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Takeaway: There now seems to be consensus among the key players that lawmakers will need to provide more federal relief as soon as possible.

Below is a complimentary research note from our Senior Policy analyst JT TaylorIf you are an institutional investor interested in accessing our research email sales@hedgeye.com

The Next Tranche: What's Coming For Coronavirus Legislation - 4 7 2020 10 27 09 AM

THE NEXT TRANCHE: It’s unclear what the next round of coronavirus legislation will be called –  Stimulus 4, Corona-4, Phase 4, Corona 3.5, CARES 2.0. 

Whatever it’s called, there now seems to be consensus among the key players that lawmakers will need to provide more federal relief as soon as possible.  

Following the March 27 enactment of the CARES Act, House Speaker Nancy Pelosi envisioned Phase 4 as a broad-ranging legislative package that might even include an infrastructure package with a 10-year price tag of as much as the $2 trillion supported by President Trump.  Those goals have now been scaled back, given (a) Republican opposition and (b) the possibility that leadership may need to pass the next round of legislation by unanimous consent if it’s not safe for lawmakers to return to Washington. 

In remarks to the press on Friday, Pelosi said, “Let’s do the same bill we just did, make some changes to make it current.”  In an April 4 'Dear Colleague' letter to all House members, Pelosi wrote that “CARES 2 must go further in assisting small businesses including farmers, extending and strengthening unemployment benefits and giving families additional direct payments.  We must also provide the desperately needed resources for our state and local governments, hospitals, community health centers, health systems and health workers, first responders and other providers on the frontlines of this crisis.” 

As for what the Administration will push for, various reports indicate that “White House officials have in recent days discussed pitching a payroll-tax cut, a capital-gains tax cut, creating 50-year Treasury bonds to lock in low-interest rates, and a waiver that would clear businesses of liability from employees who contract the coronavirus on the job.” 

Pelosi provided no timeline for action in her Dear Colleague letter, but in previous remarks, she indicated the House would be ready to move legislation soon after it returns to session.  House and Senate members are not scheduled to return until April 20 at the earliest, but if action is needed before then (for example, if the loan program for small businesses runs out of money), it will increase pressure on the Administration and Congressional leaders to quickly forge a bipartisan agreement that pumps more money into the aid programs. 

Whether such a plan could be approved without objection remains to be seen.