announcement, but will provide additional information about funding available directly from ACL. On March 18, 2020, the President signed P.L. 116-127, the Families First Coronavirus Response Act, which, among other provisions, provides a total of $260 million in FY2020 supplemental funding for expanded food assistance for OAA nutrition services. Specifically, it provides $160 million for congregate nutrition, $80 million for home-delivered nutrition, and $10 million for nutrition services to Native Americans.

Mar 23, 2020

COVID-19: State and Local Shut-Down Orders and Exemptions for Critical Infrastructure

Since the onset of the Coronavirus Disease 2019 (COVID-19) pandemic in the United States, public officials have issued numerous emergency directives closing non-essential businesses and facilities and instructing non-essential workers to stay home. However, these directives have generally included exemptions for essential businesses and other facilities if they are part of a critical infrastructure sector or provide essential services. Some business leaders have invoked federal authorities and guidelines when contesting state or local orders that would affect their operations. Uncertainty about what systems, assets, and facilities are part of a federally recognized critical infrastructure sector, and what (if any) official status is conferred to a company that is a participant in such a sector, may complicate both administration of emergency directives and impact private-sector management of critical infrastructures and workforces. This Insight provides an overview of the federal critical infrastructure protection and resilience policy framework and discusses its relevance and potential application to the management of essential systems, assets, facilities, and workforces subject to state and local emergency orders. Critical Infrastructure Designations and Workforce Management Decisions The White House Coronavirus Guidelines for America, released on March 16, stated that those working in a critical infrastructure industry as defined by the Department of Homeland Security (DHS) had a “special responsibility” to maintain their normal work schedules. DHS currently recognizes 16 critical infrastructure sectors in manufacturing, emergency services, government, basic utilities, and other areas. On March 19, DHS, through the Cybersecurity and Infrastructure Security Agency (CISA), issued additional guidelines and a list of critical infrastructure occupations to assist state and local authorities in identifying critical infrastructure assets, facilities, and workforces during the COVID-19 crisis. Administration officials and business leaders have sometimes cited these White House and agency guidelines as the authoritative basis for their workforce management directives. For example, the Department of Defense (DOD) Undersecretary for Acquisition and Sustainment issued a memorandum to defense contractors this month citing the guidelines and instructing contractors to maintain normal work schedules if their contracts supported “development, production, testing, fielding, or sustainment of our weapon systems/software systems, or the infrastructure to support those activities.... ” Some defense contractors have presented the DOD guidance as binding. For example, General Dynamics Bath Iron Works (BIW), a major shipyard, posted a message to workers that the “federal guidance on dealing with COVID-19 states that critical infrastructure, including defense contractors like Bath Iron Works, must continue to operate in the interest of national security.” Media sources report that BIW union representatives have expressed safety concerns about continuing manufacturing operations during the pandemic. On March 25, BIW sent a letter to employees after a worker tested positive for COVID-19, stating, “We remain open because the President of the United States and the United States Navy has mandated that we do so....” Other defense industry representatives have suggested that while the DOD memorandum provides voluntary guidance it is not binding. On March 20, Eric Fanning, President and CEO of the Aerospace Industries Association, which represents defense contractors, wrote a letter to congressional leaders requesting legislation or oversight direction to clarify the “essential” status of defense-related industries. He wrote that such actions were necessary “for the purpose of gaining exemptions from state and local orders.” Some business leaders outside the defense industry have likewise identified their facilities as essential under current federal guidelines, and have sought exemptions from mandatory shutdown orders from state or local authorities. A dispute between Tesla Inc. and local California authorities over a shutdown order received national media attention in March after the auto manufacturer claimed that DHS had designated a production facility as critical infrastructure. Tesla Inc. subsequently agreed to scale back the operation of its Fremont facility in compliance with the local order. The Federal Role in Critical Infrastructure Protection and Resilience Presidential Policy Directive 21 (PPD-21), signed in 2013, directs the Secretary of Homeland Security to “promote the security and resilience of the Nation’s critical infrastructure” by providing strategic guidance, promoting national unity of effort, and coordinating relevant federal efforts. Under PPD-21, DHS identified 16 critical infrastructure sectors, which serve to structure voluntary public-private partnerships for infrastructure security and resilience. Critical infrastructure owner-operators may self-identify as part of a critical infrastructure sector and choose to participate in its voluntary coordination bodies, but DHS has generally not construed such actions as conferring any kind of official “critical” status upon private-sector infrastructure and associated workforces. CISA recognized the essentially voluntary character of the federal critical infrastructure protection and resilience framework when it released its March 19 guidelines for state and local officials. In his statement upon releasing the guidance, CISA Director Christopher Krebs reiterated the earlier White House guidance that critical infrastructure workers had a “special responsibility” to maintain normal work schedules. However, he stated that the CISA list of critical infrastructure workforces “is advisory in nature” only, and therefore state and local authorities should not consider it “a federal directive or standard in and of itself.” Nonetheless, some states issuing emergency orders have exempted certain categories of businesses, organizations, and other facilities from mandatory shutdowns if they are part of the critical infrastructure sectors identified by CISA. According to an article in the National Law Review, state and local authorities—not federal agencies—assume responsibility for adjudicating claims of criticality made by private sector stakeholders in these cases. Options for Congress As Congress considers who and what is essential during the COVID-19 pandemic, some options might include: clarifying or modifying federal or state government authorities to designate businesses and production facilities as critical infrastructure or to otherwise allow or require operation during national emergencies; and directly designating specific critical infrastructure entities or assets as essential and defining the type and scope of exemptions from state and local emergency orders that apply.

Mar 23, 2020

COVID-19 and Funding for Civil Aviation

The COVID-19 pandemic has created headwinds for the airline industry. Out of health concerns, customers were canceling international air travel to China and other affected countries in Asia as early as January 2020. Since then, travel restrictions imposed by governments around the world as well as suspension of nonessential travel by businesses and organizations have led to a sharp drop in air travel. These developments could also have significant implications for civil aviation programs. The International Air Transport Association, an airline industry group, projected on March 17 that the industry’s losses globally due to COVID-19 would exceed $113 billion—more than 19% of the annual revenue—and warned that numerous airlines around the world were running out of cash. Many passenger carriers have canceled services in the face of reduced demand, and have sought to conserve cash by offering voluntary leaves of absence, placing workers on furlough, and grounding or accelerating retirement of some aircraft. Cargo airliners are not subject to travel restrictions at this point. However, a considerable proportion of air cargo normally moves in the bellies of passenger aircraft. While this accounted for a modest 1.6% of airlines’ total revenue in 2019, cancellations of passenger flights may disrupt air cargo flows. Some airlines have indicated they will convert otherwise unused passenger planes into cargo planes to meet shipper demand. On March 17, Fedex, a major air and ground logistics company, suspended its earnings forecast for 2020 but did not offer an estimate of the financial impact of COVID-19. Package carrier UPS told investors on March 3 that its financial results for the current quarter “would be impacted” by COVID-19, but offered no details. A U.S. industry trade association, Airlines for America, said on March 16 that “U.S. carriers are in need of immediate assistance as the current economic environment is simply not sustainable,” and called for the federal government to provide grants, loans, and tax relief to both passenger and cargo carriers. Separately, the Federal Aviation Administration (FAA) has temporarily waived minimum slot-use requirements that required airlines at slot-controlled airports to use their slots at least 80% of the time or risk losing them. This benefits airlines that otherwise might have been disadvantaged as a result of canceling flights at the three slot-controlled airports—Ronald Reagan National Airport in Washington, DC, and LaGuardia Airport and John F. Kennedy International Airport in New York. Impact on Funding of Civil Aviation Activities The reduction in air traffic as a consequence of the COVID-19 pandemic is likely to have significant effects on the amount of funds available for civil aviation infrastructure and activities. The federal government provides grants to eligible airports for infrastructure projects through the Airport Improvement Program (AIP) that provides federal grants to airport infrastructure projects. The program is primarily funded through the Airport and Airways Trust Fund, which receives revenue from passenger ticket taxes, segment fees, air cargo fees, and fuel taxes paid by both commercial and general aviation aircraft. The drop in passenger air travel will reduce revenue from ticket taxes and segment fees, while flight cancellations will affect fuel tax receipts. The decline in trust fund revenue could affect the availability of AIP grants to airports. According to the Congressional Budget Office estimate, the uncommitted balance in the trust fund was $7 billion at the end of FY2019. The AIP program receives annual funding of $3.5 billion from the trust fund. Annual funding for FAA is about $19 billion. Part of the cost of FAA’s operations and programs, such as its air traffic operations and aviation safety program, is paid from the same trust fund that supports AIP. A substantial decrease in revenue from aviation taxes and fees would require Congress to increase general fund appropriations or find other funding sources if it sought to sustain these programs at their currently funded levels. Federal law authorizes airports to impose a local passenger facility charge (PFC) on each boarding passenger to fund airport infrastructure, including some types of projects not eligible for AIP funding, such as passenger terminals and on-airport rail systems. PFCs are included in air ticket prices and collected by the airlines on behalf of airports. The decline in airline traffic would unavoidably lead to a decrease in airports’ receipts from PFCs. This may delay some planned infrastructure improvements, and may lead to calls for Congress to increase the limit on PFCs, currently capped at $4.50 per boarded passenger, with a maximum charge of $18 per round trip. The Essential Air Service program, which provides subsidies to airlines to serve over 170 small communities, receives nearly half its funding from overflight fees paid to the FAA by foreign aircraft that transit U.S. airspace without landing in or taking off from the United States. The sharp reduction in the number of international flights is likely to lead to lower receipts from overflight fees, potentially reducing the amount available to subsidize Essential Air Service flights. If it seeks to maintain the current number of subsidized flights to all currently eligible communities, Congress may need to increase discretionary appropriations to make up for the shortfall.

Mar 23, 2020

Division B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act—Relief for Individuals, Families, and Businesses

TO BE SUPPRESSED

Mar 20, 2020

COVID-19 and Stimulus Payments to Individuals: Potential Impacts of Direct Payments on Family Incomes

Several Members of Congress and the Trump Administration have proposed direct cash payments as part of a fiscal response to the economic impacts of the COVID-19 pandemic. Direct cash payments have previously been part of the federal government’s response to economic downturns, most recently in 2001 and 2008. In general, the purpose of direct payments is twofold: (1) they allow families to spend more, and through a multiplier effect help to stimulate the economy; and (2) they provide resources to help meet basic needs for those whose income has decreased due to COVID-19 infection or potential job loss. This Insight discusses several current direct payment proposals and their impact on family incomes. What direct payment proposals are currently being discussed? Members of both parties, as well as the Trump Administration, have proposed some form of direct payments. These proposals vary in terms of who is eligible to receive a payment, the per-person amount to be paid, and whether payments would be one-time or recurring. Selected direct payment proposals include the following: a one-time payment of $1,000 per adult proposed by Senator Romney, up to two payments of $1,000 per adult and $500 per child proposed by the Trump Administration, and a proposal from Senators Bennet, Brown, Booker, King, Murphy, and Schatz to provide recurring payments of $2,000 per individual (adult and child) that would gradually phase down as economic conditions improve. When considering direct payment proposals, one question is how payments would be delivered to eligible Americans. In both 2001 and 2008, direct payments were provided as advance refundable tax credits received as a direct deposit or a check in the U.S. mail. Because these payments were made through the tax system, eligible individuals who did not file an income tax return the previous year did not receive a payment. In the past, the federal government has also provided additional direct payments to individuals who receive recurring benefits such as Social Security or pensions through the Department of Veterans Affairs. (Note that while some proposals may provide payments to taxpayers, this analysis is of families, which may include more than one taxpayer.) How much would family incomes increase due to a direct payment? Policymakers may wish to consider the extent to which a direct payment could increase family income. To estimate the potential impact of a direct payment, CRS calculated the amount that families would receive under each of the three proposals noted above. CRS then compared the estimated benefit a family would receive to their estimated monthly income. Table 1 presents families’ median estimated monthly income and the median percentage of monthly income that families would receive under the direct payment proposals. These estimates are broken down by the ratio of family income to the poverty threshold in order to show the impacts of direct payment proposals across the income distribution. Table 1. Median Percentage of Estimated Monthly Income Families Would Receive under Three Proposed Direct Payments Ratio of Family Income to Poverty Median Estimated Monthly Income (current law) Median Percentage of Estimated Monthly Income Families Would Receive if Payment is $1,000 per Adult Median Percentage of Estimated Monthly Income Families Would Receive if Payment is $1,000 per Adult and $500 per Child Median Percentage of Estimated Monthly Income Families Would Receive if Payment is $2,000 per Individual Under 100% (below poverty) $850 137% 153% 337% 100%-199% $2,100 69% 80% 177% 200%-299% $3,570 44% 49% 105% 300%-399% $4,930 32% 36% 77% 400%-499% $6,240 26% 29% 60% 500% and above $10,440 16% 17% 36% Total $3,600 42% 48% 104% Source: CRS calculations via the TRIM3 microsimulation model using 2016 data. Notes: Median estimated monthly income rounded to the nearest ten. Estimated monthly income was calculated by dividing families’ annual income by 12. Income reported in this analysis reflects the Supplemental Poverty Measure (SPM) definition of income, and includes a family’s after-tax wage income, self-employment income, the value of refundable tax credits, Social Security, Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), assisted housing benefits, child care subsidies, and more. SPM poverty thresholds were used to calculate the ratios of family income to poverty. The estimates presented in Table 1 suggest that all three of the direct payment proposals would provide families with a substantial amount of their prior estimated monthly income. This effect is particularly strong for lower-income families. Table 1 presents estimates at a high level, and does not convey variations in the impact of direct payments based on factors such as family size, family structure, and age. These estimates should be considered with a number of caveats in mind. This analysis (1) assumes that every eligible family would receive exactly the benefit to which it is entitled, (2) does not phase down payments to higher-income families, (3) estimates monthly income using an annual measure and does not reflect potential month-to-month fluctuations in family income, and (4) does not estimate decreases in income that families may experience as a result of COVID-19. Other analysis of direct payment proposals returns estimates that are similar to the ones presented in this analysis, but are methodologically different in several important ways. First, this analysis uses a broader definition of family income that includes additional sources of income and benefits. Second, this analysis breaks families into groups based on the ratio of family income to poverty rather than using deciles of taxable income. Finally, this analysis estimates median increases rather than average (or mean) increases in income. What are the alternatives to direct payments? Some commentators have noted that direct payments are not necessarily targeted at the families most impacted by COVID-19. Social insurance programs such as unemployment compensation, workers’ compensation, and disability insurance are well established and may be more effective at targeting benefits to families impacted by the virus or an associated economic downturn. The Temporary Assistance for Needy Families (TANF) program has also been used in previous economic downturns to provide short-term benefits to families with immediate needs.

Mar 20, 2020

State and Local Fiscal Conditions and Economic Shocks

Policymaker attention to the COVID-19 economic shock has included its potential effect on state and local governments. This Insight summarizes the underlying forces affecting state and local finances following a negative economic shock, examines tools available to them in response to such forces, and briefly discusses federal assistance offered in recent recessions. State and Local Finances and Economic Shocks State and local governments are an integral part of U.S. economic activity, with $3.7 trillion in 2017 spending (19% of GDP). Federal, state, and local government revenues tend to increase when the economy is growing (as taxes are paid on increased economic output) and decrease when the economy is not growing. Unlike at the federal level, state and local governments must routinely balance their operating budgets, typically every one or two years. All else equal, state and local governments therefore must offset reductions in revenues caused by negative economic shocks with increases in revenues, reductions in spending, or a combination of the two. Balanced budget requirements can limit state and local ability to meet increased spending program demands during economic downturns. In contrast, the federal government has typically enacted larger spending increases in response to economic shocks. Table 1 shows federal, state, and local spending levels in the years leading up to and during the Great Recession. Measured as a share of economic output, federal outlays were 21% larger during the period FY2009 through FY2011 than during the FY2006-FY2008 period. State and local operating expenditures rose by 8% over the same timeframe. Table 1. Government Spending Before and During the Great Recession, FY2006-FY2011 (as a percentage of GDP) FY2006-FY2008 FY2009-FY2011 State and Local Operating Expenditures 13.9 15.0 Federal Expenditures 19.6 23.7 Source: U.S. Census Bureau and Office of Management and Budget. The timing of economic effects can prove to be an additional challenge for state and local financing. About 70% of state and local government spending is devoted to education, general welfare, health, and infrastructure programs, for which demand tends to increase shortly after a negative economic shock occurs. A substantial portion of state and local revenues, meanwhile, are collected from taxes on income and property, which can see more lagged effects from an economic downturn. For state and local policymakers, this means that any early action taken to address spending needs may need to be supplemented later on if there is a lagged reduction in revenues, all while working within budgetary restrictions. Responding to Economic Shocks There are a few sources of assistance available to state and local governments to address budget shortfalls that do not require outside intervention. Rainy day funds are budget accounts that are designed to assist in closing funding gaps when revenues are insufficient to meet spending demands. All 50 state governments have at least one rainy day fund, and recent estimates projected there to be roughly $62 billion (or 2.5% to 3.0% of annual state government spending) in those funds at the end of 2019. However, use of rainy day funds alone would likely be insufficient to bridge state financing gaps from a moderate or severe recession. Moreover, there is scant evidence of rainy day fund use at the local level. State and local governments may also consider increasing the relative amount of resources they devote to their capital budgets, which are not typically subject to the balancing restrictions of operating accounts. Capital budgets are generally restricted to funding projects related to infrastructure and land maintenance and construction, and research has found limited practical ability to move projects from operating to capital accounts. Capital projects typically involve substantial levels of government borrowing, for which costs may increase in recessions due to an increase in the perceived credit risk of state and local government bonds. The potential for automatic increased federal support of state and local governments undergoing poor economic circumstances is limited. Federal government transfers are the single largest source of state and local government revenue, and the federal contribution for some of those programs is set by formula under current law. For many of the largest transfer programs, however, federal contributions either have increased only in cases of unique economic harm to the state or locality (as has been the case in the past with Medicaid) or are insensitive to economic conditions (as is true for TANF). Additional Federal Support The federal government may intervene to provide fiscal support to state and local governments in times of economic hardship. Assistance may be offered in the form of increased support for established programs or through the creation of new programs. The American Recovery and Reinvestment Act of 2009 (P.L. 111-5), passed during the Great Recession, provided $192 billion in direct state and local government transfers, which included increased Medicaid payments to states through a temporary increase in the Medicaid federal matching assistance percentage, or FMAP (i.e., federal matching rate); the creation of an emergency contingency fund for TANF and a state fiscal stabilization fund; and increased funding for SNAP administrative costs. The Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27), enacted following the recession in the early 2000s, provided a total of $20 billion through a combination of FMAP increases and general state and local fiscal assistance. The Families First Coronavirus Response Act (H.R. 6201), enacted on March 18, 2020, included direct state and local government assistance in the forms of a temporary FMAP increase as well as increased funding and new authorities for SNAP and other domestic food assistance programs.

Mar 20, 2020

COVID-19 Economic Stimulus: Business Payroll Tax Cuts

The economic fallout from coronavirus disease (COVID-19) has accelerated rapidly. Policymakers continue to evaluate tax policy economic relief options. Payroll tax cuts for businesses are one option that would provide economic assistance to business activities. Business Payroll Taxes Payroll taxes are collected to finance certain entitlement programs, including Social Security, parts of Medicare, and Unemployment Compensation (UC). Social Security’s old age, survivors, and disability insurance (OASDI) payroll tax is paid by both employers and employees, and it finances the Social Security trust funds. The tax equals 6.2% of wages on the taxable earnings base ($137,700 in 2020). This tax is paid by both employers and employees (with self-employed individuals paying both the employer and the employee share, or 12.4%). The primary source of funding for Medicare Part A is a separate payroll tax paid by employers and employees. Each pays a tax of 1.45% on the employee’s earnings; the self-employed pay 2.9%. Employers typically deposit payroll taxes with the Internal Revenue Service semiweekly or monthly, and report employment taxes paid on quarterly federal tax returns filed no later than 30 days after the end of the calendar quarter. Some employers with small payrolls may file annually. Employment payroll taxes generally are paid by all types of employers: businesses, nonprofits, and government employers. Thus, tax relief that is provided through payroll tax reductions may be available to nonprofits, which generally do not benefit from income tax reductions. If maintaining Social Security or Medicare Part A trust fund balances is a policy objective, these funds can be made whole through a transfer of general revenue. In this case, the revenue loss from a payroll tax cut would add to the deficit, but not decrease amounts available for Social Security or Medicare benefits. Temporary cuts to payroll taxes enacted in past recessions have protected trust funds from any impact in such a manner. Options for Payroll Tax Cuts There are a number of options for how to structure and implement payroll tax reductions. The Relief for Individuals, Families, and Businesses portion (i.e., Division B) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (S. 3548) proposes a payroll tax deferral for employers. Employers and self-employed individuals would be able to defer, or postpone, the employer share of the Social Security payroll tax. Deferred tax liability would be paid in two installments: one due by December 31, 2021, and the second by December 31, 2022. The Social Security trust funds would not be affected. Another option is to provide a payroll tax rebate. This option would return 2020 payroll taxes already paid by employers. It could be targeted to small businesses, with small businesses identified using an employee threshold, a gross receipts threshold, or some other measure. A rebate could be capped at a fixed amount per employee, or given for a certain number of employees. A payroll tax rebate could also apply only to businesses who have been ordered by federal, state, or local government officials to cease operations due to COVID-19, or these types of businesses could be given a larger rebate. A payroll tax rebate payment could improve cash flow, helping businesses with limited financial resources. Depending on how the policy was designed, a portion of the lost federal revenue may also support employers whose business activities were unaffected by the COVID-19 economic shock. A third option is to suspend business payroll taxes (provide a payroll tax holiday). The Trump Administration has expressed interest in this option. The business community has also expressed support for a payroll tax suspension. How long the payroll tax would be suspended is one policy choice. It could be suspended for three months, for the rest of the year, or for some other period of time. There is also the question of whether employee payroll tax collections would be suspended entirely or instead reduced by some amount (e.g., reduced by two percentage points). Suspending payroll taxes would reduce the cost of keeping employees on the payroll, and thus could promote worker retention. A payroll tax suspension only helps employers with paid employees; if an employer has already been forced to lay off its workforce, a payroll tax suspension will not provide financial assistance. Past Experience and Potential Effectiveness Employer payroll tax cuts have been enacted in the past. The Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147), enacted during the Great Recession, suspended the employer’s share of the 2010 payroll tax (6.2% of the worker’s earnings) for qualified workers (generally unemployed individuals) hired between February 3, 2010, and January 1, 2011. The policy was estimated to reduce federal revenue by $7.6 billion. One difference between the past policy and the current proposals is that the past policy was intended to spur hiring; current proposals have the goal of preventing layoffs. The provision’s effectiveness will depend on how the additional cash flow is utilized. According to CBO models run during the Great Recession, an employer payroll tax reduction would provide a small incentive to increase employment or hours worked. The empirical literature generally agrees with the results from the CBO model, finding that during economic turmoil businesses are prone to favor holding cash or reducing debt over making investments (Eisfeldt and Muir 2016, Bolton, Chen and Wang 2013, and Dobridge 2016). The last study also found that the use of refunds to improve a firm’s cash flow reduced the firm’s bankruptcy risk and the probability of a future credit-ratings downgrade. One caveat to this empirical literature is that those studies examined a different cash flow incentive—net operating loss carrybacks—that would be equivalent to a payroll tax refund.

Mar 20, 2020

Central Bank Digital Currencies

Mar 20, 2020

Federal Reserve: Recent Actions in Response to COVID-19

Coronavirus (COVID-19) has created significant economic disruption. In response, the Federal Reserve (Fed) has taken a number of steps to promote economic and financial stability involving the Fed’s monetary policy and “lender of last resort” roles. Some of these actions are intended to stimulate economic activity by reducing interest rates and others are intended to provide liquidity to financial markets so that firms have access to needed funding. Actions to Lower Interest Rates Federal Funds Rate Traditionally, the Fed conducts monetary policy by changing the federal funds rate, the overnight interbank lending rate. In response to COVID-19, on March 3, the Fed reduced the federal funds rate from a range of 1.5%-1.75% to a range of 1%-1.25% to stimulate economic activity. On March 15, it reduced the range to 0%-0.25%. Economists refer to this as the “zero lower bound” to signify that the Fed’s traditional monetary policy tool has been exhausted at this point, and cannot be used to provide additional stimulus. This is the second time this interest rate has ever hit the zero lower bound—the first time was in 2008, during the financial crisis. At that time, the Fed developed two other tools to provide stimulus at the zero lower bound—forward guidance and quantitative easing. Both aim to reduce long-term interest rates which, unlike short-term rates, are not directly determined by the Fed, but are important for stimulating economic activity. These tools are being revived in response to COVID-19. Forward Guidance Forward guidance refers to Fed public communications on its future plans for short-term interest rates, and it took many forms following the 2008 financial crisis. As monetary policy returned to normal in recent years, forward guidance was phased out. It is being used again today. For example, when the Fed reduced short-term rates to zero on March 15, it announced that it “expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” Quantitative Easing Large-scale asset purchases, popularly referred to as quantitative easing or QE, were also used during the financial crisis. Under QE, the Fed expanded its balance sheet by purchasing Treasury securities and government-backed mortgage-related securities. Three rounds of QE from 2009 to 2014 increased the Fed’s securities holdings by $3.7 trillion. On March 15, the Fed announced that it would increase its Treasury securities holdings by at least $500 billion and its mortgage-backed securities holdings by at least $200 billion “over the coming months.” As a result, the value of the Fed’s balance sheet is projected to exceed its post-financial crisis peak of $4.5 trillion. One notable difference from previous rounds of QE is that the Fed is purchasing securities of different maturities, so the effect likely will not be concentrated on long-term rates. Actions to Provide Liquidity Reserve Requirements On March 15, the Fed announced that it was reducing reserve requirements—the amount of vault cash or deposits at the Fed that banks must hold against deposits—to zero for the first time ever. As the Fed noted in its announcement, because bank reserves are currently so abundant, reserve requirements “do not play a significant role” in monetary policy. Term Repos The Fed can temporarily provide liquidity to financial markets by lending cash through repurchase agreements (repos) with primary dealers (i.e., large government securities dealers who are market makers). Before the financial crisis, this was the Fed’s routine method for targeting the federal funds rate. Following the financial crisis, the Fed’s large balance sheet meant that repos were no longer needed, until they were revived in September 2019. On March 12, the Fed announced it would offer a three-month repo of $500 billion and a one-month repo of $500 billion on a weekly basis through the end of the month in addition to the shorter-term repos it had already been offering. These repos would be larger and longer than those offered since September. Discount Window In its March 15 announcement, the Fed encouraged banks (insured depository institutions) to borrow from the Fed’s discount window to meet their liquidity needs. This is the Fed’s traditional tool in its “lender of last resort” function. The Fed also encouraged banks to use intraday credit available through the Fed’s payment systems as a source of liquidity. Foreign Central Bank Swap Lines Both domestic and foreign commercial banks rely on short-term borrowing markets to access U.S. dollars needed to fund their operations and meet their cash flow needs. But in an environment of strained liquidity, only banks operating in the United States can access the discount window. Therefore, the Fed has standing “swap lines” with major foreign central banks to provide central banks with U.S. dollar funding that they can in turn lend to private banks in their jurisdictions. On March 15, the Fed reduced the cost of using those swap lines and on March 19 it extended swap lines to nine more central banks. Emergency Credit Facilities for Nonbanks In 2008, the Fed created a series of emergency credit facilities to support liquidity in the nonbank financial system. This extended the Fed’s traditional role as lender of last resort from the banking system to the overall financial system for the first time since the Great Depression. To create these facilities, the Fed relied on its emergency lending authority (Section 13(3) of the Federal Reserve Act). To date, the Fed has resurrected three of those facilities in response to COVID-19. The commercial paper market is another important source of short-term credit for financial and nonfinancial companies. On March 17, the Fed revived the commercial paper funding facility (CPFF) to purchase commercial paper, offsetting a drop in private demand. Like banks, primary dealers are heavily reliant on short-term lending markets in their role as securities market makers. Unlike banks, they cannot access the discount window. On March 17, the Fed revived the primary dealer credit facility (PDCF), which is akin to a discount window for primary dealers. Like the discount window, it provides short-term, fully collateralized loans to primary dealers. On March 19, the Fed created the Money Market Mutual Fund Liquidity Facility (MMLF), similar to a facility created during the 2008 financial crisis. The MMLF makes loans to financial institutions to purchase assets that money market funds are selling to meet redemptions. Although there were no losses from these facilities during the financial crisis, assets of the Treasury’s Exchange Stabilization Fund have been pledged to backstop any losses on the CPFF and MMLF today.

Mar 20, 2020

Department of Veterans Affairs’ Potential Role in Addressing the COVID-19 Outbreak

The Department of Veterans Affairs (VA) provides a range of benefits to eligible veterans and their dependents. The department carries out its programs nationwide through three administrations and the Board of Veterans’ Appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing disability compensation, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things. With a vast integrated health care delivery system spread across the United States, VHA is also statutorily required to serve as a contingency backup to the Department of Defense (DOD) medical system during a national security emergency and to provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS), as necessary, in support of national emergencies (also referred to as the “Fourth Mission” of the VHA). Based on limited information from VA, this report provides an overview of VA’s response to the Coronavirus Disease 2019 (COVID-19) pandemic that is affecting communities throughout the United States. It also discusses recent congressional action as it pertains to the veterans’ benefits and services, as well as the supplemental appropriations for the department.

Mar 20, 2020

COVID-19 and Passenger Airline Travel

The COVID-19 global pandemic presents particular risks and challenges to commercial passenger airline travel. Taking a passenger flight involves numerous interpersonal interactions, transiting through often crowded airport terminals, and sitting in close proximity to others for extended periods, both onboard aircraft and at airport gates. These activities may increase the probability of exposure to infectious disease. Curtailing infectious disease spread through airline travel is challenging, in part because the passenger airline system in the United States is highly concentrated around 30 large hub airports, with tens of thousands of passengers passing through each of these airports every day. In early March 2019, a year before the COVID-19 outbreak, about 2.25 million passengers passed through screening checkpoints across the United States on a daily basis. Passenger activity for early March 2020 appeared to be only slightly lower, averaging just under 2 million daily passengers. However, as travel restrictions and warnings in response to COVID-19 have been issued, passenger volumes at Transportation Security Administration (TSA) checkpoints decreased to less than 1 million daily passengers by mid-March 2020. This travel reduction has had considerable economic impact, and questions remain as to whether adequate steps are being taken to reduce the potential spread of COVID-19 through passenger airline travel. International Travel The federal response to address COVID-19 spread through passenger airline travel has focused on risk-based health screening of inbound international passengers and restrictions placed on certain international arrivals. On January 31, 2020, President Trump suspended travel from China. International travel restrictions have since expanded to include travelers from Iran, the European Schengen area, the United Kingdom, and Ireland. Travelers returning home to the United States from these areas must enter the country through one of 13 designated entry airports for enhanced screening and are instructed to stay at home for 14 days thereafter and monitor their health for COVID-19 symptoms. On March 19, 2020, the U.S. Department of State issued a global health advisory urging U.S. citizens to avoid all international travel, noting that many airlines have canceled international flights in response to COVID-19 creating disruptions that could prevent travelers from returning to the United States for an undetermined time frame. Domestic Flights Efforts to restrict domestic air travel have largely been voluntary. The President’s Coronavirus Guidelines for America advise individuals to avoid discretionary travel. The Centers for Disease Control and Prevention (CDC) has noted that “[c]rowded travel settings, like airports, may increase chances of getting COVID-19, if there are other travelers with coronavirus infection.” Individual travelers weigh their options for canceling or delaying a trip depending on their unique circumstances. Restrictions have been put in place at some airports to limit access. For example, access to the terminal at Baltimore-Washington Thurgood Marshall International Airport (BWI) has been restricted to ticketed passengers and airport workers. Screening Checkpoints TSA has eased some travel rules, allowing passengers to bring up to 12 ounces of liquid hand sanitizer though screening checkpoints and wear masks during the screening process. It is instructing passengers to keep personal items such as wallets, keys, and cell phones inside carry-on bags rather than placing them in plastic bins. TSA is also allowing passengers to use expired driver’s licenses as identification since some state motor vehicle agencies are now closed due to COVID-19. TSA has instructed its workers to increase cleaning of screening checkpoints, but in 2020 it reportedly eliminated federal funding for checkpoint cleaning services, leaving airports to shoulder the cost. Security screeners must wear gloves when swabbing or patting down passengers, and passengers may request that screeners put on new gloves. TSA reportedly is providing surgical masks to screeners, but wearing them is optional. The TSA screeners’ union has asked TSA to provide N95 masks that are currently in short supply. Aviation Workforce Infections and Absenteeism In addition to passengers, airports and airlines employ large numbers of individuals who work at and transit through airports and interact with passengers. In theory, these individuals could be infected and spread or become infected by COVID-19 while at airports or aboard aircraft. Moreover, the aviation system itself could be significantly impacted by COVID-19 if high levels of absenteeism in the sector’s safety-critical workforce result or if key facilities and infrastructure become temporarily unavailable subsequent to possible COVID-19 contamination. In March 2020, for example, the Federal Aviation Administration closed air traffic control towers for disinfecting after a controller at Las Vegas McCarran International Airport, three technicians at Chicago Midway airport, and a worker at New York Kennedy International Airport reportedly tested positive for COVID-19. While these airports remained open to air traffic, albeit with reduced capacity, several flights were canceled. More widespread disruptions could occur if larger facilities, like en route centers or terminal radar approach control facilities, are affected. Impacts to the security screening workforce could also affect passenger airline operations. A few TSA screeners have tested positive for the virus. It has also been reported that hundreds of TSA screeners are opting to stay home under a more relaxed policy regarding paid “safety leave.” TSA has closed several checkpoints in response to decreased passenger demand, but may need to alter checkpoint availability depending on staffing levels. TSA already faced concerns regarding screener attrition prior to COVID-19. Further attrition coupled with a recently implemented freeze on hiring and overtime pay could leave the agency short-staffed in some locations should the COVID-19 outbreak abate and airline passenger demand pick back up. Sudden reductions in passenger demand are causing numerous flight cancellations and could lead to furloughs and layoffs at airlines that collectively employed almost 750,000 people as of January 2020. Virus-related absenteeism among airline employees, particularly pilots, flight attendants, and ground handlers, could complicate airlines’ efforts to maintain reduced flight schedules.

Mar 20, 2020

Federal Executive Agencies: Hiring Flexibilities for Emergency Situations

Mar 19, 2020

COVID-19 and Direct Payments to Individuals: Historical Precedents

Members of Congress and the Trump Administration have signaled their support for making direct payments to individuals to address the economic fallout from the COVID-19 outbreak. In current discussions, these payments are sometimes framed in terms of “universal basic income” or UBI proposals. In the past when these proposals were made—and sometimes enacted—they were framed in terms of providing economic stimulus. Historical Precedents There are historical precedents for such payments; most of these were done through the federal income tax code. The Internal Revenue Service (IRS) sent checks to taxpayers in 1975, 2001, and 2008. An issue with using the IRS to make payments to individuals is that payments generally have been restricted to those who file federal income tax returns. Those who do not file tax returns generally include populations such as retirees, disabled individuals, and low-income individuals who have no earnings. The 1975 legislation included direct payments to retirees receiving Social Security and Railroad Retirement. In 2009, direct payments were also made to retires, recipients of Supplemental Security Income (SSI), and recipients of certain veterans’ benefits. Table 1 provides an overview of laws enacted since 1975 that provided for one-time payments to individuals to address economic downturns. Table 1. Selected Law Providing Direct Payments to Individuals: 1975 to Present Law Description CRS Products Tax Reduction Act of 1975 (P.L. 94-12) Tax rebate: 10% of taxes paid in 1974. Maximum payment of $200 (phased down to $100 for higher income taxpayers). Direct payment: $50 for Social Security and Railroad Retirees and recipients of Supplemental Security Income (SSI). CRS Report 92-20E (available to congressional clients upon request). The Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16)Advance payment of a tax rate reduction. Maximum credit of $600 for married couples filing jointly and $300 for others.CRS Report RS21171, The Rate Reduction Tax Credit - “The Tax Rebate” - in the Economic Growth and Tax Relief Reconciliation Act of 2001: A Brief Explanation Economic Stimulus Act of 2008 (P.L. 110-185) Advance payment of a refundable tax credit. Maximum credit of $1,200 for joint filers, $600 for others, and an additional $300 per dependent. Credits phased out for higher income taxpayers. CRS Insight IN11255, COVID-19 and Stimulus Payments to Individuals: How Did the 2008 Recovery Rebates Work? American Recovery and Reinvestment Act of 2009 (P.L. 111-5)Payment of $250 for certain recipients of Social Security, Supplemental Security Income (SSI), Railroad Retirement, and veterans’ compensation or pensions. CRS Insight IN11254, COVID-19 and Stimulus Payments to Individuals: How the 2009 Economic Recovery Payment Worked. Source: Congressional Research Service (CRS). The economic effects of past direct tax payments have been studied (see summaries here and here). Also see here for a discussion of how direct payments may compare with an alternative to provide payroll tax relief. Relationship to Universal Basic Income and Automatic Payments The current discussions about these payments are sometimes framed as a “universal basic income” or UBI. UBI is a form of guaranteed income that would provide a payment to individuals or families at regular intervals. The United States does not have an income guarantee other than the Supplemental Security Income program (SSI), which is restricted to the needy aged, blind, and disabled. SSI was created in 1972 in legislation related to President Nixon’s proposal to create a guaranteed income for families with children, his Family Assistance Plan (FAP). Social insurance benefits—particularly unemployment compensation—provides partial wage replacement for some workers who lose their jobs. Need-tested programs provide benefits to low-income individuals and families, though benefits are restricted to certain categories of low-income persons, and not all persons who are eligible receive aid. The programs that aid the largest number of low-income persons—the Supplemental Nutrition Assistance Program (SNAP) and Medicaid—provide in-kind rather than cash aid. Cash aid provides families and individuals with the greatest flexibility to address their individual circumstances, whether that is paying rent, bills, child care, or other necessities. Prior to the current situation, Claudia Sahm, formerly an economist at the Federal Reserve Board, proposed in May 2019 automatic direct payment in the event of a recession. She proposed that direct payments be triggered by a rise in the unemployment rate by a sufficient amount.

Mar 19, 2020

Presidential Declarations of Emergency for COVID-19: NEA and Stafford Act

This Insight provides an overview of the presidential declarations of emergency made under the National Emergencies Act (NEA; 50 U.S.C. §§1601 et seq.) and the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act; 42 U.S.C. §§5121 et seq.) in response to the novel coronavirus 2019 (COVID-19). Table 1 describes select differences between these types of declarations and their authorities. This Insight does not discuss other actions mentioned by the President, or federal agencies (other than the Department of Health and Human Services (HHS)) that have been, or may be, tasked to respond. Two Emergency Declarations for COVID-19 On March 13, 2020, President Donald J. Trump issued Proclamation 9994 under the NEA and declared an emergency under the Stafford Act. The act of simultaneously declaring an emergency pursuant to the NEA and the Stafford Act nationally for the same threat or hazard appears to be unprecedented. NEA Proclamation 9994 In Proclamation 9994, President Donald J. Trump “proclaim[ed] that the COVID-19 outbreak in the United States constitutes a national emergency, beginning March 1, 2020.” The proclamation also permits the Secretary of HHS to exercise the authority under section 1135 of the Social Security Act “to temporarily waive or modify certain requirements of the Medicare, Medicaid, and State Children’s Health Insurance programs and of the Health Insurance Portability and Accountability Act Privacy Rule....” Previously, there was one instance where a President declared a national emergency pursuant to the NEA related to a health issue. President Barack Obama issued Proclamation 8443 in which he declared a national emergency regarding the 2009 H1N1 influenza pandemic in the United States. Stafford Act Emergency Declaration The President’s emergency declaration, pursuant to Stafford Act Section 501(b), 42 U.S.C. §5191(b), authorized assistance for COVID-19 response efforts for all U.S. states, territories, and the District of Columbia. This is the first time the President has unilaterally declared a nationwide Stafford Act emergency; unilateral presidential declarations, however, have been made for incidents on a limited scale. There is also limited precedent for Stafford Act emergency declarations in response to public health incidents. The Stafford Act emergency declaration for COVID-19 authorized one form of Federal Emergency Management Agency (FEMA) assistance: Public Assistance emergency protective measures (authorized under Stafford Act Section 502). An amended emergency declaration or a major disaster declaration could authorize additional forms of assistance. Distinguishing Between the NEA and Stafford Act Declarations of emergency under the NEA and Stafford Act are distinct and have different implications. Additionally, the declaration of emergency under the NEA does not invoke Stafford Act authorities, and vice versa. Declarations made pursuant to the NEA generally are considered efforts to protect the nation as a whole. When the President has declared an emergency under the Stafford Act in the past, it has been for a specific, disaster-affected state/territory or Indian tribal government. Although this most recent Stafford Act declaration is the first instance in which the President has declared an emergency that covers the entire nation, each disaster-affected state/territory and the District of Columbia received a distinct emergency declaration (i.e., 57 total declarations). Another key difference involves the authorities invoked by each type of emergency declaration. The President may invoke one or more so-called standby authorities in a national emergency declaration under the NEA, or the President may do so in a subsequent presidential directive (e.g., an executive order), which may reference the prior declaration. The Stafford Act includes specific programs and authorities available pursuant to an emergency declaration. In addition, some external statutory and regulatory structures use Stafford Act declarations as triggering events. Table 1. Comparison of Selected Features of the National Emergencies Act and the Stafford Act National Emergencies Act Stafford Act Emergency Statutory Authority 50 U.S.C. §§1601 et seq. 42 U.S.C. §§5121 et seq. Definition of emergency No definition of national emergency or emergency. “... any occasion or instance for which, in the determination of the President, Federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect ... public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States” (42 U.S.C. §5122(1)). Scope Nation as a whole. State/Territory or Indian Tribal Government. Process A proclamation (or executive order) declaring a national emergency shall immediately be transmitted to Congress and published in the Federal Register (50 U.S.C. §1621). 42 U.S.C. §5191(b) allows the President to unilaterally declare an emergency for certain emergencies involving federal primary responsibility. Timing/Termination The President may terminate an emergency by issuing a proclamation, or by not publishing a continuation notice (which must meet certain conditions). Congress and the President may terminate an emergency by passing and enacting a joint resolution into law (50 U.S.C. §1622(a) and (d)). FEMA determines the incident period—“time interval during which the disaster-causing incident occurs” (44 C.F.R. §206.32(f)). Extensions of the incident period, and program extensions and end dates may be announced via FEMA news releases on FEMA’s website. Amendments to the emergency declaration are published in the Federal Register (44 C.F.R. §206.40). Additional Authorities The President may invoke one or more so-called standby authorities in the initial declaration or in a subsequent presidential directive, such as an executive order (50 U.S.C. §1621(b)). 42 U.S.C. §5192 specifies the federal emergency assistance that may be provided. Designated areas and forms of assistance are published in the Federal Register (44 C.F.R. §206.40). Reporting Requirements The President shall transmit promptly significant presidential orders, rules, and regulations to Congress. After a President has declared a national emergency, the President shall transmit semi-annual reports to Congress on the total expenditures incurred by the U.S. Government during the preceding six months. No later than 90 days after termination of an emergency, the President shall transmit a final report on all such expenditures (50 U.S.C. §1641). The President must notify Congress when assistance provided for an emergency declaration will exceed $5 million (42 U.S.C. §5193). Funding No dedicated funding. Disaster Relief Fund (DRF)—“Base Disaster Relief” and supplemental appropriations.

Mar 19, 2020

Defense Primer: Department of Defense Maintenance Depots

Mar 19, 2020

COVID-19 and Direct Payments to Individuals: How Did the 2008 Recovery Rebates Work?

In response to concerns about an economic slowdown stemming from the COVID-19 pandemic, policymakers have been considering a broad array of policy options. Some are targeted directly toward individuals and industries that may be most affected. Others would more broadly seek to stimulate the economy. Among this latter category of policies, some have proposed direct cash payments sent to virtually all U.S. households. In 2008 Congress enacted direct cash payments—the 2008 recovery rebates—that were tax credits advanced to households that had filed an income tax return. A portion of these credits were refundable and hence available to taxpayers with little to no income tax liability, including many low-income filers. (For answers to some common questions about advanced refundable tax credits, see CRS Insight IN11247). This Insight provides a brief overview of how those 2008 recovery rebates worked. 2008 Recovery Rebates On January 28, 2008, the House introduced H.R. 5140, which was enacted into law as P.L. 110-185 two weeks later. The law included 2008 recovery rebates for individuals that were credits against 2008 income taxes. The recovery rebate for a given taxpayer was equal to (1) a $300-$600 basic credit amount per individual, plus (2) an additional $300 per-child credit amount. These credit amounts were phased out for higher-income taxpayers. Calculating the Credit Amount The basic credit was equal to the greater of the following: (1) the taxpayer’s net income tax liability up to $600 ($1,200 for married joint filers). Net income tax liability was effectively pre-EITC and pre-child tax credit income tax liability—or (2) $300 ($600 for married joint filers) if the taxpayer had qualifying income. For the purposes of the basic credit, qualifying income was either (a) at least $3,000 in total of some combination of earned income, social security income, or veterans’ benefits, or (b) gross income above the taxpayer’s standard deduction plus a personal exemption (two personal exemptions for married joint filers) and $1 of net income tax liability. The child credit was $300 for each of the taxpayer’s children that qualified for the permanent child tax credit. Taxpayers could only receive the supplementary child credit if they were eligible to receive the basic credit. The total credit—basic credit plus child credit—was phased out at a rate of 5% of adjusted gross income (AGI) above $75,000 ($150,000 for married joint returns). Higher-income taxpayers not subject to the phaseout would tend to receive a larger basic credit, while lower-income taxpayers would tend to receive a smaller basic credit. Other Provisions of the 2008 Recovery Rebates SSN Requirement: Taxpayers had to provide social security numbers (SSN) for themselves, their spouse (if married filing jointly), and any child for whom they claimed the supplementary child credit. Taxpayers who provided an individual taxpayer identification number (ITIN) were ineligible for the credit. Nonresident Aliens: The credit was not available to nonresident aliens. Territories: The law included a provision requiring the U.S. Treasury to make payments to territories (mirror code and non-mirror code) equal to the aggregate amount of credits claimed by their residents. Interaction with Means-Tested Programs: 2008 recovery rebates were not included in income (for the month they were received and the following two months) in determining eligibility for, or the amount of, any federally funded public benefit program. (A similar provision is now permanent law for all refundable credits.) Subject to Offset for Past-Due Debts: All or part of an economic stimulus payment could be applied to back taxes or certain other debts of the taxpayer, such as delinquent child support and student loans. Advancing the 2008 Recovery Rebates The law also included a provision to advance the credit during 2008. Without this advancing provision, taxpayers would have received the recovery rebates when they filed their 2008 income tax returns in early 2009. The advanced credit amount was estimated using the same formula as the 2008 recovery rebates, but based on taxpayers’ 2007 income tax return information. Hence, the IRS evaluated information on taxpayers’ 2007 returns, determined the credit amount as described above, and began to advance the recovery rebate by the end of April 2008. Taxpayers that had filed their 2007 tax returns and received a refund via direct deposit also received the 2008 recovery rebates via direct deposit. (They also generally received their advanced recovery rebate within two weeks of payments going out.) Otherwise, paper checks were mailed out to taxpayers using address information collected from their 2007 income tax returns. In other words, taxpayers had to file a 2007 income tax return in order to receive the recovery rebate check in 2008. However, taxpayers that did not receive the advanced credit, perhaps because they did not file a 2007 income tax return, could receive it when they filed their 2008 income tax return at the beginning of 2009. According to the Treasury Inspector General for Tax Administration (TIGTA), “The IRS issued more than $96 billion in advanced economic stimulus payments to more than 119 million individuals in Calendar Year 2008 and approximately $8.5 billion in recovery rebate credits to almost 21 million taxpayers as of April 17, 2009.” If taxpayers received a larger advanced credit in 2008 than they were eligible for, they were not required to repay the excess credit. For example, if a single parent had $600 in net income tax liability and one qualifying child in 2007, the IRS would advance the taxpayer a $900 recovery rebate ($600 basic credit plus the $300 supplemental child credit). If, in 2008, the taxpayer’s income tax liability remained the same, but their child actually ended up living with their ex-spouse—and therefore was not the taxpayer’s qualifying child for the $300 supplementary child credit in 2008—their actual recovery rebate would have been $600, a $300 difference. However, under the law, the taxpayer would not need to pay back this excess amount.

Mar 19, 2020

COVID-19: The Basics of Domestic Defense Response

As the COVID-19 pandemic has unfolded, the Department of Defense (DOD) has been drawn steadily into an ever more direct supporting role in the U.S. government’s domestic response. Below are the funding, authorities, and basic descriptions of foreseeable ways DOD might further contribute. Links in this product connect to more detailed information on the highlighted subjects within CRS products or web pages. The World Health Organization (WHO) declared the global COVID-19 outbreak a Public Health Emergency of International Concern on January 30, raised its global risk assessment to “Very High” on February 28, and labeled the outbreak a “pandemic” on March 11. President Donald J. Trump declared a U.S. national emergency on March 13. For more information on the domestic and international health aspects of COVID-19, see CRS Report R46219, Overview of U.S. Domestic Response to Coronavirus Disease 2019 (COVID-19), and CRS In Focus IF11421, COVID-19: Global Implications and Responses . On Friday March 20, the Federal Emergency Management Agency assumed the lead agency role in President Trump’s Coronavirus Task Force under the National Response Framework (NRF) for national emergencies. DOD participates in the national response to the crisis within the NRF. Defense Funding On March 14, 2020, the House passed by a vote of 363-40 the Families First Coronavirus Response Act (P.L. 116-127), Title II of which included $82 million for the Defense Health Program to waive all TRICARE cost-sharing requirements related to COVID-19. On March 18, the Senate approved the bill by a vote of 90-8. President Trump signed the bill the same day. On March 17, the Trump Administration delivered to Congress an FY2020 supplemental appropriations request for $45.8 billion to respond to the pandemic, including $8.3 billion in emergency funding for DOD. DOD proposed these Operation and Maintenance funds be allocated to its Emergency Response Fund account to: facilitate changes in military personnel policy (e.g., return of dependents to the United States, changes to reassignments, cancelled training); expedite access to rapid COVID-19 diagnostics; ensure access to medical care; address the impacts of the pandemic on logistics and supply chains; and bolster the overall national response. Defense Capabilities and Authorities DOD has capabilities that can directly support civil authorities in health emergency situations, including health and medical surveillance, research on diseases, treatment facilities, communications equipment, temporary lodging facilities and storage space, material-handling equipment, and logistics support. Installations approved for these purposes include Active and Reserve Component bases. This type of assistance is called Defense Support of Civil Authorities (DSCA). For more on these capabilities, see CRS Report R43560, Deployable Federal Assets Supporting Domestic Disaster Response Operations: Summary and Considerations for Congress, coordinated by Jared T. Brown (PDF pages 36-40). Integrating Defense Capabilities Legal authority for DOD involvement in domestic disasters is provided in the following statutes: The Robert T. Stafford Disaster Relief and Emergency Assistance Act is the statutory authority for disaster relief for both natural disasters and human-caused incidents. The Economy Act provides authority for federal agencies to order goods or services from other federal agencies; it permits an agency to request DOD support in situations other than those outlined in the Stafford Act. The Posse Comitatus Act generally prohibits federal troops from search, seizure, and arrest. While under the control of a governor, however, National Guard personnel are not subject to the restrictions of the Posse Comitatus Act. Military Support to Civilian Law Enforcement Agencies provisions (10 U.S.C. §§271-284) authorize certain types of military support to civilian law enforcement officials including use of military equipment and facilities, training and advising, maintenance and operation of equipment, support for counterdrug activities, and support for activities to counter transnational organized crime. DOD Directive 3025.18 is the DOD regulation governing defense support of civil authorities. Reserve Component Activation On March 22, the President authorized activation of National Guard personnel in hardest hit states of New York, Washington, and California under Title 32 U.S.C § 502(f), under which governors control operations with pay and benefits provided by the federal government. The President could also order the National Guard and Reserves to federal active duty under Title 10; applicable authorities include 10 U.S.C. 12302, Partial Mobilization; 10 U.S.C. 12304, Presidential Reserve Call-up; and 10 U.S.C. 12304a, Army Reserve, Navy Reserve, Marine Corps Reserve, and Air Force Reserve: order to active duty to provide assistance in response to a major disaster or emergency. A state’s governor can also activate its National Guard for full time duty (i.e., state active duty); this may include federal pay and benefits. For more on Reserve Component activation, see CRS In Focus IF10540, Defense Primer: Reserve Forces. U.S. Army Corps of Engineers (USACE) Per historical precedent, USACE involvement in rehabilitating or constructing facilities as part of a domestic disaster response under the National Response Framework would be funded through the Disaster Relief Fund (DRF), not from DOD funds. In this situation, the federal lead for the disaster would assign a task to USACE and pay for the task through the DRF. Below is an excerpt from the NRF that describes the typical assignment for USACE’s largely civilian staff. / Defense Production Act As the COVID-19 pandemic evolves, the United States faces drug and medical supply scarcities due to disrupted supply chains and increased demand. In response, the President may invoke emergency authorities under the Defense Production Act of 1950 (DPA; 50 U.S.C. §§4501 et seq.) to address economic impacts. He did so on March 18, 2020 through an executive order but has yet to give direction to the private sector under this authority. For more on the DPA, see CRS Insight IN11231, The Defense Production Act (DPA) and COVID-19: Key Authorities and Policy Considerations, and CRS Report R43767, The Defense Production Act of 1950: History, Authorities, and Considerations for Congress.

Mar 19, 2020

COVID-19 and Stimulus Payments to Individuals: How the 2009 Economic Recovery Payment Worked

In response to concerns about an economic slowdown due to the Coronavirus Disease 2019 (COVID-19) outbreak, some lawmakers have expressed interest in providing direct cash payments to Americans. One option to provide such payments would be to establish a new advanced refundable tax credit, as was done in 2008 with “recovery rebates.” Although this option would disburse payments to the vast majority of Americans relatively quickly, it would not directly help those who do not file a federal income tax return. A 2017 study found that “nonfilers” were more likely to be seniors or recipients of public assistance than those who filed a tax return. To provide direct cash payments to nonfilers, lawmakers could consider providing such payments through existing programs for certain vulnerable populations. To assist lawmakers in assessing the merits of such a proposal, this Insight examines the 2009 Economic Recovery Payment (ERP), which was a one-time $250 payment made to most individuals who received recurring cash benefits from the Social Security Administration (SSA), the Railroad Retirement Board (RRB), or the Department of Veterans Affairs (VA). Overview The ERP was established as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). Section 2201 of ARRA provided a one-time payment of $250 to the following groups: Adult Social Security beneficiaries; Supplemental Security Income (SSI) recipients of all ages; Adult railroad retirement annuitants; and Adult VA disability compensation or pension recipients. The ERP was not available to dependent minor or student children who might otherwise receive benefits under Social Security, railroad retirement, or VA’s programs, nor was it available to SSI recipients who received a personal needs allowance. To qualify, an individual must have been eligible for benefits under one of the aforementioned programs for at least one month during the three-month period prior to ARRA’s enactment (i.e., eligible for benefits between November 2008 and January 2009). Individuals were ineligible for the ERP if they resided outside of the United States or had their benefits suspended during the qualifying month prior to ARRA’s enactment because they were (1) incarcerated, (2) a fugitive felon, (3) a probation or parole violator, (4) not lawfully present in the United States, or (5) found to have committed fraud. Each eligible individual received the ERP. Thus, a married couple composed of two eligible individuals received $500 in combined payments ($250 each). However, ARRA specified that no eligible individual could receive more than one payment, even if he or she were eligible for benefits under multiple programs (e.g., Social Security and VA disability compensation). In addition, the ERP reduced the amount of the Making Work Pay tax credit, which was another stimulus measure in ARRA. ARRA specified that the ERP was not subject to federal income tax, and it provided the ERP with certain garnishment protections, although the ERP was still subject to the Treasury Offset Program. ARRA also provided that the ERP could not be treated as income, or as a resource for the month of receipt and the following nine months, in determining the individual’s eligibility or assistance amount under any federally funded public program. ERPs and administrative costs were financed by general revenues. Legislative History and Rationale The House version of ARRA would have provided for a one-time payment to SSI recipients equal to the average monthly SSI payment. In justifying the payment, Representative Carolyn Kilpatrick noted that ARRA “focuses on addressing the needs of those who need assistance most” and SSI recipients would be more likely to spend the payment quickly because they have “very low incomes.” The Senate version of ARRA would have set the one-time payment equal to $300 and extended it to Social Security, RRB, and VA beneficiaries. Then-Senate Finance Committee chairman Max Baucus said the provisions in ARRA (including the one-time payment) were designed to “counteract weak consumer demand and spending slowdowns.” The conference agreement followed the Senate version but set the payment level at $250. Representative Paul Kanjorski remarked that by providing the ERP to retirees and disabled individuals, the payment was designed to “help more people without jobs.” Meanwhile, Senator Sheldon Whitehouse noted that the ERP provided “extra help from the Federal Government” for vulnerable seniors. Implementation ARRA required SSA, RRB, and VA to work with Treasury to coordinate and certify the eligibility of each ERP recipient. Administering agencies sent out notices to identified individuals in advance of receiving the ERP, as well as provided FAQs on their websites. Treasury was required to start disbursing ERPs no later than 120 days (4 months) after enactment of ARRA (February 17, 2009), and no payments were to be made after 2010. Treasury disbursed most ERPs in May 2009, as well as a “catch-up” payment in December 2010 for individuals identified as eligible after the initial disbursement date (Table 1). SSA considered the May 2009 timeframe to be “a major accomplishment,” given the short statutory deadline for initial payments. Treasury ultimately issued more than 55.2 million ERPs, totaling over $13.8 billion. Table 1. Economic Recovery Payment (ERP) Schedule Milestone Completion Date Days Since Enactment of ARRA (Feb. 17, 2009) First Social Security payments 05/07/2009 79 SSI payments 05/18/2009 90 Last Social Security payments 05/28/2009 100 RRB payments 05/29/2009 101 VA payments 06/30/2009 133 “Catch-up” payments 12/31/2010 682 Source: U.S. Department of the Treasury. Discussion The congressional rationale for the ERP was twofold: (1) to provide assistance to certain vulnerable populations and (2) to stimulate economic activity through consumer spending. A 2012 study analyzed the answers to a 2009 household survey on certain stimulus measures created in 2008 and 2009. It found that most ERP recipients were aged 65 or older, had household income at or below $35,000, and had little or no wealth in stocks. With respect to how recipients used the ERP, the study found that 30% mostly spent it, 29% mostly saved it, and 41% mostly paid down debt with it.

Mar 18, 2020

Domestic Public Health Response to COVID-19: Current Status and Resources Guide

The global outbreak of Coronavirus Disease 2019, COVID-19, is affecting communities throughout the United States, with case counts growing daily. Containment and mitigation efforts by federal, state, and local governments have been undertaken to “flatten the curve”—that is, to curb widespread transmission that could overwhelm the nation’s health care system. This CRS Insight presents selected international and U.S. government actions and related events, CRS products, and federal websites relevant to the domestic public health response to COVID-19. As the situation evolves, CRS will continue to publish and update products relevant to the current needs of Congress. This Insight will be updated accordingly. This Insight does not provide information on the international response to COVID-19, nor on economic or other non-health policy issues related to COVID-19. This Insight also does not address issues related to health insurance and financing. For further information on those issues, see the CRS Coronavirus Disease 2019 homepage. A Snapshot of the Domestic Public Health Response to COVID-19, as of March 18, 2020 Note: All dates below are in 2020. International Events and World Health Organization (WHO) Actions https://www.who.int/emergencies/diseases/novel-coronavirus-2019 WHO declared the COVID-19 outbreak to be a Public Health Emergency of International Concern (PHEIC) on January 30. WHO announced the official name for the disease, COVID-19, on February 11. WHO raised its global risk assessment for the outbreak to “very high,” its highest risk level, on February 28. WHO declared the global COVID-19 outbreak a “pandemic” on March 11. Globally, over 200,000 cases have been confirmed in over 150 countries, with over 8,500 deaths reported. United States Actions and Status https://www.hhs.gov/about/news/index.html; https://www.cdc.gov/coronavirus/COVID-19/summary.html; and https://www.fda.gov/emergency-preparedness-and-response/mcm-issues/novel-coronavirus-COVID-19. Several emergency declarations are in effect, including a Public Health Emergency under Section 319 of the Public Health Service Act; an Emergency Declaration pursuant to Section 501(b) of the Stafford Act; and a National Emergency declaration pursuant to the National Emergencies Act. Waivers are in effect under Section 1135 of the Social Security Act to aid the health care system with surge capacity. President Donald Trump announced the formation of the President’s Coronavirus Task Force, and appointed Vice President Mike Pence as the coordinator and Dr. Deborah Brix as response coordinator. Congress and the President enacted the Coronavirus Preparedness and Response Supplemental Appropriations Act (P.L. 116-123) on March 6, which provides a total of $7.767 billion in appropriations: $6.497 billion for HHS (including contingent amount), $20 million for the Small Business Administration, and $1.250 billion for foreign operations. Expanded telehealth services in Division B of the act additionally have a cost estimate of $490 million over the course of FY2020 through FY2022. Prior to enactment, health response efforts were primarily supported by the Centers for Disease Control and Prevention (CDC) Infectious Diseases Rapid Response Reserve Fund allotment of $105 million and HHS transfers of $136 million. The House and Senate passed The Families First Coronavirus Response Act, H.R. 6201, which includes several provisions related to health care coverage and delivery. Discussions about additional measures to provide response assistance are underway. CDC has developed a diagnostic test kit for the virus and distributed it to public health laboratories pursuant to an Emergency Use Authorization (EUA) issued by the U.S. Food and Drug Administration (FDA) on February 4. Issues with test performance have limited access to testing at a local level. FDA has issued several EUAs for COVID-19 diagnostic tests (including for both commercial test kits and laboratory-developed tests, or LDTs) and personal protective equipment. FDA issued guidance on February 29 to authorize certain CLIA (Clinical Laboratory Improvement Amendments) certified labs to validate and use their own COVID-19 laboratory-developed tests for clinical diagnosis before EUA is granted. On March 16, FDA expanded this policy to cover the manufacture, distribution and use of commercial test kits prior to EUA authorization. In this guidance, FDA also authorizes states to further authorize laboratories within their own state to develop and perform tests for COVID-19 pursuant to state law and without the objection of the FDA. Medical countermeasures (diagnostics, vaccines, and therapeutics) are in development, including those supported by the National Institutes of Health (NIH) and the Biomedical Advanced Research and Development Authority (BARDA). An NIH-supported Moderna vaccine is in Phase 1 clinical trials (early-stage testing in humans). Gilead’s Remdesivir antiviral therapy is in Phase 3 clinical trials and available under expanded access (also known as compassionate use). Widespread availability of a vaccine is projected to be at least a year away, while initial results of clinical trials of potential treatments are said to be expected by May. Travel restrictions and quarantine requirements are in effect for certain travelers who have been in mainland China, the Islamic Republic of Iran, Schengen area of the European Union, the United Kingdom and the Republic of Ireland within 14 days prior to arrival, pursuant to proclamations issued by President Trump. Enhanced health screenings are in place at 13 major U.S. airports. Health screenings and referrals are in place at all air, land, and sea ports of entry by DHS. CDC has issued guidance for the general public, schools, health care providers, health departments, pregnant women and children, travelers, and others. Containment and mitigation efforts are underway in several state and local jurisdictions. Several states have mandated cancellation of events, closures of schools, bars, and/or restaurants, among other actions. Several counties in Northern California are under a shelter-in-place order. The White House has advised Americans to avoid gatherings of 10 or more people, discretionary travel, and restaurants, food courts, and bars. Over 7,500 cases have been reported in 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands, with over 100 deaths reported. Given limitations with testing, these are likely to be underestimates of disease spread. CRS Products on COVID-19 Domestic Health Issues General CRS Report R46209, Coronavirus Disease Outbreak (COVID-19): CRS Experts, by Matthew B. Barry. Public Health and Health System Response CRS Report R46219, Overview of U.S. Domestic Response to Coronavirus Disease 2019 (COVID-19), coordinated by Sarah A. Lister and Kavya Sekar. (Parts of this report have become outdated as the COVID-19 situation has evolved.) CRS Legal Sidebar LSB10415, COVID-19: Current Travel Restrictions and Quarantine Measures, by Edward C. Liu. CRS Report R46261, Development and Regulation of Domestic Diagnostic Testing for Novel Coronavirus (COVID-19): Frequently Asked Questions, by Amanda K. Sarata. CRS In Focus IF10745, Emergency Use Authorization and FDA’s Related Authorities, by Agata Dabrowska. CRS Report R46239, Telehealth and Telemedicine: Frequently Asked Questions, by Victoria L. Elliott. CRS Insight IN11238, Coronavirus Disease 2019 (COVID-19) Poses Challenges for the U.S. Blood Supply, by Jared S. Sussman. Related Issues CRS Insight IN11229, Stafford Act Assistance for Public Health Incidents, by Bruce R. Lindsay and Erica A. Lee. CRS Insight IN11231, The Defense Production Act (DPA) and COVID-19: Key Authorities and Policy Considerations, by Michael H. Cecire and Heidi M. Peters. Federal Agency Websites General The White House, https://www.whitehouse.gov/. USA.gov, “Government Response to Coronavirus, COVID-19,” https://www.usa.gov/coronavirus. Department of Health and Human Services Administration for Community Living (ACL): “Coronavirus Disease 2019 (COVID-19),” https://acl.gov/COVID-19. Assistant Secretary for Preparedness and Response (ASPR): “COVID-19: Coronavirus Disease 2019,” https://www.phe.gov/emergency/events/COVID19/Pages/default.aspx. Centers for Disease Control and Prevention (CDC): “Coronavirus Disease 2019 (COVID-19),” https://www.cdc.gov/coronavirus/2019-ncov/index.html; and “CDC Newsroom,” https://www.cdc.gov/media/index.html. Centers for Medicare and Medicaid Services (CMS),. “Current Emergencies,” https://www.cms.gov/About-CMS/Agency-Information/Emergency/EPRO/Current-Emergencies/Current-Emergencies-page; “Coronavirus Disease 2019 (COVID-19).” Food and Drug Administration (FDA): “Coronavirus Disease 2019 (COVID-19),” https://www.fda.gov/emergency-preparedness-and-response/mcm-issues/coronavirus-disease-2019-covid-19. Health Resources and Services Administration (HRSA): “Emergency Preparedness and Recovery Resources for Health Centers,” https://bphc.hrsa.gov/emergency-response. Indian Health Service (IHS), “COVID-19 Update as of March 16, 2020,” https://www.ihs.gov/newsroom/announcements/2020-announcements/covid-19-update-as-of-march-16-2020/. National Institutes of Health (NIH): “Coronavirus Disease 2019 (COVID-19),” https://www.nih.gov/health-information/coronavirus. Other Relevant Agencies Department of Homeland Security (DHS): “Coronavirus (COVID-19)” https://www.dhs.gov/coronavirus. Department of Veterans Affairs (VA), “Novel Coronavirus Disease (COVID-19),” https://www.publichealth.va.gov/n-coronavirus/. Transportation Security Administration (TSA), “Coronavirus (COVID-19) information,” https://www.tsa.gov/coronavirus.

Mar 18, 2020

The Palestinians and Amendments to the Anti-Terrorism Act: U.S. Aid and Personal Jurisdiction

Two recent amendments to the Anti-Terrorism Act (ATA, 18 U.S.C. §§ 2331 et seq.) have significant implications for U.S. aid to the Palestinians and U.S. courts’ ability to exercise jurisdiction over Palestinian entities. They are the Anti-Terrorism Clarification Act of 2018 (ATCA, P.L. 115-253) and the Promoting Security and Justice for Victims of Terrorism Act of 2019 (PSJVTA, § 903 of the Further Consolidated Appropriations Act, 2020, P.L. 116-94). Congress passed ATCA after a U.S. federal lawsuit (known in various incarnations as Waldman v. PLO and Sokolow v. PLO) against the Palestinian Authority (PA) and Palestine Liberation Organization (PLO) that an appeals court dismissed in 2016. The trial court had found that the PA and PLO were responsible under ATA (at 18 U.S.C. § 2333) for various terrorist attacks by providing material support to the perpetrators. However, the U.S. Court of Appeals for the Second Circuit ruled that the attacks, “as heinous as they were, were not sufficiently connected to the United States to provide specific personal jurisdiction” in U.S. federal courts. Amendments to ATA. ATCA provided that a defendant consents to personal jurisdiction in U.S. federal court for lawsuits related to international terrorism if the defendant accepts U.S. foreign aid from any of the three accounts from which U.S. bilateral aid to the Palestinians has traditionally flowed. In December 2018, the PA informed the United States that it would not accept aid that subjected it to federal court jurisdiction. Consequently, all bilateral aid ended on January 31, 2019. PSJVTA eliminated a defendant’s acceptance of U.S. foreign aid as a trigger of consent to personal jurisdiction—thus partly reversing ATCA—and instead provides that PA/PLO payments related to a terrorist act that kills or injures a U.S. national act as a trigger of consent to personal jurisdiction. The PA/PLO may face strong Palestinian domestic opposition to discontinuing such payments. PSJVTA also directs the State Department to establish a mechanism for resolving and settling plaintiff claims against the PA/PLO. President Trump stated in a signing statement that this provision could interfere with the exercise of his “constitutional authorities to articulate the position of the United States in international negotiations or fora.” Implications of stopping U.S. aid and prospects for resumption. It is unclear to what extent the stop to U.S. security assistance for the PA has affected Israel-PA security cooperation and could affect it in the future. The U.S. Security Coordinator for Israel and the Palestinian Authority (USSC) said in December 2019 that the suspension of aid had not significantly affected Israel-PA security cooperation, but that the disruption of initiatives aimed at facilitating cooperation and helping reform the PA security sector had some impact on PA acquiescence to USSC requests aimed at reform and greater professionalization. Even though PSJVTA removed acceptance of U.S. bilateral aid as a trigger for personal jurisdiction, the actual resumption of U.S. aid may depend on political decisions by Congress and the Administration, as well as cooperation from the PA. For FY2020, Congress has appropriated $75 million in PA security assistance for the West Bank and $75 million in economic assistance for the “humanitarian and development needs of the Palestinian people in the West Bank and Gaza.” However, the Trump Administration had previously suggested that restarting U.S. aid for Palestinians could depend on a resumption of PA/PLO diplomatic contacts with the Administration, which may be unlikely in the current U.S.-Israel-Palestinian political climate. Additionally, it is possible that the PA might not accept aid if doing so could be perceived domestically as giving in to U.S. political demands on the peace plan, or as tacitly agreeing to the new triggers of potential PA/PLO liability in PSJVTA. Implications for personal jurisdiction. The extent to which Congress can provide by statute—such as through ATA—that a foreign entity (in this case, the PA/PLO) is deemed to consent to personal jurisdiction appears to be untested in court. The deemed consent provision in ATA may encounter legal challenges on the basis that it could constitute an unconstitutional condition. A condition attached to government benefits is unconstitutional if it forces the recipient to relinquish a constitutional right that is not reasonably related to the purpose of the benefit. If this concept applies to personal jurisdiction, a reviewing court may need to determine whether submission to jurisdiction has a rational relationship with PA/PLO payments or other PA/PLO activities, such as maintenance of facilities in the United States.

Mar 18, 2020

USDA Domestic Food Assistance Programs’ Response to COVID-19: House-Passed H.R. 6201 and Related Efforts

U.S. Department of Agriculture (USDA) Food and Nutrition Service (FNS) programs are often part of emergency response efforts, providing program flexibilities, foods for distribution, and benefits for redemption. Emergencies generate different FNS responses and vary with states’ requests. During the COVID-19 pandemic, access to food—particularly in light of school closures—has been a concern for many. Some also view the Supplemental Nutrition Assistance Program (SNAP) as a force for economic stimulus. This Insight discusses House-passed H.R. 6201’s food assistance provisions, which supplement FNS’s existing COVID-19 response with new funds and authorities. USDA-FNS Responses To-Date FNS maintains a COVID-19 response website. During unanticipated school closures, school districts or “school food authorities” that normally operate the National School Lunch Program and School Breakfast Program may transition to serving meals through the Summer Food Service Program (SFSP) or Seamless Summer Option (SSO) if they are approved as summer meal sponsors. Nonprofit and other public agency sponsors may also operate meal sites, and states may approve new sponsors, during unanticipated school closures. Normally, SFSP/SSO meals must be served at non-school sites and consumed onsite (“congregate feeding”). As of March 15, 2020, USDA-FNS had granted waivers to all 50 states, DC, and Puerto Rico, allowing SFSP/SSO operators to serve meals in non-congregate settings (e.g., meal pick-up or delivery) and at school sites during COVID-19-related school closures. For SNAP’s Quality Control system, FNS is allowing telephone interviews instead of face-to-face interviews in 16 states as of March 15, 2020. Supplemental Appropriations for WIC and TEFAP (Division A) H.R. 6201 provides a $500 million supplemental appropriation for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). It also provides a $400 million supplemental appropriation for The Emergency Food Assistance Program (TEFAP), of which $100 million can be used for food distribution costs. Child Nutrition Programs (§§2102, 2202) Under §12(l) of the Richard B. Russell National School Lunch Act (42 U.S.C. §1760(l)), states and service providers may request, and USDA may grant, waivers of child nutrition program requirements. Division B of H.R. 6201 expands these authorities. §2102 newly allows USDA to grant waivers that increase federal costs. Such waivers must be requested by a state or service provider and be aimed at providing meals and snacks during a COVID-19-related school closure. §2202 newly allows USDA to issue a single waiver to all states. States may opt-in without USDA’s approval. §2202 also specifies that USDA may grant waivers to allow non-congregate feeding in the Child and Adult Care Food Program. Both waivers must be for the purpose of providing meals and snacks “with appropriate safety measures with respect to COVID-19.” §2202 also newly allows USDA to grant waivers related to the nutritional content of meals served in child nutrition programs if USDA determines the waiver is necessary to provide meals and snacks and there is a food “supply chain disruption” due to COVID-19. The waiver authority under §2202 expires on September 30, 2020. SNAP SNAP Benefits during School Closures (§1101) H.R. 6201 includes what has been called “P-SNAP” (Pandemic Supplemental Nutrition Assistance Program), an option allowing USDA approval of state plans to provide SNAP benefits, when a school is closed five or more days, to households with children who would normally receive free or reduced-price school meals (in an amount equal to at least five days’ of free meal reimbursements). This option was last available in FY2010 (during the H1N1 flu epidemic), enacted in an FY2010 appropriations law (P.L. 111-80, §746). In 2009, FNS issued detailed guidance. However, no SNAP state agencies ever administered P-SNAP. Work-Related Requirements (§2301) SNAP has work-related eligibility requirements, the strictest being a time limit for nondisabled adults (ages 18 to 49) without dependents (“ABAWDs”) who work less than 80 hours per month. §2301 suspends this time limit nationwide during the period of the Secretary of Health and Human Services’ public health emergency declaration, allowing participants who would have lost eligibility due to the time limit to continue to receive benefits. Separately, on March 13, 2020, a federal court blocked enforcement of the part of a USDA final rule that would make it more difficult for states to use labor statistics to waive the time limit, changes that were to go into effect April 1. The court “determined that aspects of the Final Rule are likely unlawful ... [and] USDA will be enjoined from implementing those aspects of the Final Rule nationwide pending final judicial review.” Part of the court’s rationale was the global pandemic. Benefit Increases, Administrative Requirements (§2302) §2302 provides for temporary SNAP benefit increases during the public health emergency. It requires USDA to grant SNAP state agencies’ requests that are supported “with sufficient data (as determined by [USDA]).” The increases are “to address temporary food needs not greater than the applicable maximum monthly allotment for the household size.” Previously, a nationwide increase to SNAP benefits was included in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). The bill also allows USDA to adjust (through guidance and based on states’ requests) administrative requirements like issuance methods and reporting requirements. WIC (§§2203, 2204) In addition to the aforementioned supplemental funding provided, H.R. 6201 gives USDA further authority to grant waivers allowing WIC participants to get certified (or recertified) without being physically present at the WIC clinic (normally required). Waiver requests are to be made by state agencies to USDA. Also, the bill authorizes USDA to grant waivers from program administrative requirements that a state determines “cannot be met due to COVID-19” and is “necessary to provide assistance” under WIC. Grants for Nutrition Assistance Funding for Certain Territories (§1102) The Northern Mariana Islands, Puerto Rico, and American Samoa do not operate a SNAP program; instead, they operate programs funded by Nutrition Assistance Program block grants in lieu of SNAP. §1102 provides $100 million for grants to these territories for nutrition assistance “in response to a COVID-19 public health emergency,” as presumably they would not have the authority to operate P-SNAP or other options in the bill that increase SNAP benefits.

Mar 18, 2020

The Hours of Service (HOS) Rule for Commercial Truck Drivers and the Electronic Logging Device (ELD) Mandate

In response to the COVID-19 outbreak, on March 13, 2020, the Department of Transportation (DOT) issued a national emergency declaration to exempt from the Hours of Service (HOS) rule through April 12, 2020, commercial drivers providing direct assistance in support of relief efforts related to the virus. This includes transport of certain supplies and equipment, as well as personnel. Drivers are still required to have at least 10 consecutive hours off duty (eight hours if transporting passengers) before returning to duty. It has been estimated that up to 20% of bus and large truck crashes in the United States involve fatigued drivers. In order to promote safety by reducing the incidence of fatigue among commercial drivers, federal law limits the number of hours a driver can drive through the HOS rule. Currently the HOS rule allows truck drivers to work up to 14 hours a day, during which time they can drive up to 11 hours, followed by at least 10 hours off duty before coming on duty again; also, within the first 8 hours on duty drivers must take a 30-minute break in order to continue driving beyond 8 hours. Bus drivers transporting passengers have slightly different limits. Approximately 3 million drivers are subject to the federal HOS rule. For decades, drivers recorded their service hours in paper log books. This method made violations of the HOS rule easy to hide. Since many drivers are paid by the mile, some drivers violated the HOS rule in order to drive longer and make more money. Some drivers said they had to violate the rule to meet the schedules imposed on them by dispatchers. There were concerns about the safety impacts of having drivers become even more fatigued by driving longer than the maximum times allowed by the HOS rule. In an effort to improve compliance with the HOS rule, in 2012 Congress mandated that trucks be equipped with electronic logging devices (ELDs), hardware devices that are connected to the truck engine to record driving time and transmit it during roadside inspections. In 2015, the Federal Motor Carrier Safety Administration (FMCSA) finalized regulations to implement that mandate. The mandate took effect in December 2017. FMCSA determined that the mandatory use of ELDs would improve highway safety, and could improve driver health if drivers take advantage of the rest periods mandated under the regulations to get adequate sleep. Since the ELD mandate went into effect, certain sectors of the commercial trucking industry have raised concerns about its impact. Since the ELD mandate did not change the HOS rule, but made it harder to evade the HOS limits without being detected, those concerns suggest that some operators may have routinely been out of compliance with the HOS rule. One sector that has been particularly critical of the improved enforcement of the HOS limits is the livestock hauling industry. The industry’s business model has evolved to depend on hauling livestock long distances from around the nation to feedlots and slaughterhouses located mostly in the central states, and each stop along the way poses hazards to the livestock. Congress has repeatedly provided temporary waivers from the ELD mandate for livestock haulers, pending proposed revisions of the HOS rule by FMCSA. Currently the agency is prohibited from using federal funding to enforce the HOS rule against livestock haulers until September 30, 2020. The use of ELDs may help to quantify a challenge faced by drivers: inroads into their driving time caused by delays in loading and unloading their cargo by shippers and receivers. Drivers are typically paid by the mile, and by one estimate this unpaid “driver detention time” costs drivers $1.1 billion to $1.3 billion a year (an average of $1,300 to $1,500 per driver). This detention time is also estimated to increase the risk of crashes due in part to encouraging drivers to speed to make up for mileage that otherwise could not be driven during the allowable work time because of detention time. As the ELD mandate has been in effect for two years now, some impacts are starting to come into focus. An array of ELDs are now offered, some at prices below FMCSA’s initial estimates. The impact of improved enforcement on industry activity and truck safety is not yet clear. Legislation is being proposed to help address the shortage of parking spots for truck drivers that can make it difficult to find a safe place to stop when they reach their HOS time limit. FMCSA has proposed a set of relatively minor changes to the HOS rule to, in the agency’s words, increase safety while providing flexibility to drivers.

Mar 18, 2020

COVID-19 Medical Countermeasures: Intellectual Property and Affordability

Mar 18, 2020

Low Oil Prices and U.S. Oil Producers: Policy Considerations

Global oil prices have declined by more than 50% since January 2020 (see Figure 1). Following a brief period of geopolitically-driven upward price pressure resulting from events in Iraq and Libya, world oil supply/demand balances were projected to be oversupplied by the second quarter of 2020. Reduced travel and other potential economic impacts related to the evolving COVID-19 outbreak are suppressing near-term oil demand. Oversupply expectations were amplified when the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC countries (OPEC+), including Russia, failed to agree on an OPEC recommendation to reduce oil production by 1.5 million barrels per day until the end of 2020. Oil prices immediately declined. Subsequently, Saudi Arabia announced regional price discounts and plans to increase oil supplies in April. Other countries have also indicated intent to increase oil production. This combination of demand suppression and supply expansion increases short-term oversupply expectations and exerts downward pressure on oil prices. Prolonged periods of depressed prices could affect U.S. oil production (approximately 12.2 million bpd in 2019, the world’s largest), exports, employment, and industry consolidation. Due to recent developments, a plan to sell crude oil—required in FY2020 by P.L. 116-94—from the Strategic Petroleum Reserve (SPR) was suspended. Figure 1. West Texas Intermediate (WTI) Spot Price and Selected Events December 31, 2019–March 13, 2020 / Source: Compiled by CRS. WTI daily spot prices from Bloomberg. Coronavirus timeline and other announcements from media reporting. Notes: Announcements included are not comprehensive of oil supply/demand events. Dow stands for Dow Jones Industrial Average, a stock market index that can be considered an economic indicator linked to announcements shown here and other events not included. Effects on U.S. Oil Producers While low oil prices are generally positive for consumers (i.e., lower gasoline prices), sustained low prices could result in financial stress for companies operating in the U.S. oil exploration and production (E&P) sector. The degree of financial stress will be unique to each E&P company and will depend on factors such as hedging positions, balance sheet fundamentals (e.g., debt liabilities and cash), cost structures, ability to renegotiate service contracts, and corporate finance actions (e.g., dividend adjustments and spending reductions). Companies with limited capacity to adapt could default on debt obligations, reduce employment levels, or file for bankruptcy protection. Industry consolidation through mergers, acquisitions, and distressed asset transactions is a possible outcome. Other companies that provide support to the E&P sector might also encounter challenging business conditions. Exactly how the U.S. oil sector might be affected—and the severity of these effects—is uncertain at this time and will depend largely on the timeframe for price recovery. Policy Options and Considerations During previous periods of depressed oil prices, Congress has considered various policy options that might provide some degree of relief to the U.S. E&P sector. For example, in late 2014 to early 2016, OPEC did not reduce production to address oversupply, some producers increased output, and prices fell below $30/barrel. Legislation introduced in the 114th Congress (H.R. 4559) would have created a commission to investigate OPEC anticompetitive practices. Current oil market conditions are similar, but with the addition of demand weakness being magnified by COVID-19. Other previously considered policy options that might support U.S. producers include: SPR acquisitions: Acquiring crude oil—direct purchases or royalty-in-kind—for SPR storage could absorb a limited amount of market oversupply. Physical SPR capacity is 713.5 million barrels, while actual inventories are 635 million barrels. Inventories could be increased by as much as 78.5 million barrels. Whether increasing SPR inventories might contribute to oil market rebalancing is uncertain. Furthermore, acquiring SPR crude oil to reduce oversupply and increase prices could conflict with statutory objectives to minimize market impacts from purchases. The Trump Administration has announced oil acquisition plans. Loans and loan guarantees: Federal loans and loan guarantees could provide financing for companies adversely affected by low prices. Legislation enacted in 1999 (P.L. 106-51) created a $500 million emergency oil and gas loan guarantee program for independent oil and gas companies, as well as small businesses supporting the U.S. E&P sector, that had experienced layoffs, production declines, or financial losses due to low oil prices. There are approximately 9,000 independent U.S. oil and gas companies. Oil import fees, tariffs, and quotas: Currently, a two-tiered tariff system applies to crude oil imports. Other oil import restrictions have been used as policy tools to support prices for U.S. oil producers. For example, Presidential Proclamation 3279 instituted an oil import quota system in 1959 with the goal of maintaining acceptable price levels. The quota system was changed to an import fee in 1973. The President has authority under the International Emergency Economic Powers Act of 1977 (IEEPA) and other federal laws (e.g., Section 232 of the Trade Expansion Act of 1962) to prohibit imports of oil or impose import duties. Due to the globally integrated nature of current U.S. petroleum imports and exports, restricting imports could adversely affect other elements (e.g., refining) of the broader petroleum sector. Antidumping remedies: Antidumping and countervailing duties are trade remedies available to U.S. industries “materially injured,” or threatened with injury, by comparable products sold in the U.S. market at less than fair value or subsidized by a foreign government or public entity. U.S. oil industry groups have previously petitioned the International Trade Administration to seek remedies against oil producing countries—including Iraq and Saudi Arabia—during previous low-oil-price periods. Whether or not this remedy is applicable to current market conditions is uncertain. Concluding Remarks Low oil prices reflect a global market that is projected to be oversupplied in the near-term. Price recovery would largely depend on market rebalancing. However, the rebalancing timeframe is uncertain as demand impacts of COVID-19 and actual oil supply increases are unknown at this time. Rebalancing could take the form of OPEC/non-OPEC supply restraint, price-induced demand increases, lower U.S. and global oil production, or a combination thereof. Existing federal policy options that might contribute to balancing near-term global markets appear limited.

Mar 17, 2020

COVID-19 and Direct Payments to Individuals: Considerations on Using Advanced Refundable Credits as Economic Stimulus

In response to concerns about an economic slowdown stemming from the COVID-19 pandemic, policymakers have been considering a broad array of policy options. Some are targeted directly toward the individuals and industries that may be most affected. Others would more broadly seek to stimulate the economy. Among this latter category of policies, some have suggested a payroll tax cut, while others have proposed direct cash payments—“recovery rebates”—to virtually all households. One mechanism to provide cash payments relatively quickly is to create a new refundable tax credit and then advance it to households before they would otherwise claim it on their income tax returns. A similar policy was enacted most recently in 2008. This Insight addresses some common questions about advanced refundable tax credits. What is a refundable tax credit? Tax credits reduce income taxes owed dollar for dollar; each dollar in tax credit is a one-dollar subtraction from income tax liability. Nonrefundable credits are limited by the taxpayer’s income tax liability, while refundable credits are not. Hence, taxpayers with little to no income tax liability—including many low-income taxpayers—can benefit from refundable tax credits. Refundable tax credits targeted toward low-income individuals and families are estimated to have relatively large stimulative effects compared to other policies—a large “bang for the buck”—because low-income populations tend to spend these amounts quickly. Some economists were concerned that the 2008 credit would not be effective because a lump-sum payment might be saved rather than spent. Empirical evidence based on studying a prior rebate found, however, that the rebate was largely spent. Current refundable tax credits—the earned income tax credit (EITC) and the refundable portion of the child credit—benefit low-income families that include workers and children. These tax credits are received once a year when federal income tax returns are filed. Tax credit amounts are primarily based on the taxpayer’s earned income and number of qualifying children in the prior year (e.g., an EITC received in 2020 when 2019 tax returns are filed is based on 2019 income and family composition). What does “advancing” a tax credit mean? Advancing a tax credit effectively means issuing a tax credit for a given year before the tax return for that year has been filed (and before income taxes for that year have been calculated). The 2008 recovery rebates for individuals included in P.L. 110-185 were refundable tax credits against 2008 income taxes. However, taxpayers did not need to wait to file their 2008 income tax returns in early 2009 to receive these credits. Instead, the law allowed the IRS to advance these credits in 2008, basing the advanced amount on income and family structure information from tax returns filed for the 2007 tax year. The credit equaled up to $600 per person ($1,200 for joint filers), with an additional $300 per dependent child. Lower-income taxpayers tended to receive a smaller credit, while the credit phased out for taxpayers with incomes over $75,000 ($150,000 for married joint filers). Advancing tax credits based on prior data can pose challenges if any of the parameters used to calculate the credit—like income and number of children—change from these prior values. For example, if a taxpayer’s 2019 income is significantly greater than their income at the end of 2020, an advanced credit estimated based on 2019 income may be larger than what a taxpayer is ultimately eligible for in 2020. (Even if an advanced payment is a fixed amount per person [does not vary by income], the final amount can still vary if family structure changes during the year.) This could result in taxpayers having to pay back the excess credit when they file their 2020 income tax returns (in early 2021). Insofar as this is a concern, policymakers can limit how much taxpayers have to pay back (for example, as is done with the advanced premium assistance tax credit), or they can bar repayments of excess advanced payments entirely, as was done with the 2008 recovery rebates. How long would it take for the IRS to begin issuing advanced credits? Past experiences with the IRS issuing advanced refundable tax credits may provide some guide on how long these policies take to implement. On January 28, 2008, H.R. 5140, which included the 2008 recovery rebates for individuals, was introduced in the House. Two weeks later, on February 13, 2008, it was enacted as P.L. 110-185. Sixty-two days later, the IRS began issuing the first one-time rebate checks. More than 120 million taxpayers received their payments by mid-July 2008. Taxpayers who had filed their 2007 tax returns and received a refund via direct deposit also received the 2008 recovery rebates via direct deposit. Otherwise, paper checks were mailed out to taxpayers using address information from 2007 income tax returns. A 2007 tax return had to be filed to receive a recovery rebate check. Those who did not receive a recovery rebate check could claim the benefit when filing a 2008 income tax return. How many individuals could receive an advanced refundable tax credit? One concern that some have about using the federal tax system to administer direct cash payments to households is that not all individuals in the United States file income tax returns—either because their income is below the filing threshold or because they are not complying with federal tax laws. A 2017 CBO analysis estimated that of 292.6 million individuals who could be included on a federal income tax return (as the taxpayer, spouse, or dependent), 251.9 million were actually included—or 86%. The study estimated that the greatest share of nonfilers were lower-income individuals, especially those 65 years or older. As was noted above, the 2008 recovery rebate could be claimed by taxpayers who did not file a 2007 tax return. These nonfilers—which included many low-income individuals and seniors—could claim the credit on their 2008 returns when they filed them in 2009. The federal income tax system is limited in its ability to provide cash assistance to individuals quickly, particularly when those individuals are nonfilers.

Mar 17, 2020

H.R. 6201: Paid Leave and Unemployment Insurance Responses to COVID-19

This Insight provides summary information on the paid leave and unemployment insurance (UI) provisions in the House-passed version of H.R. 6201, the Families First Coronavirus Response Act, including the technical corrections made by H.Res. 904. For a general discussion of current workplace leave policies and UI programs and benefits, including considerations related to COVID-19, see CRS Insight IN11233, Workplace Leave and Unemployment Insurance for Individuals Affected by COVID-19. For additional legislation introduced related to UI and COVID-19, see CRS Report R45478, Unemployment Insurance: Legislative Issues in the 116th Congress. Paid Leave Provisions in H.R. 6201 H.R. 6201, as amended by H.Res. 904 (amendment text available at Congressional Record, March 16, 2020, p. H1698) contains two paid leave provisions: (1) providing for paid family and medical leave in certain instances for needs related to a COVID-19 public health emergency and (2) providing for paid sick leave for a similar but more expansive set of needs. In terms of private-sector coverage, the provisions apply only to eligible employees who are employed by employers with fewer than 500 employees. The bill also includes tax credit provisions to help employers cover costs related to paid leave requirements; self-employed individuals, including gig workers, are similarly eligible for tax credits if they are unable to perform services in their trade or business for reasons discussed below. Both provisions allow employers of health care providers and emergency responders to exclude such employees from the application of the leave provisions. Further, both provisions would allow the Secretary of Labor to issue regulations that exempt from the new leave provisions: (1) certain health care workers and emergency responders and (2) employers with fewer than 50 employees if the leave requirements “would jeopardize the viability of the business as a going concern.” Both paid leave provisions would take effect no later than 15 days after the bill’s enactment and expire on December 31, 2020. Division C—Emergency Family and Medical Leave Expansion Act H.R. 6201, as amended by H.Res. 904, proposes to temporarily extend Family and Medical Leave Act (FMLA) leave to include leave needed to care for the employee’s minor child whose school or care provider is unavailable due to a COVID-19 public health emergency. Such FMLA-leave may be used by employees who have been employed by their current employer for at least 30 calendar days and work for a covered employer. Covered employers are private-sector employers employing fewer than 500 employees, and certain public agencies, including state and local governments. The first 10 days of the new FMLA leave may be unpaid; although the employee may elect to use other paid leave during that period. Employers would be required to compensate employees for the remainder of FMLA-leave taken for qualifying public health emergencies (i.e., up to 10 work weeks) at two-thirds of their regular rate of pay. Such paid leave is capped at $200 per day and $10,000 total per employee. FMLA leave is generally job-protected, but this requirement would not apply to employers with fewer than 25 employees if the employee used FMLA-leave for public health needs and certain conditions are met. Whereas FMLA provides that employees may seek damages or equitable relief for FMLA violations, H.R. 6201 provides that such liability would not apply to employers with fewer than 50 employees for violations related to FMLA-leave for a public health emergency. Division E—Emergency Paid Sick Leave Act The bill would require covered employers to temporarily provide paid sick leave to employees to attend to certain COVID-19-related medical and caregiving needs if the employee is unable to work (including telework). Such needs include (1) the employee’s self-isolation or quarantine in compliance with an official order or as advised by a health care provider due to concerns related to COVID-19; (2) to care for an individual subject to such an order or medical advice to self-isolation or quarantine; (3) to seek a medical diagnosis when the employee is experiencing COVID-19 symptoms; (4) to care for the employee’s child, generally a minor child, whose school or care provider is unavailable due to a COVID-19 public health emergency; and (5) any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor. Full-time employees would be entitled to 80 hours of paid sick leave, and part-time employees the equivalent of 2 weeks of leave. For leave taken for the employee’s quarantine, self-isolation, or medical diagnosis, sick leave is compensated at the greater of the employee’s regular rate of pay, the federal minimum wage, or the minimum wage rate in the applicable state or locality of employment; such paid leave is capped at $511 per day and $5,110 total per employee. For caregiving and other needs, the employer must compensate the employee at two-thirds of such a rate; such paid leave is capped at $200 per day and $2,000 total per employee. The provisions apply broadly to public-sector employers and to private-sector employers with fewer than 500 employees. Unemployment Insurance Provisions in H.R. 6201 The UI provisions in Division D of H.R. 6201, which were not amended by H.Res. 904, would give states more flexibility to address COVID-19 through expanded benefit eligibility as well as additional administrative funding, among other UI measures. Unlike workplace leave policies, the UI system generally treats public-sector workers similarly to private-sector workers. UI benefits replace a proportion of wages for those workers who are temporarily or permanently separated from their jobs, but are otherwise able, available, and searching for work. Depending on state law, UI benefits may replace up to 60%-66% of total wages and are often subject to a benefit cap of half of the state’s average weekly wage, although some states have lower benefit caps. Division D—Emergency Unemployment Insurance Stability and Access Act of 2020 The UI provisions in Division D of H.R. 6201 would Provide $1 billion in “emergency administrative grants” to states in calendar year 2020 for administrative purposes. Half of this amount would be available to all states who meet certain requirements related to Unemployment Compensation eligibility notifications and claims access. The second half of this amount would be available to states that experience at least a 10% increase in UC claims over the previous calendar year and meet certain other requirements related to easing UC eligibility requirements for individuals affected by COVID-19. There would be reporting requirements to U.S. Department of Labor (DOL) and committees of jurisdiction within one year for states that receive these grants. Waive any federal UI requirements related to work search, one-week waiting periods, quits for good cause, and employer tax assessments for state programs (i.e., under Section 303 of the Social Security Act and Federal Unemployment Tax Act [FUTA] Section 3304) if a state modifies its UC laws “on an emergency temporary basis as needed to respond to the spread of COVID-19.” Temporarily waive interest payments and the accrual of interest on federal advances (loans) to states to pay UC benefits through December 2020. However, these provisions would not reduce any underlying loan principal. Require DOL to provide assistance to states in establishing, implementing, and improving Short-Time Compensation (work sharing) programs. Temporarily make Extended Benefits (EB) 100% federally financed (under permanent law: 50% state, 50% federal) from enactment until the end of December 2020, but only for states that receive emergency administrative grants. This bill would also temporarily remove the current incentive in EB law for states to have a waiting week for their regular UC programs through December 2020.

Mar 17, 2020

COVID-19: Potential Role of Net Operating Loss (NOL) Carrybacks in Addressing the Economic Effects

A number of industries may suffer losses in 2020 as a result of the coronavirus disease 2019 (COVID-19) outbreak. The travel and tourism industry, and restaurant industry, appear particularly susceptible at the moment due to an uptick in canceled reservations and a reduction in bookings. Other industries are likely to be impacted as well by a drop-off in consumer spending and a resulting reduction in profits, with the impacts likely increasing if COVID-19 continues to spread. Before 2018, businesses with losses could “carry back” net operating losses (NOL) and use them to receive a refund for past taxes paid. On several occasions, Congress temporarily extended or enhanced the carryback rules to assist businesses in times of general economic weakness, or in response to natural disasters. Recent changes enacted in the 2017 tax revision (P.L. 115-97), commonly referred to as the Tax Cuts and Jobs Act (TCJA), however, eliminated the ability to carry back losses. This Insight discusses how allowing NOL carrybacks could potentially assist businesses impacted by economic weakness associated with COVID-19. Carrybacks and Carryfowards When a business experiences a loss (or NOL, in tax jargon) it owes no tax in that year. Currently, a business may use a loss to reduce future taxes by claiming it as a deduction against income earned in some future year. This process is known as carrying forward a loss, and a business may carry a loss forward indefinitely. Prior to the TCJA, businesses were able to use losses to obtain a refund for taxes paid in the past two years, a process known as carrying back a loss. TCJA, however, eliminated the two-year carryback. Businesses generally prefer to carry losses back rather than carry them forward because carrybacks produce a benefit sooner and with certainty, whereas carryforwards reduce taxes at some uncertain time in the future. An example may help demonstrate the mechanics of carrying back a loss. Suppose that a business earned profits of $100 last year and paid taxes of $21 (i.e., the tax rate was 21%). This year the business incurred a loss of $40 and thus owes nothing in taxes. If the business is allowed to carry back this $40 loss it can receive a partial refund for taxes paid last year. It does this by recalculating its tax liability last year, subtracting the $40 loss from its $100 in income and applying the 21% tax rate. The business would find its recalculated tax liability for last year to be $12.60 ($60 x 21%). It would then receive as a refund the difference between what it originally paid in taxes last year and its recalculated tax liability, or $8.40 ($21 - $12.60). Expanded NOL Carrybacks: Past Experience At various times, the NOL carryback period was modified to provide temporary or targeted tax relief. For example, during the Great Recession, the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) and Worker, Homeownership, and Business Assistance Act of 2009 (P.L. 111-92) temporarily extended the two-year carryback period to up to five years. In response to the destruction caused by Hurricanes Katrina, Rita, and Wilma, Congress passed the Gulf Opportunity Zone Act of 2005 (P.L. 109-135), which extended the carryback period from two to five years for qualified losses occurring in the Gulf Opportunity Zone (or GO Zone). The Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) temporarily extended the NOL carryback period from two to five years for losses incurred in 2001 and 2002 to assist in the economic recovery. Stimulative Effect of Loss Carrybacks One feature of effective fiscal stimulus is the speed with which it can impact the economy. Loss carrybacks suffer from one fundamental issue in this aspect: losses cannot be carried back until after the end of the tax year. The reason is that tax losses are computed over a tax year, and not over a month or a quarter. Additionally, some businesses suffering from short-term economic disruption may not benefit from a NOL carryback if they earn a profit over their full year. Businesses that are reasonably confident that they will be in a loss position at the end of the tax year, and that have (or have access to) technical tax accounting expertise, may be able to adjust required estimated tax payments to reflect an expected loss carryback and experience some relief. These will most likely be larger corporate taxpayers, and not smaller businesses. Still, because it is notoriously difficult to predict the economy’s performance, and because there is a great deal of uncertainty about COVID-19, providing the ability to carry back losses may help support businesses if economic weakness is prolonged. Businesses that ultimately incur losses at the end of the tax year would be able to amend previous years’ tax returns and receive a partial refund. This could assist businesses that struggled to make payroll or cover operating expenses, as well as those that took loans that need to be repaid. Another aspect of effective fiscal stimulus is the “bang for the buck” a given tax reduction or spending increase produces. Economists quantify this notion with the use of fiscal “multipliers.” Fiscal policy multipliers measure the change in economic output in response to a dollar change in taxes or a dollar change in spending. Past estimates by the Congressional Budget Office (CBO) and Moody’s Analytics suggest that the multiplier effects associated with NOL carrybacks are small when compared to other policy options. CRS Report R45780, Fiscal Policy Considerations for the Next Recession, contains the CBO’s and Moody’s estimates, and also reviews the potential effectiveness of a number of fiscal stimulus options that have been considered in response to recent economic slowdowns, including NOL carryback modifications. Separate from the stimulative effects of NOL carrybacks is the issue of whether carrybacks should be part of the tax system’s underlying structure. Many economists would argue that allowing businesses to carry back losses increases economic efficiency by reducing the distorting effect taxation has on investment.

Mar 16, 2020

Tax Credit for Paid Sick and Family Leave in the Families First Coronavirus Response Act (H.R. 6201)

The Families First Coronavirus Response Act (H.R. 6201) includes an employer tax credit for the paid sick and family leave required as part of this legislation. This tax credit is intended to help businesses with the cost of providing paid leave to address the coronavirus disease (COVID-19) pandemic. Tax Credits for Paid Leave The employer payroll tax credit is for wages paid to fulfill the new leave requirements. The Emergency Paid Sick Leave Act, Division E of H.R. 6201, requires private employers with fewer than 500 employees, and all government employers, to provide employees with two workweeks of paid sick leave for coronavirus-related leave purposes. The Emergency Family and Medical Leave Expansion Act, Division C of H.R. 6201, provides employees of employers with fewer than 500 employees expanded job-protected Family and Medical Leave Act (FMLA) leave; under certain conditions this leave must be partially compensated by employers. The legislation expands access to paid sick and family leave for employees at many small- and mid-sized businesses. Employees of large businesses, however, would not have guaranteed access to paid sick or family leave under this proposal. Employer Payroll Tax Credit The employer payroll tax credit is computed using wages paid, and claimed against the employer’s share of the Social Security payroll tax in each calendar quarter. The Social Security payroll tax rate is generally 12.4% of wages, with 6.2% paid by employers and 6.2% paid by employees. The tax applies to workers’ earnings up to an annual limit, $137,700 in 2020. The Social Security trust fund will not be affected by the tax credit. A general fund transfer to the trust fund will offset the reduction in federal revenues from the tax credit. The tax credit is refundable. If an employer’s tax credits exceed its payroll tax liability, the excess can be received as a payment from the Treasury. Employers that claim this credit are required to include the amount claimed in gross income, for income tax purposes, offsetting the reduction in gross income from deducting wages paid (preventing a double benefit). Additionally, employers cannot claim this credit for any wages taken into account for the purposes of calculating the employer tax credit for paid family and medical leave. Employers may also elect not to have the credit apply. The credit does not apply to state or local governments. The tax credits can be claimed for a period to begin within 15 days following enactment, and ending December 31, 2020. Sick Leave Employers can claim a tax credit for amounts required to be paid in sick leave wages to individuals who miss work to (1) self-isolate because of coronavirus diagnosis; (2) obtain a medical diagnosis or care for coronavirus symptoms; or (3) quarantine based on the recommendation or order of a public official or health care provider. Sick leave wages are paid at 100% of the employee’s normal wages, and the tax credit is 100% of qualifying sick leave wages, up to $511 per day. A maximum of 10 days of paid sick leave can be taken into account when determining the tax credit. Family Leave The employer tax credit for family leave is 100% of qualified family or medical leave wages paid, up to a maximum amount. Family and medical leave wages include those paid to individuals who are (1) quarantining on the recommendation or order of a public official or health care provider and cannot perform their work while doing so; (2) caring for an at-risk family member who is in quarantine on the recommendation or order of a public official or health care provider; or (3) caring for a minor child whose school or place of care has closed, or whose child-care provider is unavailable due to coronavirus. The paid leave period for the purposes of the tax credit begins once an individual has taken 14 days of leave for a family (or medical) leave purpose described above. These 14 days of leave may consist of unpaid leave, or an employee election to use paid vacation, personal, or other medical or sick leave. After this 14-day period, employees will receive a benefit from their employers that is at least two-thirds of the employee’s usual pay. The tax credit for family leave wages is limited to $200 per day, and $10,000 total. Tax Credit for Self-Employed Individuals Self-employed individuals, including gig workers, are eligible for tax credits similar to above. If individuals are unable to perform services in their trade or business for the sick leave purposes described above, the individual may qualify for an income tax credit equal to 100% of average daily self-employment income. Like the employer credits, this credit is limited to $511 per day for qualifying sick leave purposes, and $200 for other qualified leave purposes. The sick leave credit is limited to a maximum of 10 days. The family leave credit is limited to 50 days. For self-employed individuals, the income tax credit is refundable (meaning that if the tax credit amount exceeds the individual’s income tax liability, the excess is received as a refund, or payment, from the Treasury). Like the employer tax credit, the tax credits for self-employed taxpayers can be claimed for a period to begin within 15 days of enactment, and ending December 31, 2020. Issues and Considerations for Congress The tax credit for required paid sick and family leave will largely offset the cost of providing such required leave in the Emergency Paid Sick Leave Act. The legislation mandates leave for employees of firms that employee fewer than 500 employees. In 2019, 47.6% of employees worked in firms with fewer than 500 employees. The other 52.4% of employees worked in large firms, or firms with 500 or more employees. This legislation does not mandate sick leave for employees of these firms who may not have access to paid sick or family leave. Nor does it provide tax credits for these larger firms for providing leave. Some experts have expressed concern about this potential gap in coverage. A refundable payroll tax credit will likely reduce the financial burden of providing required paid sick and family leave. The credit, however, does not necessarily encourage businesses to provide additional leave beyond what is required. Employees of large businesses in particular may be left without coverage. Additionally, this credit is not designed to help businesses who have suffered lost business as a result of COVID-19.

Mar 16, 2020

The Global Health Security Agenda (GHSA): 2020-2024

Mar 16, 2020

The Financial Industry and Consumers Struggling to Pay Bills during the COVID-19 (Coronavirus) Outbreak

A growing number of cases of Coronavirus Disease 2019 (COVID-19) have been identified in the United States, significantly impacting many communities. For background on the coronavirus, see CRS In Focus IF11421, COVID-19: Global Implications and Responses, by Sara M. Tharakan et al. This outbreak may continue to cause disruptions as federal, state, and local governments limit public gatherings, close schools, and encourage workers to telework to contain the coronavirus’s spread. While this situation is evolving rapidly, the economic impact may be large due to illnesses, quarantines, and other business disruptions. Consequently, many Americans may lose income and face financial hardship due to the coronavirus outbreak. Some workers may need to take time off work if they or their families fall ill. In addition, layoffs or reduced hours may impact workers in particular industries affected by the outbreak, such as the travel, restaurant, and entertainment industries. To address these concerns, on Saturday, March 14, the House passed H.R. 6201, which, among other things, expands sick leave access, unemployment insurance, and food assistance benefits. Even if this bill is enacted, some families may continue to feel the economic impact. This Insight focuses on possible policy options relating to the financial services industry for consumers who may have trouble paying their bills due to the outbreak. Payment Relief for Consumer Loans On Monday, March 9, federal and state financial regulators coordinated a statement to the financial industry, encouraging it to help meet the needs of consumers impacted by the coronavirus outbreak. They stated that “financial institutions should work constructively with borrowers and other consumers in affected communities,” and that “prudent efforts that are consistent with safe and sound lending practices” would not be criticized by regulators. This statement was similar to past statements by financial regulators during events such as natural disasters and government shutdowns. On Friday, March 13, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) expanded on this statement with more detailed guidance for the institutions they regulate. In addition, on Wednesday, March 11, the chairwoman and other members of the House Financial Services Committee sent a letter to financial services organizations “[urging them] to proactively help [their] customers who may be experiencing temporary financial hardship in making payments on their existing credit obligations as a result of this crisis.” During past responses to natural disasters, government shutdowns, or other similar events, the financial industry has provided financial assistance to some impacted consumers. For example, they sometimes help consumers having trouble paying their mortgages, credit cards, or other loans due to temporary financial problems through forbearance plans, which are agreements that allow extended time for consumers to become current on their payments. Financial institutions also may agree to limit late or other fees and extend credit to ease consumer financial struggles amid the outbreak. However, some of these efforts may be more difficult for some institutions if they require changes in credit contracts. Financial regulatory agencies might also consider employing other policy tools to encourage banks to provide this type of financial assistance. For example, bank regulators may award Community Reinvestment Act (CRA) credits after major disasters in adversely affected communities, even those where the bank does not primarily collect deposits. Regulator guidance under the CRA encourages banks during major disasters to meet customer cash and financial needs by waiving fees and penalties, deferring or skipping loan payments, or other related activities. In order to qualify, the federal government, through the Federal Emergency Management Agency (FEMA), must declare a “designated disaster area” (Category A or B). FEMA’s national emergency declaration on Friday, March 13, does not trigger this statute. Although the coronavirus outbreak may be similar to these other events, making it consistent for the financial industry to provide assistance, it is also possible that this current outbreak may be more widespread than past events. Therefore, it might be more challenging for institutions to provide support alone. Some banks have recently announced measures they are taking to help assist impacted consumers. However, it remains unclear whether these efforts will be sufficient, particularly depending on how large the financial consequences of the outbreak become in the United States. For example, in Italy, which is currently one of the hardest hit countries in the world, mortgage payments generally have been suspended to help people during the crisis. However, this type of action may require direct government support to the financial industry, and other types of government policies outside of the financial industry might better target impacted Americans and be more appropriate given the economic situation. Other Potential Responses to Help Consumers Other policy options may be available to help consumers having trouble paying their bills during the coronavirus outbreak. For example, consumers can harm their credit scores when they miss consumer loan payments, which can impact their access to credit in the future. In this way, the credit reporting industry may be in a position to help affected consumers. During natural disasters, lenders have the ability to flag affected borrowers by using special comment codes when reporting to credit bureaus. A similar approach might be appropriate during the coronavirus outbreak. Encouraging lenders to furnish this information to credit bureaus could allow the credit reporting industry to limit the impact on affected consumers’ credit scores and their future access to credit. Moreover, legislation could be considered to help prevent declining credit scores. However, it may be difficult to target this type of policy to the most impacted people, and, if the policy is too widespread, it may potentially harm the predictiveness of credit scores in the future. Communication and financial education may also play an important role. Many consumers having trouble paying their bills may not realize that their financial institutions can provide loan forbearance, access to credit, or other assistance under extenuating circumstances. Financial institutions and government agencies such as the Bureau of Consumer Financial Protection (CFPB) may be able to conduct outreach to consumers to let them know about their possible options.

Mar 16, 2020

COVID-19: The Potential Role of TANF in Addressing the Economic Effects

The Temporary Assistance for Needy Families (TANF) block grant provides grants to the 50 states, District of Columbia, American Indian tribes, and certain territories with the broad purpose of ameliorating and addressing root causes of childhood economic disadvantage. Some of the flexibility the block grant affords to states has been used, and augmented by federal legislation, to address the fallout from Hurricane Katrina and the deep economic recession of 2007-2009. TANF is currently funded on a short-term basis, with funding set to expire on May 22, 2020. Overview of TANF TANF was created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, P.L. 104-193) and is best known as funding for state programs that provide monthly assistance to needy families with children. PRWORA placed work requirements on states and time limits on families that receive this assistance. TANF funds a wide range of benefits and services—including what are known as “non-recurrent short-term benefits,” which are defined as aid that addresses a specific episode of need and does not exceed four months. The receipt of a nonrecurrent short-term benefit does not count toward a family’s time limit, nor other requirements such as those related to work, assigning child support to the state, and state reporting of detailed characteristics. In crafting a response to Hurricane Katrina in 2005, Congress enacted special rules to permit states to tap an existing fund to pay nonrecurrent short-term benefits to families evacuated from their homes because of Hurricane Katrina. In terms of addressing unemployment related to a recession, TANF can also fund employment services and subsidized employment. If an individual is in subsidized employment, the requirements of assistance (e.g., time limits) also do not count. TANF Funding The basic TANF block grant provided to states was established in PRWORA in 1996, based on spending in its predecessor programs in the early 1990s. The basic block grant has not been adjusted for inflation or changes in other circumstances (e.g., population growths and shifts among the states). It represents the bulk of funding available to the states under TANF. Nationally, the assistance caseload is about 25% of what it was in the 1990s, and states have shifted TANF funds to a wide range of activities. PRWORA also contained a $2 billion contingency fund for economic downturns. However, that fund was exhausted in the last recession; in recent years, Congress has provided appropriations of $608 million per year to it. The fund is spent each year regardless of economic conditions. It is expected to be exhausted in April of this year. Thus, there is little in the way of additional federal funding for states to meet unexpected costs related to COVID-19. States also have the ability to “reserve” (save) TANF funding. Some states have relatively large reserves, others have no reserves. Potential Legislation to Address the Effects of the COVID-19 Outbreak The flexibility of states’ use of TANF make it a possible source of funding for them to address the unknown and evolving needs of families resulting from the COVID-19 pandemic. However, states may not have funds to meet unexpected costs. Moreover, the fund that was tapped to provide states with help to address Hurricane Katrina is in the process of being exhausted for the current fiscal year. Congress responded to the economic downturn of 2007-2009 by creating a separate emergency fund. Such a fund to provide for increased short-term benefits would be an option to address the immediate economic needs of families resulting from the COVID-19 pandemic. Further, Congress might consider addressing not only these emergency needs, but also the lack of a counter-cyclical funding mechanism for states under TANF. That is, if the economy does go into recession, there is no automatic TANF funding to address it. The emergency fund created for the 2007-2009 recession might be considered a model for such a fund. Additionally, Congress might consider addressing TANF work participation standards. These standards are rules for states, not individuals, and states are penalized if they do not have a sufficient number of families participating for a minimum number of hours per week. Thus, they do help guide how states set work requirements for individual recipients. TANF regulations require that all hours that an individual is in paid employment—including paid sick leave—count toward meeting the hourly requirement. However, the regulations limit to 16 hours per month excused absences from non-paid activities because of illness. States may excuse hours for individual recipients, providing “good cause” exemptions for those who are sick or caring for family members. However, this could disadvantage states in meeting their work participation standards. The U.S. Secretary of Health and Human Services may, but is not required to, provide a “reasonable cause” waiver of the penalty imposed on a state for failure to meet the TANF work requirements.

Mar 16, 2020

Global Economic Effects of Covid-19: In Brief

Since the Covid-19 outbreak was first diagnosed, it has spread to over 100 countries and all but a handful of U.S. states. The virus is having a noticeable impact on global economic growth. Estimates so far indicate that the virus could trim global economic growth by 0.5%, but the full impact will not be known until the effects peak. This report provides an overview of the global economic costs to date and the response by governments and international institutions to address these effects.

Mar 13, 2020

Coronavirus Disease 2019 (COVID-19) Poses Challenges for the U.S. Blood Supply

The current Coronavirus Disease 2019 (COVID-19) outbreak may pose significant challenges for the United States’ blood supply. Mitigation strategies to prevent the spread of COVID-19, such as closures of schools and workplaces, have led to blood drive cancellations, resulting in a critical blood supply shortage in the Pacific Northwest (specifically, western Washington and Oregon). School closures, event cancellations, and other mitigation strategies in other areas of the country may provide challenges for maintaining a sufficient blood supply. The management and distribution of the U.S. blood supply is largely coordinated by private organizations, with some oversight by the Department of Health and Human Services (HHS). Congress may consider how best to address critical storages, such as through HHS or the U.S. Food and Drug Administration’s (FDA) authority over blood safety and donation guidance. Industry and Blood Center Response The nation’s blood supply is managed by a network of independent blood centers and the American Red Cross. On March 9, 2020, one blood center, Bloodworks Northwest, headquartered in Seattle, Washington, issued a press release warning that the Pacific Northwest blood supply is at the risk of collapse in coming days due to COVID-19 concerns. The release notes that the closure of schools, businesses, and events has led to the cancellation of blood drives in the area. Immediate risk of blood supply collapse due to the COVID-19 outbreak is currently limited to the Pacific Northwest. However, blood drives may potentially be cancelled in other areas of the country as containment and mitigation strategies increase, which may lead to blood supply shortages in additional areas. Blood centers are also concerned that potential donors may choose not to donate over fears of contracting COVID-19 while at the blood center. Blood centers throughout the country and organizations representing the industry are urging individuals to donate blood to mitigate potential shortages. (For examples, see Kentucky Blood Center, New York Blood Center, and LifeServe Blood Center.) Blood products have a limited shelf-life, and therefore ongoing donations are necessary. Blood can be mobilized and distributed regionally by blood center networks when a shortage exists at a blood center, but only to a certain extent given the limited shelf-life. HHS supports blood availability preparedness and response coordination through a number of roles and responsibilities. Blood Donation and Transfusion Safety The industry is reinforcing the notion that blood donation is a safe activity. Bloodworks Northwest, for instance, relayed in its press release on the outbreak that it routinely sanitizes its facilities and equipment, and staff regularly implement infection control precautions. Furthermore, staff, donors, and volunteers are encouraged to stay home if they feel unwell. Other blood centers are including similar reassurances in their calls to donate. On the day of donation, donors must have a normal temperature and present other signs of good health (21 C.F.R. § 630.10(f)). Blood centers are asking donors to follow-up after donating if diagnosed with COVID-19, as recommended by FDA. FDA reports that there are no known cases of respiratory virus transmission by blood transfusion and there have been no reported cases of transfusion-transmitted COVID-19, but has issued recommendations to guide the blood donation activities of persons who may have been exposed. FDA Recommendations on Blood Donation On March 11, 2020, FDA published updated information for blood establishments regarding donation during the outbreak. The March 11 information suggests that some blood establishments may want to consider donor education, encourage self-deferral, and manage post-donation information about COVID-19. The March 11 information recommends that individuals self-defer from donating blood for 28 days after either (1) resolution of symptoms after a diagnosis of COVID-19 or (2) the last possible contact exposure to a person with a COVID-19 infection. Donors are also directed to report a subsequent diagnosis after donation. Previous, now-outdated FDA information published on February 4, 2020, also recommended that individuals self-defer from donating blood for 28 days following travel to a location with a COVID-19 outbreak. However, some blood centers are still instructing potential donors to self-defer from donating if they recently traveled to areas with COVID-19 cases (for examples, see LifeServe Blood Center and Bloodworks Northwest). If these instructions remain in effect, they could potentially limit supply in areas that have the most critical need as many potential donors may meet the self-deferral criteria. The March 11 information also recommends that blood centers “prepare and evaluate emergency plans to address challenges, such as effects on the availability of blood donors and staff.” FDA did not provide any specific guidance for the preparation of emergency plans for blood centers. Implications for Congress Congress may direct FDA to issue more specific information to help blood centers educate potential donors as the outbreak evolves, to prevent travel deferrals, and to guide the development of emergency plans. Congress may also direct HHS to ensure that measures are in place to mobilize and distribute blood to blood centers, as needed. In addition, individual members of Congress may wish to communicate the safety of blood donation to constituents and to encourage donations at the local level.

Mar 13, 2020

Supreme Court Grants Stay in MPP Case

Mar 13, 2020

The Stafford Act Emergency Declaration for COVID-19

This Insight provides an overview of emergency declarations under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (hereinafter the Stafford Act, P.L. 93-288, as amended; 42 U.S.C. §§5121 et seq.). It describes the forms of assistance authorized pursuant to President Donald J. Trump’s March 13, 2020 emergency declaration under the Stafford Act in all U.S. states and territories in response to the coronavirus disease 2019 (COVID-19) pandemic. Stafford Act Emergency Declaration for COVID-19 The President’s emergency declaration, pursuant to Stafford Act Section 501(b), authorized assistance for COVID-19 response efforts for all U.S. states, territories, and the District of Columbia. There was no precedent for a nationwide Stafford Act declaration. Generally, the governor of an affected state/territory or tribal chief executive of an affected Indian tribal government requests the President approve a Stafford Act declaration for specific jurisdictions and types of needed assistance, and the President makes the determination in consultation with FEMA. It is rare for the President to declare an emergency without a governor or chief executive’s request; examples include the explosion at the federal courthouse in Oklahoma City and the loss of the Space Shuttle Columbia. Like the COVID-19 emergency declaration, these declarations were authorized under Stafford Act Section 501(b), for certain emergencies involving federal primary responsibility (42 U.S.C. §5191). The Department of Health and Human Services (HHS) remains the lead agency for the federal response to COVID-19 (see also 42 U.S.C. 300hh(a)). Assistance authorized through the Stafford Act is to supplement and support the efforts of HHS and state, territorial, tribal, and local governments. The Stafford Act does not supplant or supersede other federal authorities, including public health authorities exercised by the Secretary of HHS. Comparing Stafford Act Declarations The Stafford Act authorizes the President to issue either “emergency” or “major disaster” declarations. An emergency is broadly defined, and may include public health incidents. Although infectious disease events are not listed in the definition of a major disaster, President Trump stated that he “believe[s] that the disaster is of such severity and magnitude nationwide that requests for a declaration of a major disaster ... may be appropriate.” Table 1 lists the forms of assistance available pursuant to each type of declaration. Table 1. Assistance Available under Stafford Act Declarations Emergency Declaration Major Disaster Declaration Public Assistance (PA) Emergency Work Category A – Debris Removal Category B – Emergency Protective Measures Emergency Work Category A – Debris Removal Category B – Emergency Protective Measures Permanent Work Categories C-G – Restoration of damaged facilities Individual Assistance (IA) Individuals and Households Program (IHP) IHP Crisis Counseling Program Disaster Case Management Disaster Unemployment Assistance Disaster Legal Services Disaster Supplemental Nutrition Assistance Program Hazard Mitigation Assistance (HMA) Not Available Hazard Mitigation Grant Program Source: FEMA, “The Disaster Declaration Process.” Public Assistance Emergency declarations typically authorize certain types of Public Assistance (PA), which provides financial assistance to supplement a state, territorial, or tribal government’s ability to respond to an incident. Emergency declarations may authorize PA “emergency work” undertaken to save lives, protect property and public health and safety, and lessen or avert the threat of a catastrophe. The two forms of PA “emergency work” are debris removal (authorized under Stafford Act Sections 403, 407, and 502) and emergency protective measures (authorized under Stafford Act Sections 403, 418, 419, and 502). When PA is authorized, a state, territory, or tribe becomes the PA grant recipient. Local governments and certain nonprofit entities may apply for grant funds through the recipient. The Stafford Act authorizes FEMA to reimburse not less than 75% of the eligible costs of specific types of work undertaken by eligible PA applicants. Aside from eligibility restrictions, the amount of money that can be awarded for any single applicant or declaration through the PA program is not limited. However, the President must notify Congress when assistance provided for an emergency declaration exceeds $5 million (42 U.S.C. §5193). Public Assistance for COVID-19 Emergency Declaration The Stafford Act emergency declaration for COVID-19 authorized only one form of assistance: PA emergency protective measures. Applicants are to be reimbursed for 75% of eligible costs incurred while performing emergency protective measures. FEMA will not reimburse work supported by the authorities of another federal agency (42 U.S.C. §5155). Emergency protective measures encompass a wide range of activities. According to a FEMA news release on the COVID-19 emergency declaration, reimbursable activities may include “activation of State Emergency Operations Centers, National Guard costs, law enforcement and other measures necessary to protect public health and safety.” Additionally, FEMA is to reimburse costs for overtime labor performed by applicants’ budgeted employees and for overtime and regular-time labor performed by unbudgeted employees engaged in eligible work, per 44 C.F.R. §206.228. General FEMA guidance includes the following activities that may be relevant to a pandemic in a non-exclusive list of eligible emergency protective measures. FEMA has not yet specifically authorized these activities for COVID-19 response. Disaster-specific guidance may provide more information. Transporting and pre-positioning equipment and resources for response; Emergency Operation Center (EOC)-related costs; Supplies and commodities; Limited, uninsured emergency medical care and transport up to 30 days from the declaration date, unless extended by FEMA. Eligible care includes uninsured vaccinations, durable and consumable medical equipment and supplies, temporary medical facilities, and medical waste disposal; Evacuation and sheltering. Generally, FEMA only provides assistance for congregate sheltering, though non-congregate sheltering may be authorized upon request; Limited child care; Security, including law enforcement; Use or lease of temporary generators for facilities that provide essential services; Public dissemination of hazard information; and Mass mortuary services. Individual Assistance The FEMA Individuals and Households Program (IHP) may be available following a Stafford Act emergency declaration. IA was not authorized pursuant to the initial emergency declaration for COVID-19. An amended emergency declaration or a major disaster declaration could authorize different forms of IA. For more information on the federal COVID-19 response, see CRS Report R46219, Overview of U.S. Domestic Response to Coronavirus Disease 2019 (COVID-19), coordinated by Sarah A. Lister and Kavya Sekar.

Mar 13, 2020

COVID-19 and Broadband: Potential Implications for the Digital Divide

According to the Federal Communications Commission’s (FCC) 2019 Broadband Deployment Report, approximately 21.3 million Americans lack a broadband connection speed of at least 25 megabits per second (Mbps) download/3 Mbps upload, which is the FCC’s benchmark for high-speed broadband. In the midst of the coronavirus (COVID-19) pandemic, federal, local, and state governments, in addition to large and small businesses, are considering remote working or distance learning options to help abate the spread of the virus. As these decisions are made, some portion of the population will likely have the option and the capability to shift activities online, while others will not. COVID-19 mitigation efforts will likely reveal discrepancies in broadband availability and accessibility—termed the digital divide—across the United States. The Digital Divide The term digital divide refers to the gap between those Americans who use or have access to telecommunications and information technologies and those who do not. Several factors contribute to the digital divide disparity, including terrain, population density, demography, and market factors. Even in areas with broadband penetration, factors such as income can inhibit the ability of individuals to access broadband. For example, according to a 2019 Pew Research Center study, 44% of adults with household incomes below $30,000 a year do not have home broadband services. Although broadband access in the United States has steadily increased over the last 10 years, the digital divide persists. For background on the digital divide, see CRS Report RL30719, Broadband Internet Access and the Digital Divide: Federal Assistance Programs, by Colby Leigh Rachfal and Angele A. Gilroy. Remote Workforce Challenges Moving an entire workforce from an onsite environment to a remote environment may present some challenges; including the ability to connect to broadband in the home and the inability of all jobs to be done remotely. While those who have access to broadband may be able to work remotely and continue operations uninterrupted, there are many people who cannot perform their work functions from home, such as those in the restaurant, construction, or hospitality industries. According to the Department of Labor, approximately 29% of workers in the United States may be able to work from home. Another challenge may be capacity issues and whether a network can support a remote workforce. Distance Learning and the Homework Gap Internet use has increased in schools, with a growing number of schools issuing homework assignments online. In response to the coronavirus, some schools are not just assigning homework online, but temporarily moving all instruction online. The move to online instruction on a massive scale will likely encounter various challenges, especially if students do not have access to broadband at home or access to service with sufficient speed to support live features such as video conferencing. The divide between students that have access to adequate broadband at home and those that do not is known as the Homework Gap. While some schools may have the option to shift classes online, many cannot due in part to the varying levels of access to broadband. Some schools may have the resources to lend devices, such as laptops or tablets, along with hotspots to provide broadband to students; however, some schools may not—which may place those students at a potential disadvantage to their peers who do have connectivity. Telemedicine As the coronavirus continues to spread in the United States, the Centers for Disease Control and Prevention (CDC) have advised the best way to prevent catching the coronavirus is to avoid being exposed to the virus; namely avoiding close contact with people who may be carrying the virus (also known as social distancing). Visiting a doctor’s office may increase the chance of encountering people who are contagious, and an option of seeing a doctor virtually, known as telemedicine, may be an effective method of reducing the spread of the coronavirus. In addition, the coronavirus may constrain resources at hospitals and telemedicine could be an efficient and safe way for doctors to diagnose patients. By using the telemedicine option, a patient may be able to video teleconference with a doctor from the comfort of their home; however, telemedicine requires connection to high-speed broadband. For background on telemedicine, see CRS Report R46239, Telehealth and Telemedicine: Frequently Asked Questions, by Victoria L. Elliott. Broadband Mapping Although the FCC’s 2019 Broadband Deployment Report indicates approximately 21.3 million Americans lack a broadband connection, the number may be higher due to potential inaccuracies in broadband mapping data. Pinpointing where broadband is and is not available in the United States has been an ongoing challenge. Current data on national broadband availability is provided by private telecommunications providers, collected by the FCC, and displayed on the FCC’s Fixed Broadband Deployment Map. Difficulty in accurately mapping broadband availability has been attributed to a number of factors, including the adequacy of census block data, the lack of independent data validation outside the FCC, and the absence of a challenge process for consumers and other entities that believe the Fixed Broadband Deployment Map may overstate availability in their area. This can be particularly challenging for decision-making on whether to move classes online or move a workforce to telework, as there is no accurate basis for determining who would have access to broadband and who would not. For additional information on broadband data and mapping, see CRS Report R45962, Broadband Data and Mapping: Background and Issues for the 116th Congress, by Colby Leigh Rachfal.

Mar 13, 2020

Business Tax Provisions Expiring in 2020, 2021, and 2022 (“Tax Extenders”)

Thirteen temporary business tax provisions are scheduled to expire at the end of 2020. Four other temporary business tax provisions are scheduled to expire in 2021 or 2022. In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions. Collectively, these temporary tax provisions are often referred to as “tax extenders.” This report briefly summarizes and discusses the economic impact of the 17 business-related tax provisions that are scheduled to expire in 2020, 2021, or 2022. The provisions discussed in this report are listed below, grouped by type and scheduled year of expiration. The following special business investment (cost recovery) provisions are scheduled to expire in 2020: special expensing rules for certain film, television, and live theatrical productions; seven-year recovery period for motorsports entertainment complexes; three-year depreciation for race horses two years or younger; and accelerated depreciation for business property on an Indian reservation. The following economic development provisions are scheduled to expire in 2020: empowerment zone tax incentives; American Samoa economic development credit; and new markets tax credit. The following other business-related provisions are scheduled to expire in 2020: Indian employment tax credit; mine rescue team training credit; employer tax credit for paid family and medical leave; work opportunity tax credit; look-through treatment of payments between related controlled foreign corporations; and provisions modifying excise taxes on wine, beer, and distilled spirits. The following provisions are scheduled to expire in 2021 or 2022: 12.5% increase in low-income housing tax credit (LIHTC) authority; computation of adjusted taxable income without regard to any deduction allowable for depreciation, amortization, or depletion; the rum cover over; and credit for certain expenditures for maintaining railroad tracks. The 13 temporary business-related tax provisions scheduled to expire at the end of 2020 were most recently extended by the Further Consolidated Appropriations Act of 2020 (P.L. 116-94). Of these 13 provisions, 8 had expired in 2017 and were extended retroactively and 5 were scheduled to expire in 2019. Past tax extenders legislation had extended 11 of these 13 provisions. The other two provisions, both of which were scheduled to expire in 2019, were added to the tax code as part of the 2017 tax revision (P.L. 115-97). Four other business-related provisions will expire in 2021 or 2022. This report does not include provisions that in the past have been classified as individual or energy-related. See CRS Report R46243, Individual Tax Provisions (“Tax Extenders”) Expiring in 2020: In Brief, coordinated by Molly F. Sherlock; and CRS Report R44990, Energy Tax Provisions That Expired in 2017 (“Tax Extenders”), by Molly F. Sherlock, Donald J. Marples, and Margot L. Crandall-Hollick. For a general overview of tax extenders, see CRS Report R45347, Tax Provisions That Expired in 2017 (“Tax Extenders”), by Molly F. Sherlock.

Mar 13, 2020

Sunshine Week: Selected Issues for Congress

Coinciding with former President James Madison’s birthday, Sunshine Week recognizes the importance of transparency in government operations, and the work of Freedom of Information Act (FOIA; 5 U.S.C. §552) professionals across the federal government. Considered a defender of open government, Madison wrote, “A popular Government without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or, perhaps both. Knowledge will forever govern ignorance; And the people who mean to be their own Governors, must arm themselves with the power, which knowledge gives.” Recognition of the people’s right to know what their government is doing through access to government information can be traced back to the early days of the nation; however, modern statutes provide guidance on how the public may access government information. One critical statute, which is celebrated alongside Madison’s legacy during Sunshine Week, is FOIA. This Insight provides a brief summary of FOIA and its administration, and then provides an overview of selected issues relating to FOIA that may be of interest to Congress. The Freedom of Information Act The Freedom of Information Act established a statutory presumption of public access to information held by executive branch agencies. Enacted in 1966, FOIA generally allows any person—individual or corporate, U.S. citizen or not—to request and obtain, without explanation or justification, existing and identifiable agency records on any topic. Under FOIA, the burden of proof to access government information shifted from a requester’s “need to know” to a “right to know” doctrine. FOIA includes a series of exemptions from disclosure of certain categories of information. Since 2016, agencies may not withhold information under one of the statute’s nine exemptions, unless the disclosure would violate the law or the agency reasonably foresees that disclosure would harm an interest covered by an exemption. FOIA is a tool of inquiry and information gathering for various individuals and sectors—including the media, businesses, scholars, attorneys, consumers, and activists. Agency responses to FOIA requests may involve a few sheets of paper, several stacks of records, or information in an electronic format. Assembling responses requires staff time to search for records and make duplicates, among other resource commitments. Agency information management professionals are responsible for efficiently and economically responding to, or denying, FOIA requests. Congress may be interested in improving the administration of FOIA in light of the persistent backlog of requests, the variety of offices managing FOIA requests, and the use of FOIA’s exemptions to withhold information. Backlog of FOIA Requests The backlog of requests received by agencies that have not yet been completed continues to increase; in FY2018, the number of backlogged requests stood at 130,718 requests, up 17% from FY2017 (111,344 requests). Data for FY2019 are not yet available. The Department of Homeland Security, Department of Justice, and Department of Defense have the highest number of backlogged requests; however, these three agencies also receive the largest number of requests government-wide. Congress may consider policies that would target improving the FOIA backlog at particular agencies, or a broader multiagency approach. Some proposals include introducing FOIA measurements into employee performance reviews, centralizing FOIA request processing, or contracting surge support staff to assist. Variety of FOIA Officers The Chief FOIA Officer (5 U.S.C. §552(j)) is responsible for ensuring efficient and appropriate agencywide compliance with the statute, and may administratively report to other agency officials in different ways. While statute specifies that the Chief FOIA Officer shall be an Assistant Secretary or equivalent within an agency, it is common for the person serving in the role to split his or her duties with another Assistant Secretary role. For example, the Chief FOIA Officer may also serve as the agency’s Chief Privacy or Management Officer, Assistant Secretary for Public Affairs, or General Counsel. This variety of duties for an agency Chief FOIA Officer also reflects the variety of reporting mechanisms on FOIA policy to the agency, and may pose an obstacle to centralizing FOIA request processing. In some agencies, the Chief FOIA Officer might report directly to the agency head, while in others, the officer might be several steps removed from the agency head. Use of FOIA Exemptions While FOIA’s main purpose is to provide the public with a means of gaining access to information on federal government operations, the federal government may use one of the statute’s nine exemptions to prevent the disclosure of information. The exemptions cover information as varied as national security secrets to geological information concerning wells. Congress may be interested in determining whether there are trends in exemption usage, and if the exemptions are being properly applied by agencies. Per FY2018 data, Exemptions 6, 7(C), and 7(E) were most commonly cited in withholding information. Generally, Exemptions 6 and 7(C) apply to certain information whose disclosure would or could reasonably be expected to interfere with personal privacy, and Exemption 7(E) applies to law enforcement techniques, guidelines, and procedures. Notably, the Supreme Court issued a 2019 Exemption 4 decision in FMI v. Argus Leader Media related to the disclosure of confidential commercial or financial information. The Court’s decision to more broadly interpret Exemption 4 likely permits agencies to withhold a larger category of private-sector information from FOIA’s disclosure mandate. The more expansive interpretation of Exemption 4’s scope could see a corresponding decrease in the public disclosure of information protected by that exemption. However, it may also make some private entities more willing to supply commercial and financial information to the government. Selected CRS Resources CRS In Focus IF11450, The Freedom of Information Act: An Introduction, by Daniel J. Sheffner; CRS Report R46238, The Freedom of Information Act (FOIA): A Legal Overview, by Daniel J. Sheffner; CRS Report R41933, The Freedom of Information Act (FOIA): Background, Legislation, and Policy Issues, by Meghan M. Stuessy; CRS In Focus IF11272, Freedom of Information Act Fees for Government Information, by Meghan M. Stuessy; and CRS In Focus IF11119, Federal Records: Types and Treatments, by Meghan M. Stuessy.

Mar 13, 2020

Telework in Executive Agencies: Background, OPM Guidance, and 116th Congress Legislation Following Coronavirus

Mar 12, 2020

Oversight Provisions in H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act

President Donald Trump signed H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act, on March 6, 2020. It provides a total of $8.3 billion in supplemental funding to support the response of the United States to Coronavirus Disease 2019 (COVID-19). Prior to the passage of H.R. 6074, Congress had already begun to oversee the federal government’s response to COVID-19 with committee hearings in both the House and the Senate. Other committees are planning additional hearings in the coming weeks, and the Trump Administration has also been providing regular briefings. This voluntary flow of information among Congress, senior Administration leaders, and frontline experts will facilitate Congress’s response to COVID-19. If lines of communication remain open, voluntary information sharing may prove to be sufficient to meet Congress’s needs and expectations for oversight. However, H.R. 6074 makes explicit a number of requirements regarding both the type and frequency of information Congress will receive. H.R. 6074 appropriates significant funding for specific responses to COVID-19 and sets explicit requirements regarding how funds may be spent. The specificity of these conditions, as well as ongoing development of the outbreak, make it particularly important that Congress receive information in a timely manner. Even relatively short delays may prevent Congress from ensuring that the executive branch is following its instructions. The reporting requirements in H.R. 6074 are designed to improve the executive branch’s ability to provide timely information to Congress. This Insight details the oversight provisions included in H.R. 6074. CRS has produced several other written products related to COVID-19, some of which are linked at the bottom of this Insight. All CRS materials on the subject are available on CRS.gov. Consultation and Reporting Requirements in H.R. 6074 H.R. 6074 creates the following reporting requirements for entities receiving supplemental appropriations: Title III appropriates $300 million to be transferred into the Infectious Disease Rapid Response Reserve Fund. If the Secretary of the Department of Health and Human Services (HHS) declares an infectious disease emergency and seeks to use the fund (as authorized by the third proviso of Section 231 of Division B of P.L. 115-245), the Secretary must, in consultation with the director of the Centers for Disease Control and Prevention, report to the Appropriations Committees every 14 days for one year from the date of the declaration “as long as such report[s] would detail obligations in excess of $5,000,000” or upon the request of either committee. Title III also appropriates $300 million to the HHS Public Health and Social Services Emergency Fund for the purchase of “vaccines, therapeutics, and diagnostics” to respond to COVID-19. In order to access these funds, the HHS Secretary must certify to the Appropriations Committees that the funds are necessary in addition to other funds appropriated in the bill. Section 302 authorizes the HHS Secretary to enter into personal services contracts to respond to COVID-19 following notification to the Appropriations Committees. Section 305 requires that the HHS Secretary provide to the Appropriations Committees a detailed spend plan for the funds appropriated to HHS no later than 30 days after enactment of the act (i.e., April 6). HHS is required to update the plan every 60 days until September 30, 2024. Each spend plan submission must also include a listing of all new contract obligations in excess of $5 million and the amount of each of those obligations. Section 401 establishes that funds appropriated under Title IV of the act to the Department of State and United States Agency for International Development (USAID) are subject to the “regular notification procedures” of the Appropriations Committees. This requirement does not apply to $300 million appropriated for International Disaster Assistance. Section 404 allows funds appropriated in the act for Global Health Programs and the Economic Support Fund to be contributed to international organizations following consultation with the Appropriations Committees. Section 406(a) requires the Secretary of State and the USAID administrator to submit a strategy to “prevent, prepare for, and respond to coronavirus abroad” to the Appropriations Committees within 15 days of the enactment of the act (i.e., March 21). Section 406(b) requires the Secretary of State and the USAID administrator to provide the Appropriations Committees a report on the proposed uses of appropriated funds by country and project no later than 30 days after enactment (i.e., April 6). It also requires updates every 60 days until September 30, 2022, and then every 180 days until all funds have been expended. Section 505 requires the comptroller general of United States to consult with the Appropriations Committees on the “oversight of activities supported with funds appropriated by this Act.” H.R. 6074 also includes several provisions amending existing transfer authorities and authorizing the transfer of funds between specified accounts, subject to notification of the Appropriations Committees. Supplemental Funding for Select Inspectors General A portion of the supplemental funding appropriated in H.R. 6074 is directed to the Offices of the Inspectors General for HHS and USAID. Section 306 provides for the transfer of up to $2 million from the Public Health and Social Services Emergency Fund to the Office of the Inspector General for HHS. The inspector general is required to consult with the Appropriations Committees prior to the obligation of funds regarding how such funds will be used. H.R. 6074 also appropriates $1 million to the Office of the Inspector General for USAID for the oversight of USAID activities funded by the act. For More Information CRS Report R46219, Overview of U.S. Domestic Response to Coronavirus Disease 2019 (COVID-19), coordinated by Sarah A. Lister and Kavya Sekar CRS In Focus IF11421, COVID-19: Global Implications and Responses, by Sara M. Tharakan et al. CRS Legal Sidebar LSB10415, COVID-19: Current Travel Restrictions and Quarantine Measures, by Edward C. Liu CRS Report R46209, Coronavirus Disease Outbreak (COVID-19): CRS Experts, by Matthew B. Barry

Mar 12, 2020

COVID-19: Potential Economic Effects

This Insight discusses the potential economic effects of the coronavirus (COVID-19) on the U.S. economy. For background on the coronavirus, see CRS In Focus IF11421, COVID-19: Global Implications and Responses, by Sara M. Tharakan et al. Channels Through Which the Virus Could Affect the Economy Although the COVID-19 outbreak presently is most widespread abroad, it will directly affect foreign demand for U.S. exports of goods and services. As discussed in this CRS In Focus, the coronavirus could also disrupt U.S. companies’ international supply chains. If COVID-19 becomes widespread in the United States, it could directly reduce domestic economic activity by reducing both supply and demand. On the supply side, hours worked would be reduced by illnesses and fatalities and any work stoppages to prevent the virus from spreading. On the demand side, spending could be reduced by quarantines and other attempts to avoid crowds, such as public event cancellations. In addition, fear and uncertainty could reduce business and consumer confidence, leading to a reduction in spending. A reduction in investor confidence could also tighten financial conditions. For example, the sharp decline in the stock market since late February 2020 was widely perceived to be in response to worsening news about the virus. In general, these macroeconomic effects would be expected to eventually reverse once conditions return to normal, except to the extent COVID-19 causes worker fatalities. Unknowns in Evaluating the Economic Impact How large could the economic effects of the coronavirus ultimately be? At this stage, uncertainty is so great that a very wide range of economic outcomes—from little effect on the U.S. economy to a severe downturn—is plausible. The unknowns include the following questions: How many people will become infected over the course of the outbreak in the United States and abroad? How long will the outbreak last? What public and private measures will ultimately be taken that disrupt normal economic activity (e.g., travel restrictions, closures, shutdowns, cancellations)? How easily can businesses find substitutes for supply chain disruptions? How many businesses will fail before the outbreak ends? How will consumer and investor confidence be affected? What fiscal or monetary policy actions will ultimately be taken to offset the economic effects, and how effective would they be in a pandemic? To date, an emergency supplemental appropriation has been enacted (P.L. 116-123), and the Federal Reserve has reduced interest rates by 0.5 percentage points. Economic Estimates Two recent studies attempt to quantify the potential economic effects of the outbreak. The purpose of these studies is to illustrate how the economy would be affected under different outbreak scenarios rather than to provide the best projection of the outbreak’s scope. OECD. In its base-case scenario—a contained outbreak centered in China—the Organisation for Economic Co-operation and Development (OECD) stated “global GDP growth is projected to slow from 2.9% in 2019 to 2.4% this year, before picking up to around 3¼ per cent in 2021 as the effects of the coronavirus fade and output gradually recovers.” In this scenario, U.S. growth is only 0.1 percentage points lower in 2020 and is 0.1 percentage points higher in 2021. Despite the negative impact of COVID-19, the OECD projects a global recession is averted as growth remains positive in all the major economies—including China—except Italy. The base-case scenario assumes the outbreak peaks in the first quarter of 2020 and gradually fades thereafter. (The OECD did not report specific estimates on the number of illnesses or fatalities.) The base-case scenario also incorporates an assumption that monetary stimulus is used around the world to offset the negative effects. The OECD also presents a “domino scenario” where the virus “spread much more intensively ... through the wider Asia-Pacific region and the major advanced economies in the northern hemisphere.” In this scenario, “the level of world GDP is reduced by up to 1¾ per cent (relative to baseline) at the peak of the shock in the latter half of 2020, with the full year impact on global GDP growth in 2020 being close to 1½ per cent.” The OECD does not present an estimate for the effect on U.S. growth in the domino scenario, but growth in North America would decline by 1.5 percentage points. Figure 1 illustrates both scenarios presented by the OECD. Figure 1. Projected Decline in 2020 GDP Growth Under Two Scenarios OECD / Source: Organisation for Economic Co-operation and Development (OECD). Notes: *For the domino scenario, “U.S.” is for North America. McKibbin and Fernando. A Brookings Institution working paper by Warwick McKibbin and Roshen Fernando used a long-standing economic forecasting model developed by one of the authors to simulate economic effects under seven different outbreak scenarios—three that limit the outbreak to China and four in which the outbreak is worldwide. (The paper does not provide the relative likelihood of the various scenarios.) The model projects that “even a low-end pandemic modeled on the Hong Kong Flu is expected to reduce global GDP by around $2.4 trillion and a more serious outbreak similar to the Spanish flu reduces global GDP by over $9 trillion in 2020.” The loss in U.S. GDP relative to the 2020 baseline varies between 0.1%-8.4% across the scenarios. The scenarios assume a decline in the labor supply of 0.1%-3.44% in China and 0%-1.3% in the United States. Table 1. Projected Decrease in 2020 GDP Under Various Scenarios McKibbin and Fernando Decrease in 2020 GDP Relative to Baseline Scenario COVID-19 Deaths United States China Scenario 1 China: 279 -0.1 -0.4 Scenario 2 China: 3,493 -0.1 -1.9 Scenario 3 China: 12,573 -0.2 -6.0 Scenario 4 China: 2,794; U.S.: 236 -2.0 -1.6 Scenario 5 China: 6,985; U.S.: 589 -4.8 -3.6 Scenario 6 China: 12,573; U.S.: 1,060 -8.4 -6.2 Scenario 7 China: 2,794; U.S.: 236 -1.5 -2.2 Source: McKibbon and Fernando Notes: In Scenarios 1-3, the mortality rate for the rest of the world is negligible. In Scenario 7, the outbreak recurs annually; in the other scenarios, it is a one-time outbreak. U.S. and global growth had been projected to be moderate before the outbreak. Therefore, the economic effects of COVID-19 could result in a growth slowdown but would have to be large for the economy to contract, as the forecasts above illustrate. The estimated effects presented above are for the whole year; it is expected, however, that the economic effects will be larger in the first half of the year.

Mar 11, 2020

Tax Cuts as Fiscal Stimulus: Comparing a Payroll Tax Cut to a One-Time Tax Rebate

The Trump Administration and certain Members of Congress have expressed interest in a temporary payroll tax reduction as a fiscal stimulus response to economic concerns resulting from the coronavirus disease 2019 (COVID-19). Other lawmakers have emphasized that, with respect to tax-relief proposals, “everything’s on the table.” This sentiment reflects potential uncertainty in both the current economic outlook and what tax policy options might be most effective as the coronavirus outbreak evolves. An alternative to a temporary payroll tax reduction that might be considered, and has been used in the past, is a lump-sum tax rebate. Temporary payroll tax cuts and lump-sum tax rebates have been used in response to past periods of economic weakness. In 2011 and 2012, employee payroll taxes were reduced by two percentage points, providing tax relief to any individual with earned income. General fund revenue was transferred to Social Security trust funds to ensure that those funds were not affected by the payroll tax cut. In the first half of 2008, individual tax relief was provided through “recovery rebates”—a new tax credit for 2008 income taxes owed. Generally, individuals received the credit in the form of a rebate check in advance of filing their 2008 tax returns. Because the tax credit was an advance on taxpayers’ 2008 tax returns, the IRS estimated its value using tax returns filed for the 2007 tax year. The credit equaled a taxpayer’s income tax liability up to $600 ($1,200 for joint filers). A $300 fully refundable credit was available for low-income taxpayers with at least $3,000 in earned income, Social Security benefits, or veteran’s disability payments. The tax credits were phased out for higher-income households, phasing out by 5% for every dollar of earnings above $75,000 for individuals ($150,000 for couples). Individuals who were eligible for the credit could also receive an additional $300 fully refundable tax credit for each qualifying dependent child (which was also phased out). An individual did not have to be currently working to receive a tax benefit. The merits of these respective approaches may depend on how various policy objectives are prioritized. One issue might be how quickly benefits can reach individuals. Another might be how effective the measure was as economic stimulus in the past. Additionally, there may be distributional considerations. The range of fiscal policy options is not limited to the tax policy options discussed here. If speed of delivery is of paramount importance, for example, expanded unemployment compensation is better suited than tax policy to meet the objective. Expanded unemployment compensation, however, would not address the economic weakness caused by reduced consumption and spending among the employed population. Speed of Delivery There is general consensus that if an economic stimulus is warranted, the sooner the package reaches its recipients the better. Both a payroll tax cut and a one-time rebate have been implemented in the middle of a tax year, making them potentially attractive options if speed of delivery is a goal. The IRS was able to implement the 2008 rebate in 62 days, and the 2011 payroll tax cut was implemented within a month. Despite a shorter implementation period, a payroll tax cut would likely take longer to be fully delivered than a one-time rebate. This is because the payroll tax cut would be paid out over an extended time frame relative to a one-time rebate. For example, it would take more than nine weeks for a worker earning the median weekly wage in the fourth quarter of 2019 to receive $500 in stimulus from a 6.2 percentage point reduction in payroll taxes, while a one-time rebate could deliver $500 in stimulus immediately upon delivery. Effectiveness of Stimulus: Empirical Evidence A number of empirical studies have attempted to measure the economic effects of a payroll tax cut (Graziani, van der Klaauw, and Zafar 2016; Coronado, Lupton, and Sheiner 2005; and Souleles 2001) and a one-time rebate (Misra and Surico 2014; Parker et al. 2013; Shapiro and Slemrod 2009; and Shapiro and Slemrod 2003) or to compare the two options (Chambers and Spencer 2008). Taken as a whole, these papers and research on economic multipliers find that both of these policies are among the more effective tax policy options to stimulate the economy. The studies’ empirical results do not strongly support the assertion that, all else equal, a payroll tax rate reduction is more likely to be spent than a one-time rebate. The studies also generally conclude that allowing for refundability and targeting lower-income populations results in greater stimulative effects. Distributional Considerations The design of the 2008 “recovery rebates” led to a larger share of those benefits going toward the lower part of the income distribution (Figure 1). Allowing a refundable tax credit provided benefits to those without income tax liability, as well as those receiving Social Security benefits but not having earnings. Additionally, the “recovery rebate” was phased out for higher-income taxpayers. In contrast, the amount of a taxpayer’s payroll tax cut is tied to wage earnings. The payroll tax does not apply to earnings above the taxable earnings base ($106,800 in 2011). For taxpayers with earnings above this amount, instead of phasing out, the payroll tax cut was capped at the maximum amount (2% of $106,800, or $2,136 in 2011). As a result, when compared to the “recovery rebate,” a larger proportion went to taxpayers in higher income quintiles. Figure 1. Estimated Distribution of Payroll Tax Cut and “Recovery Rebates,” by Income Quintile / Source: CRS using Tax Policy Center’s model distributional estimates for the 2 percentage point employee payroll tax reduction and 2008 tax rebates. Notes: The estimated payroll tax cut benefits are distributed across income quintiles for the 2012 calendar year. The estimated benefits of the “recovery rebates” are distributed across income quintiles for the 2008 calendar year.

Mar 11, 2020

The Freedom of Information Act (FOIA): An Introduction

Mar 9, 2020

Development and Regulation of Domestic Diagnostic Testing for Novel Coronavirus (COVID-19): Frequently Asked Questions

On December 31, 2019, the World Health Organization (WHO) was informed of a cluster of pneumonia cases in Wuhan City, Hubei Province of China. Illnesses have since been linked to a disease caused by a previously unidentified strain of coronavirus, designated Coronavirus Disease 2019, or COVID-19. Despite containment efforts in China, the United States, and elsewhere, by late February there were indications that the COVID-19 outbreak may have entered a new phase, with community spread occurring or suspected in several countries other than China, including in the United States. Diagnostic testing is a critical part of the public health response to and clinical management of COVID-19, caused by the SARS-CoV-2 virus. Efforts in the United States to develop and disseminate a test for COVID-19 have faced challenges. Manufacturing and quality issues with the nation’s test—developed by the Centers for Disease Control and Prevention (CDC)—resulted in significant delay in access to testing throughout the country. In this context, on February 29, 2020, in an effort to facilitate the expansion of testing capacity as the first cases of community spread were confirmed in the United States, the Food and Drug Administration (FDA) announced a new policy, issued via agency guidance and effective immediately, that would allow certain laboratories—principally clinical and large commercial and reference laboratories—that have developed and validated their own COVID-19 diagnostic to begin to use the test prior to it receiving an Emergency Use Authorization (EUA) from the agency. FDA’s February 29 guidance aims to facilitate the expansion of diagnostic testing from the public health setting into the clinical health care and commercial settings. Doing so may help the country meet the increasing and substantial demand for testing generated by community spread of the disease and expanded clinical testing guidelines issued by the CDC. This report does not address financing or coverage of diagnostic testing for COVID-19.

Mar 9, 2020

Workplace Leave and Unemployment Insurance for Individuals Affected by COVID-19

This Insight provides a brief overview of the current availability of job-connected assistance to individuals, which may be relevant to the outbreak of coronavirus disease 2019 (COVID-19). Specifically, this product discusses workplace leave, paid and unpaid, that may be available to workers affected by the virus, as well as unemployment insurance (UI) benefits. It also discusses policy options to amend or expand existing UI programs to be more responsive to the effects of COVID-19. Workplace Leave Workers affected by COVID-19 may seek to use paid or unpaid workplace leave for their own medical needs or to care for family members. Leave, even if unpaid, may be preferable to a complete separation from employment if it allows for continuation of health care benefits and facilitates the employee’s return to work following recovery. Most federal civil service employees are entitled to paid sick and annual leave, but no federal law requires private-sector employers to provide paid leave of any kind. Family and Medical Leave Act The Family and Medical Leave Act (FMLA) provides an entitlement to eligible workers to unpaid, job-protected leave for a limited set of family caregiving and medical needs, with continued group health plan coverage; eligible employees may use up to 12-workweeks of leave in a 12-month period. FMLA coverage and eligibility is not universal. Federal, state, and local governments are covered employers, but private-sector employers employing fewer than 50 employees are not. Employees of covered employers must also meet tenure, hours-of-service, and work-site coverage requirements before using FMLA-leave. No other federal law creates a leave entitlement for private-sector workers. FMLA and COVID-19 Considerations A key consideration is whether FMLA-leave can be claimed for COVID-19-related needs, such as testing, quarantine, treatment, and caregiving. In most instances, FMLA-leave for medical needs (the employee’s own or a family member’s) is limited to serious health conditions, which require overnight inpatient care or continuing treatment by a health care provider. Continuing treatment generally constitutes several days of incapacitation and multiple in-person treatments by a health care provider; a single in-person treatment may suffice if the employee is prescribed a regimen of continuing treatment (e.g., prescription medication). As such, hospitalization and, potentially, testing for COVID-19 may be FMLA-qualifying needs. However, a worker who tests positive for the virus and is sent home to rest and take over-the-counter medications is unlikely to qualify for FMLA-leave for the period of home recovery. Federal law and regulations do not provide for FMLA-leave to address general needs related to public health emergencies (e.g., school closures). State Leave and Leave Insurance Laws Some states have enacted family and medical leave laws (similar to FMLA) that entitle workers to unpaid leave in certain instances. In addition, five states currently operate state leave insurance programs, which provide cash benefits (a percentage of the employee’s usual earnings, up to a maximum amount) to eligible workers who are absent from work for certain medical and caregiving reasons. As with FMLA, the extent to which state leave entitlements and leave insurance benefits may be claimed by COVID-19-affected workers will depend upon the worker meeting the criteria set out in state law. Some states have paid sick leave or paid time-off laws that require covered employers to allow employees to accrue and use several days of leave per year. Paid sick leave can generally be used for the employee’s own medical needs or to attend to the medical needs of certain family members. Some states, like New Jersey, allow that accrued sick leave may be used for workplace or school closures due to a public health emergency or because a public health official has determined that the employee should be quarantined. Policy Options As noted, the extent to which employees may use FMLA-leave for COVID-19 related needs is limited and must be assessed on a case-by-case basis. Congress may consider expanding FMLA-qualifying needs to include those related to a declared public health emergency or expanding the act’s employer coverage (e.g., including some employers with fewer than 50 employees). Given the likelihood that such changes will complicate employers’ scheduling and otherwise disrupt business activity, Congress may also consider pairing them with employer assistance (e.g., through state grants or tax credits to help cover the costs of hiring replacements for workers on leave). The Federal-State Unemployment Insurance System Two programs within the federal-state unemployment insurance (UI) system may either respond to some types of unemployment caused by COVID-19 or could be modified to respond more broadly to provide weekly income replacement for individuals unavailable to work or unemployed as a result of COVID-19. Unlike workplace leave, the UI system generally treats public-sector workers similarly to private-sector workers. Unemployment Compensation The joint federal-state Unemployment Compensation (UC) program provides income support through weekly UC benefit payments. Although there are broad requirements under federal law regarding UC benefits and financing, the specifics are set out under each state’s laws. States administer state-funded UC benefits with U.S. Department of Labor (DOL) oversight, resulting in 53 different UC programs operated in the states, the District of Columbia, Puerto Rico, and the Virgin Islands. To receive UC benefits, claimants must generally have been laid off through no fault of their own; have enough recent earnings (distributed over a specified period) to meet their state’s requirements; and be able, available, and actively searching for work. The UC program generally does not provide UC benefits to the self-employed, those who are unable or unavailable to work, or those who do not have a recent earnings history. UC and COVID-19 Considerations Individuals who are laid off for COVID-19-related reasons would be subject to UC laws regarding benefit eligibility in the state where the previous work was performed. As described above, some categories of workers would not meet state eligibility requirements for UC benefits. Additionally, individuals who are unavailable for work due to COVID-19—whether they are quarantined or caregiving for sick or quarantined family members—would likely be ineligible for UC benefits because (1) they may not be separated from employment, and thus would not meet state definitions of unemployment or (2) may not meet state requirements regarding being able and available for work. Disaster Unemployment Assistance Disaster Unemployment Assistance (DUA), which is authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act), provides federally funded unemployment benefits to individuals unable to work as a result of a federally declared major disaster and otherwise ineligible for regular UC benefits. For example, DUA benefits may be available to the self-employed and workers unable to reach their place of employment as a direct result of a major disaster, among other categories of DUA eligible employees. DUA and COVID-19 Considerations The current law definition of major disaster for the purposes of DUA, however, does not include a disease outbreak or other public health emergency. (No public health incident has ever been declared as “major disaster” under the Stafford Act.) Therefore, DUA benefits would not be available in response to unemployment or unavailability for employment related to COVID-19. UI Policy Options to Respond to COVID-19 Unlike some other federal or state programs, UC and DUA have the ability to rapidly respond and provide immediate income support. Thus, Congress may consider amending or expanding current unemployment benefits for individuals affected by COVID-19. For example, the DUA authority under the Stafford Act could be a model for responding to public health emergencies. More generally, in response to the 2007-2009 recession, UC benefits were temporarily augmented and extended, with some costs temporarily assumed by the federal government.

Mar 6, 2020

COVID-19: Social Insurance and Other Income-Support Options for Those Unable to Work

Mar 6, 2020