Sen. Mark Warner’s Paycheck Security Act would pay up to $90,000 in the salaries and benefits of Americans who have lost their jobs because of coronavirus in exchange for employers halting layoffs and keeping wages at their current rate.
Warner announced his program, which was developed with Sens. Bernie Sanders (I-VT), Doug Jones (D-AL) and Richard Blumenthal(D-CT), on the Senate floor on May 13.
Under the proposal, businesses would receive employee tax retention grants for employers to pay the money to their furloughed or laid-off employees for up to six months.
On the Senate floor, he said rapid action is needed:
We must work quickly to reduce the economic uncertainly facing workers in small businesses. To do this, we must provide immediate assistance to millions of workers who have gone overnight from a steady job to unemployment, through no fault of their own. I’m not talking about another stimulus check. I’m not talking about unemployment benefits. I’m talking about paychecks.
Warner’s Proposal Is Not A New Concept
On the Senate floor, Warner even pointed out that the proposal is similar to the “direct support approach” proposed by Republican Sen. Josh Hawley of Missouri.
In the Washington Post, Hawley wrote an op-ed, where he said, “Beginning immediately, the federal government should cover 80 percent of wages for workers at any U.S. business, up to the national median wage, until this emergency is over.”
Under Hawley’s “Rehire America” proposal, employers could receive a refundable payroll tax that would pay for up to 80% of payroll costs and would also include a rehiring bonus to bring back employees let go during the pandemic. Employees could receive wages up to the national median wage, which was about $33,000, the Federal Reserve Bank of St. Louis estimated.
Rep. Pramila Jayapal (D-WA) of Washington’s seventh district also made a similar proposal, the Paycheck Guarantee Act, which would have the government cover company payroll costs up to $100,000 per employee.
Jayapal and the other senators told Vox that they’d been in touch and were considering working together on their respective proposals.
Warner Says Direct Support Works In Europe
“We know this direct support approach works because it has been implemented successfully in a number of European countries and in Canada,” Warner said on the Senate floor.
Germany, Denmark and the United Kingdom have all adopted such paycheck guarantee programs, leading to much lower unemployment numbers in those countries than in the U.S.
Doing something to prevent an increase of the 22 million unemployment claims referenced in Warner’s draft of the bill (now reported up to 36 million by the New York Times) was a large part of Warner’s argument to prevent future layoffs. The unemployment rate, he said, is in danger of reaching 20-25% without relief beyond the Small Business Administration loans instituted in the CARES Act.
“The SBA Payroll Protection Program (PPP) is a very well-intentioned and appropriate program for many businesses, but so far the evidence suggests it won’t be enough,” he wrote in the draft proposal.
In America, Warner said the proposal could become part of an expansion of the employee retention tax credit. The credit, implemented by the Internal Revenue Service, is intended to prevent businesses from laying off employees by offering businesses financially affected by coronavirus a tax credit of 50% on up to $10,000 in wages.
Funds would come in the form of U.S. Treasury Department grants and Warner also said the proposal could be used to cover, “business operating costs, such as rent and utilities.” To prevent companies from using the funds for golden parachutes or other costs not associated with employees, Warner said any company taking the credit would “be required to suspend buybacks and limit CEO compensation for at least the term of federal assistance.”
Warner’s Proposal Is Not Included in the HEROES Act
Despite buy-in from three other prominent senators, House Speaker Nancy Pelosi has not yet included the proposal in the proposed HEROES Act, which will cost an estimated $3 trillion.
In an April announcement of the proposal, former presidential candidate Sen. Sanders said, “Our job now is to join the rest of the industrialized world and pass the Paycheck Security Act.” Sen. Blumenthal agreed, writing, “If we fail to take aggressive relief measures now, we’ll kneecap our future recovery.”
And Sen. Jones, who won his seat through a political upset victory in Alabama in 2017, also criticized the bureaucracy surrounding recovery efforts, “The Paycheck Security Act will put existing infrastructure to work to help companies maintain payroll while cutting the red tape that’s slowing down relief to the American workers who need it most.”
Blumenthal expressed disappointment that the HEROES Act hasn’t included the Paycheck Security Act, yet implied that he hadn’t given up on it yet, according to reporting from the Connecticut Mirror. Meanwhile, anticipating no support for the HEROES Act from Republicans, the news site has suggested Pelosi may have defectors. One of the potential defectors is Jayapal, who wants her Paycheck Guarantee Act included.
The HEROES Act is slated for a vote in the House on May 15.
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