We are still awaiting the full text, but here's what we know so far.

Transcription:

It is Monday, December 21st, 2020 and we just got the news last night and tonight that Congress has now reached a 900 billion dollars Covid stimulus deal and were still waiting on the actual text of that. There are reports coming out of what at least some of the bill is here.

So, zero hedges had a nice little summary here, we'll just go through real quick. Direct payments of 600 to most Americans 600 per adult and 600 per child. In the first round of stimulus payments we had 1200 for adults and then 500 for younger kids, therefore, this is a little bit less like I’ve got a wife two kids and that's the next four. So, last round I got 3 400 looks like this round I’ll get 2 400 which is what it is not much to sneeze that compared to what a lot of other countries have done but Congress in its infinite wisdom has continually addressed stimulus through businesses rather than through individuals which is a very different approach than most other countries have taken. So, that's what it is now we do know I have several clients who have yet to receive anything from the first round so their processing leaves a little bit to be desired but most people have gotten their funds from the first stimulus by this point, was that nine months ago or eight months ago, they're keeping 300 per week enhanced unemployment benefits through march.

A lot of programs are expiring for gig workers like people who work for Uber, Lyft, and those kinds of people, those payments are going to continue. This is the biggie 284 billion for the paycheck protection program that provides forgivable loans to small businesses.

The first round of paycheck protection program, the PPP, the first round of those are starting to be forgiven now and people are finding a few hidden gotchas realizing that if they took an EIDL grant as well as PPP money, then the EIDL grant gets applied against the PPP forgiveness.

I have one client who I had had PPP money spent it on the payroll but also got eight thousand dollars of EIDL so that eight thousand is not forgivable and now that becomes a long-term loan, 82.82 billion dollars for education includes 54.3 billion for k12, 22.7 for colleges, governors would get 4.05 billion to spend on education 8 at their discretion for-profit colleges would get 908 million another 1.7 billion be set aside for historically black colleges, tribal colleges, and minority-serving institutions.

We know that a lot of the schools have been hit pretty hard, enrollments down, students have said why are we paying full tuition if we're not getting full access to facilities and things like that .10 billion for child care that's an interesting one, I don’t know any more details on that yet but could very well be something to get there and then a lot of it goes into more specific things. So, 5 billion in grants for theater operations there's a big chunk in this article about the airlines, they're getting another 15 billion dollars, 25 billion in rental assistance, and extension of the moratorium on evictions, that's a big deal.

So, what forms that rental assistance will take is not revealed yet. Extension on the moratorium of evictions is another issue. Therefore, we have these people who own these properties and have rented them out, and a lot of them haven't been paid in months and months and they can't do anything about it.

Meanwhile, a lot of them are not able to pay their mortgages, it's down the line that these down payments have been an effect on the housing market, and without being able to evict. Then, we're just staying in the same place and we'll see what ends up happening after all this gets finalized.

So, there's a couple of options. One option is that you basically force everyone into either secured or an unsecured loan where the renters would have to pay back the landlords over some specified amount of time, maybe it's three years or five years but then the chances of landline actually collecting on that are pretty low, let's be honest. Then, for the people who haven't been able to pay because businesses were shut down, lost their jobs all this kind of stuff with Covid. Then, adding on this a giant liability on the end is very difficult.

Another possibility is that all back rent just magically gets forgiven with the assistance of the government. If that happens, that's really a big stick in the eye to people who have been paying their rent because why should they have paid if it was all going to just go into nothing and then at the same time if that happens then what happens to the amounts that the landlords owe to the mortgage companies.

Again, we could do a forced loan modification that would make some kind of sense if there's a corresponding amount of asset on the landlord side created by the amounts due from the renter. It's a giant mess because let's say somebody moves out and then they don't pay this amount they have an issue but you can't get blood from stone. Then, what does the landlord then turn around and do to the mortgage company, it's a sticky situation.

13 billion in funds for food stamps and child nutrition benefits. 30 billion for the procurement and distribution of a coveted vaccine as well as testing and tracing. Obviously, Pfizer and modern are going to be the recipients of that one.

1.8 billion in tax credits for businesses to provide paid leave and that's very similar to what's already been in place for the tax credits for the people impacted by Covid.

There's one interesting part buried here in the end. In addition to a 15 billion dollar airlines rescue bridge line, the draft language of the emergency coronavirus relief package includes a tax break for corporate meal expenses. President Trump has talked about a way about talking about securing the deduction derisively referred to as the “three-martini lunch” by critics as a way to revive the restaurant industry badly battered by the pandemic. Manuchin included the meal deduction as a White house priority in negotiations. But critics said it would be a little effect and largely benefit business executives who do not urgently need help at this time.

So, for decades now meals have been only 50 deductible. It used to be meals and entertainment but with the tax cut and jobs act which was the trump tax reform at the end of 2017 they actually got rid of the deductibility of entertainment altogether. Then, it was just business meals, you take a client to lunch you spend 200 lets’s say 100 of that is a deduction 100 of it is not and then the tax savings on that 100 just depends on your whatever your tax rate is. With this language then we're saying that meals are gonna be fully deductible. Now, that's a marginal incentive to then increase your spending on meals.

When you take those clients to lunch, are you getting the three martinis, are you getting the nicer thing because it's a tax write-off right? that's what they're talking about here
These are things to keep in mind.

The big things are that one, make sure you have it have at least registered with the IRS if you haven't or know that you're up to date on your tax filings so that you get your direct payments.

The other big thing is the PPP, make sure that you are set up to receive that. Again, specifics are going to matter, the businesses who received PPP money before eligible to get it
again, is these only new businesses, different businesses, or what have you. All these details need to be resolved but that is where we are for the moment and I’ll keep updating things as we go and as we learn more.

Talk to you next time.