A Summary of the HEROES (Health and Economic Recovery Omnibus Emergency Solutions) Act

The Health and Ecomonic Recovery Omnibus Emergency Solutions (HEROES) Act is a massive, $3 trillion proposal, even more ambitious than the $2.2-trillion CARES Act passed in March. The legislation passed the U.S. House of Representatives on May 15, 2020, though the bill has stalled in the Senate. Senate Majority Leader Mitch McConnell (R-Ky.) called the bill a “seasonal catalog of left-wing oddities” and an “unserious effort.” It is likely that the HEROES act will be substantially modified from the House version prior to being passed, but we have yet to see a compromise bill come out of Committee. 

Below is a brief summary of the major elements of the House HEROES act with some related commentary gathered from various sources on what a possible compromise from the Senate might include:

1) Second Round of Stimulus Checks – The HEROES Act calls for a second round of stimulus checks to most Americans. The plan is to provide a $1,200 base payment to each eligible person ($2,400 for married couples filing a joint return), plus an additional $1,200 for each dependent (up to a maximum of three dependents). So, for example, a married couple with three children could receive up to $6,000. As with the first round of stimulus checks, the HEROES Act stimulus payments would be phased-out for people with higher incomes.

President Trump has expressed interest in a second round of stimulus checks, which certainly improves the chances of an additional round. Plus, while Senate majority leader Mitch McConnell (R-Ky.) wants to wait before passing any additional stimulus legislation, he has not publicly closed the door on the idea, either. Several other Republican senators, while not necessarily enthusiastic about another round of stimulus checks right now, seemed open to the idea if they are needed later.

Republicans are not likely to support a stimulus check program that is too costly (such as the proposal to send $2,000 monthly checks until the pandemic is over). However, as long as payment amounts aren’t too high, eligibility isn’t too broad, and the duration is limited, the odds of seeing a second round of stimulus checks appear to be good.

2) Improvements to the Employee Retention Credit – The Employee Retention Credit can be worth up to $5,000 per paid employee (50% of up to $10,000 in qualified wages). However, it only applies to qualified wages paid from March 13 through December 31, 2020. For smaller firms, all wages paid when business operations are suspended, or the business is experiencing a significant decline in gross receipts, are eligible for the credit.

The HEROES Act offers several improvements to the Employee Retention Credit. For instance, it would increase the maximum credit amount from $5,000 to $36,000 per paid worker. Among other things, the bill would also extend the credit to eligible state and local government employers and allow businesses that take out Paycheck Protection Program loans to qualify for the credit.

3) Expansion of the Paycheck Protection Program (PPP) – The HEROES Act also calls for enhancements to the Paycheck Protection Program (PPP). The HEROES Act includes provisions to:

  • Extend the PPP program through the end of the year;
  • Guarantee access to PPP loans for small businesses with 10 or fewer employees;
  • Increase the eight-week loan use period to 24 weeks;
  • Create a safe harbor for borrowers who can’t rehire workers in the required timeframe;
  • Repeal the requirement that 75% of the forgiven loan amount be used for payroll; and
  • Clarify that expenses paid with PPP loans that are forgiven are tax deductible.

The PPP has been very popular with Democrats and Republicans alike, and it is expected that most of the proposed PPP enhancements will ultimately be approved by Congress.

4) Aid to State and Local Governments – The HEROES Act includes more than $1 trillion in aid to state and local governments. However, according to a recently published report, the projected two-year government revenue loss is expected to be less than $500 billion. A more modest aid package will likely be ultimately approved, though it is possible it could contain restrictions on how the money is used. Republicans are likely to insist the aid be used to address COVID related problems, such as putting employees back to work. 

5) Extended Unemployment Benefits – More than 40 million Americans are presently unemployed. Republicans are likely to agree to some amount of unemployment extension, though many Republicans express concern about benefits becoming so generous that workers feel that they are better off staying at home instead of going back to workif given the opportunity. As a result, the additional $600 unemployment federal ‘bonus’ is not likely to be renewed though some other type of federal unemployment benefit is expected. Sources have indicated renewed federal unemployment benefits could be reduced from $600 to the $300 range.