Our founding members Jeffrey Forbes and Dan Tate Jr. sent this note to clients earlier today regarding the latest on DC’s response to COVID19.
With the number of COVID-19 cases continuing to surge, national, state and local policymakers are working to address and mitigate the effects of this public health crisis. Forbes Tate Partners (FTP) has put together a short summary of what is happening in Congress, what measures are being taken to stabilize the economy, and a brief preview of future plans.
We will continue to send these updates out on a regular basis.
The Federal Reserve continues to look for ways to provide support to the U.S. economy via monetary stimulus, having already dropped rates to zero, loosened balance sheet requirements for banks, added liquidity to the overnight repo market, and pulled forward $700 billion in asset purchases in Treasuries ($500 billion) and mortgage-backed securities ($200 billion). Yesterday the Fed announced two financial-crisis-era programs to support commercial paper in an effort to unclog the short-term lending market. Even with those steps, the Fed and other leaders look to Congress to facilitate fiscal stimulus.
In an effort to provide a lifeline to businesses and families as a growing number of cities come to a virtual halt in an attempt to flatten the curve, Congress thus far has responded with a first tranche of $8.3 billion to fight COVID-19 directly. This tranche provides federal agencies money for vaccines, tests and potential treatments, and funding to help state and local governments respond to the threat. The second tranche now heads to the President’s desk for signature and guarantees free coronavirus testing, secures paid emergency leave, enhances Unemployment Insurance, strengthens food security initiatives, and increases federal Medicaid funding to states.
We expect a third tranche of stimulus (“Phase 3” or “Stimulus 3”) to support industries hit the hardest, including the travel and hospitality industry. Details are still being negotiated as both parties and the White House work to rapidly address the needs of the American public. At this time, Senate Minority Leader Chuck Schumer and other top Democrats recommend at least a $750 billion package, while President Trump and Senate Republicans have come back with a $1 trillion stimulus proposal, including $500 billion in direct payments to taxpayers, according to a recent Department of Treasury white paper. Any Phase 3 stimulus will include measures to support small to medium-sized businesses. The sheer size and complexity of Phase 3 is likely to require longer negotiations. However, driving the sense of urgency is that fear about the economy is nearly even across party: 86% of Democrats and 84% of Republicans are concerned about the impact on the economy.
At this point, everything is on the table. Members of Congress and the media are comparing this to 9/11 and the Great Recession of 2008, and both responses took months to come together and had many iterations. To that end, as news and updates are changing hourly, FTP will continue to monitor and flag key moments and opportunities for our clients. Additional stimulus measures will be moving over the next few weeks and your client leads will be working closely with you and your teams. While this is an unprecedented time, FTP will be here to work step by step with our clients, as we always have.
Please do not hesitate to reach out with any additional questions and stay healthy and safe.
Jeff Forbes and Dan Tate Jr.