Insurance leaders praise Congressional pandemic relief package
Although the latest pandemic relief bill approved by the U.S. Congress will provide an economic boost, many wish it had arrived sooner.
Several solutions backed by insurance industry leaders were included in the $2.3 trillion government funding and coronavirus relief package approved by the U.S. Congress on Dec. 21, 2020.
Although it was what financial markets had been waiting for, and the catalyst for the recent rally in U.S. stocks, by the time news broke that the U.S. House and the U.S. Senate had finally reached an agreement on a second economic relief package, many small businesses were on the chopping block, and stock and bond prices were falling.
The bill still needs to be signed by President Donald Trump in order to be enacted.
“Given the immense challenges facing small businesses, we would have preferred coronavirus relief had been passed several months ago,” Jon Gentile, vice president of Government Relations for the National Association of Professional Insurance Agents (PIA), said in a prepared statement. “However, we are pleased that several of PIA’s priorities were included in the final bill.”
As PIA explained: The coronavirus relief package was merged with a $1.4 trillion omnibus appropriations bill. The deal struck by congressional leaders that led to the agreement includes a $300 increase in weekly unemployment benefits; $600 direct payments for individuals; more than $300 billion for small business aid; and funding for schools, hospitals, and vaccine distribution. A federal eviction ban has been extended through the end of January 2021.
The PIA also endorsed the inclusion of such provisions as $284 billion for new Paycheck Protection Program (PPP) loans along with an allowance for second draws and streamlined PPP loan forgiveness.
The Independent Insurance Agents & Brokers of America (the Big “I”) also publicly thanked congressional leadership for striking a COVID-19 relief deal, which the group said “would provide much-needed assistance to individuals and small businesses all over the country.”
“Without the diligence and compromise exhibited by the bipartisan, bicameral leaders of Congress and a group of pragmatic Senators, this urgently needed COVID-19 relief package would not have happened,” Big “I” President & CEO Bob Rusbuldt said in a press release. “It was especially critical that congressional leadership was able to work in a bipartisan way to provide additional help to the millions of small businesses in need. The additional $325 billion for small businesses, including $284 billion in Paycheck Protection Program loans, and access to a second PPP loan for the hardest hit small business will help keep the lights on for many small businesses across the country.”
The Big “I” acknowledged that it also would have liked to see such a bill arrive sooner.
Unyielding virus news
News of a fast-spreading strain of the coronavirus in the United Kingdom, Denmark and South Africa has revived worries about the global economic recovery and overwhelmed the positive impact of the $900 billion U.S. economic relief bill.
Still, the fiscal relief package should “provide some relief” for the U.S. economy, whose recovery is already slowing down because of the “resurgent pandemic” in the U.S., wrote David Kelly, chief global strategist at JPMorgan Funds, in his weekly outlook.
Kelly was referring to the growing number of infections, hospitalizations, and deaths in the U.S. due to the COVID-19 virus, which has persisted well before the latest news from the U.K.
The relief package reportedly includes $600 checks per adult or child below certain income levels, an 11-week $300 enhancement to weekly unemployment benefits along with extended unemployment benefits, and close to $300 billion in new forgivable PPP loans with expanded coverage.
In addition, there’s a month-long extension for the moratorium on eviction to Jan. 31, 2021, $25 billion in rental assistance and tens of billions of dollars for schools for the purchase and distribution of vaccines and enhanced testing, and for airlines and transportation infrastructure.
Businesses receiving PPP loans that have been forgiven reportedly will be able to deduct business expenses paid from those loans, which the IRS had previously disallowed.
The “short-term nature” of the relief package, however, “underscores the need for a further relief package in the new Congress,” Kelly wrote.
Mark Zandi, chief economist at Moody’s Analytics, said the relief plan is coming “just in time” for the U.S. economy as evidenced by rising unemployment claims, sagging retail sales and renewed restrictions on businesses due the expanding pandemic.
He expects the latest fiscal rescue package will add about 1.5 percentage point to annualized real GDP growth in the first quarter of next year and close to 2.5 percentage years to 2021 growth.
“If lawmakers had not come through, the economy probably would have suffered a double-dip recession in earlier 2021 [and] unemployment, which is currently 6.7% would have risen to almost 9% by mid-year,” wrote Zandi in his “This Week in the COVID Crisis” report.
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