Winners and losers in Congress's $2 trillion coronavirus rescue plan
Days of negotiations between the Trump administration and Congress -- and fierce lobbying by industries eager for assistance dealing with the coronavirus outbreak -- has yielded a rescue package worth more than $2 trillion in spending and tax breaks. It was passed by the U.S. Senate late Wednesday night.
Here are some of the winners and losers:
- More aid for companies, strings attached: The plan would include about $500 billion in loans and assistance for larger companies, as well as states and cities, according to the latest drafts being circulated. But the aid comes with strings attached after pressure from Democrats.
Companies receiving a government loan would be subject to a ban on stock buybacks through the term of the loan plus one additional year. They also would have to limit executive bonuses and take steps to protect workers. The Treasury Department would have to disclose the terms of loans or other aid, and a new Treasury inspector general would oversee the lending program.
The bill is largely a win for the retail, hotel and restaurant industries that initially viewed lawmakers as favoring the airline industry. Trade groups representing those sectors lobbied Congress hard for loans, grants and unemployment assistance because their businesses have also suffered coronavirus-related revenue losses.
"We see it as an important win," said Austen Jensen of the Retail Industry Leaders Association. "Yes, airlines are in a tough spot, but the retail industry is equally in a difficult position."
Jensen said he hopes "necessary" oversight measures won't delay "getting this capital out into the businesses."
The details of the stimulus plan pushed the broader market to session highs, with the S&P 500 gaining as much as 5.1% before paring gains to close up 1.2%. The S&P Supercomposite Hotels Index, which includes cruise operators, also extended gains, as did restaurant and casinos stocks.
- Airlines win loans, cash-for-equity bailouts: Struggling U.S. airlines would be eligible to receive federal loans and direct cash assistance if they are willing to give an option for an ownership stake to the government.
The program allocates $25 billion to passenger carriers and $3 billion to airline contractors providing ground staff such as caterers, while cargo haulers would see $4 billion.
The addition of direct cash relief -- earmarked specifically for payrolls -- was sought by airline and industry unions, which feared massive job losses if loans were the only option.
The S&P Supercomposite Airlines Index advanced further, rising as much as 17% on the day, before closing up 9.8%.
U.S. airlines probably will avoid applying for some $25 billion in loans under a federal aid package designed to help them survive the collapse in travel from the new coronavirus, according to JPMorgan Chase.
But the carriers will tap a similar amount in cash assistance for payrolls that should eliminate the risk of near-term bankruptcies, JPMorgan analyst Jamie Baker said in a report Wednesday.
The legislation doesn't include emissions limits for airplanes that were sought by House Democrats, Sen. Pat Toomey, a Pennsylvania Republican, said on a press call.
Other transportation winners include rail and transit operators. Amtrak would get $1.02 billion to cover coronavirus-related revenue losses and support state-funded routes. State and local transit agencies would get $25 billion for operating and capital expenses.
- Small businesses wanted cash injections: The bill carves out more than $350 billion in aid for small businesses, much of which would be in loans through the Small Business Administration and banks, guaranteed by the federal government. The loans would be forgiven provided the businesses meet certain requirements, including limiting reductions in pay and layoffs, though with more flexibility for employers than the original Senate bill.