Two political strategists who have a bird’s eye view of Capitol Hill updated the Arizona business community Wednesday on the latest federal relief package and what lies ahead in 2021 for  Congress and the Biden administration. 

At the top of the list is the $1.9 trillion proposed federal stimulus package that was approved by the House on Saturday. While some moderates and conservatives are voicing concerns about the cost of a third massive Covid relief package, the Senate is expected to rush passage with a few changes, said Erik Paulsen, a former U.S. congressman who now is a consultant with , which is headquartered in Washington, D.C.  

“There are some who are a little more skeptical about whether we need to spend all of these dollars,” said Paulsen, a former Congressman from Minnesota who was a leading member on the chief tax writing House Ways and Means Committee. 

Much of the nation is seeing a resurgence in economic recovery already with added stimulus and many Americans are worried about the growing federal debt, said Paulsen, who spoke during a virtual event, the 2021 Outlook from Capitol Hill, hosted by the . 

The proposed package comes on the heels of the $2 trillion Covid relief plan passed last March during widespread shutdowns of the economy followed by the end-of-the year $900 billion package. 

Patrick Robertson, a principal of Total Spectrum who has spent almost 20 years in Washington advising clients on public policy issues also spoke at the event.

The two laid out details of the proposed relief plan and discussed other upcoming issues that are important to business. 

What’s in the proposed stimulus package

Most of the package, called the , is expected to be approved by the Senate, they said. Any changes will have to go back to the House for final approval before being sent to President Joe Biden. 

Highlights of the proposed package include:

Extended unemployment benefits Unemployment insurance benefits would be extended and increased for the third time. The bill calls for an additional $400 per week in benefits for the unemployed.  

Expanded child tax credits Child tax credits would be increased from $2,000 to $3,600 per child.

Direct stimulus payments Another round of stimulus checks would include $1,400 direct payments to adults and children. The House proposal calls for the payments to go to individuals earning up to $75,000 and couples making up to $150,000. Thus, a family of four would receive $5,600.

A host of other measures also are included: $25 billion to aid small and mid-sized restaurants still struggling from the pandemic, $15 billion for grants to businesses in low-income communities, $1.25 billion for shuttered venue operators, payments to help Americans continue to pay health care premiums, aid for local governments, and more.  

Minimum wage hike likely will not survive this legislation  

One item in the package that appears to be on the chopping block is a provision to raise the minimum wage to $15 an hour over the next four years. 

The Senate parliamentarian, a neutral arbiter of the chamber’s rules, issued guidance saying the wage increase didn’t meet the guidelines for a budget reconciliation package. Under reconciliation, bills can pass with a simple majority, rather than the 60 votes required to invoke cloture, which ends a filibuster on a bill.

Looking ahead: corporate tax rate and infrastructure 

Paulsen and Robertson also spoke about whether Congress will be able to overcome division between the two parties to finally pass a long awaited infrastructure bill, a top priority for the business community. 

President Biden has made infrastructure a priority and they said Congress could succeed this year and pass a comprehensive package to update the nation’s highways, bridges, water facilities, transportation systems, and other infrastructure. Projects for the modern age will be included — green and renewable energy, expansion of broadband as well as development tax credits and workforce investment. 

A new funding mechanism for such a plan will be needed, however, which could be a challenge considering the president has vowed not to increase taxes during the pandemic, Robertson said. 

Attempts to raise the gas tax to fund projects through the Highway Trust Fund have failed year after year. The tax is also becoming less sufficient as a funding source as electric vehicles move to the forefront of society, he said. 

“The current Highway Trust Fund doesn’t pay for itself,” Robertson said. “Now, we have Teslas and Priuses and people using different amounts of gasoline. Gasoline isn’t the only marker for how much you’re using our roads.” 

Biden has also proposed hiking the corporate tax rate from 21 to 28 percent, which would put the U.S. at a disadvantage, Paulsen said. That would spur industry and jobs to start relocating  outside of the country again.

“That would move us to the highest of all (Organization for Economic Cooperation and Development) countries in the world, so we would be uncompetitive again,” he said.  

Centrists will play important role

With narrow majorities in both houses, moderation will be needed to temper the far left and far right, both said. 

Lawmakers like Arizona’s Senator Kyrsten Sinema (D) have shown that they can place their constituents above politics. Arizona’s newest Senator, Mark Kelly (D), could follow her lead, Robertson said. 

“It appears that Senator Kyrsten Sinema does a pretty good job of listening and representing the interests of Arizona and I think Senator Kelly could learn a lot from that, advocating for Arizona instead of Democrats,” he said.

Paulsen agreed.

“Senator Kelly has mentioned he’s been spending time getting to know colleagues on both sides. If you want to be an effective legislator, you need to build relationships and he’s doing that with Republicans, which is what the country is looking for and certainly those in Arizona are looking for to make progress on the legislative front,” he said.

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While sectors of Arizona’s economy have suffered financial losses during the pandemic, the state is faring better than much of the nation, according to a leading economist. 

If Arizonans can stay masked, socially distanced and sanitized, it has a good chance for full recovery as soon as mid 2021, said the state’s heavyweight economic forecaster, George Hammond, a research professor and the director of the Economic and Business Research Center at the Eller College of Management at the University of Arizona.

“There’s a huge amount of uncertainty about how this is going to all play out and it’s connected to the outbreak and how the virus itself works,” said Hammond, who has been local and state economies for more than two decades from his university office in Tucson. 

Hammond issued his latest projections and talked about how the state has managed to weather the pandemic at a recent , entitled Economic Forecast: Covid 19 Impacts on Arizona’s economy, hosted by the Arizona �鶹��ýӳ�� of Commerce and Industry.  

Arizona jobs’ picture better than nation

Among the reasons Arizona is hanging on are jobs and unemployment reports. 

In the early months of the pandemic, the nation saw 14.5 percent of jobs lost and has since recovered to 10 percent. Arizona’s is only 5 percent lower than where it was before the pandemic.

Arizona also has a slightly lower unemployment rate. In June, the rate was 10 percent compared with the nation’s 11.1 percent.

Arizona’s healthier data is due in part to being one of the fastest growing in the country pre pandemic, and industries like construction and remote retail remain strong. Governor Doug Ducey’s early and gradual reopening of the economy also contributed to jobs and economic growth. 

Personal income bolstered by federal lifelines 

Personal income also got a boost from the bipartisan passed by the U.S. Congress in late March to help keep Americans and businesses afloat during the coronavirus shutdowns. 

These lifeline programs have helped families pay their bills and put food on the table, Hammond said. 

In the first few months of the pandemic, CARE Act programs pumped more than $17 billion into the state’s economy including:

• Increased unemployment benefits: Unemployment compensation recipients in Arizona received an extra $600 tacked on to their weekly benefit of $240 for up to two months. That injected about $8.2 billion into the state, amounting to about 2.4 percent of the state’s total personal income last year.  
• The federal Paycheck Protection Program: The program, which provides grants to small businesses to keep employees on the payroll and pay company operating expenses, injected $7 billion into the economy early in the pandemic, representing about 2.1 percent of personal income in 2019. 
• Recovery rebates:  Rebates provided another $2 billion to citizens in the state.

“So somewhere north of 5 percent of Arizona’s personal income last year was injected into Arizona’s personal income in just a couple of months,” Hammond said. “I think that’s had a significant impact in our ability to deal with the pandemic so far.”

Economic forecast for coming months 

Hammond also laid out projections for an “alphabet soup” of pandemic recovery scenarios including:

• A 20 percent chance the state will see a rapid V-shaped recovery, where the economy will quickly bounce back from the downturn, then return to pre pandemic levels by early 2021.  
• A 30 percent chance for a W-shaped recovery — the worst case scenario — that would occur if there is a surge of the coronavirus combined with a virulent flu season, forcing the state back into a shutdown and economic distress. 
• A 50 percent likelihood for a “Nike Swoosh-shaped,” or baseline, recovery where a bottoming out is followed by a steady and gradual rebound.

“If we can avoid a significant surge in the outbreak as we go through the fall and winter months, I think we’ll continue on a gradual recovery trajectory like a Nike Swoosh type recovery, getting us back to where we were before the pandemic by mid 2021 or in the second half,” Hammond said.

That will depend, of course, on the state’s ability to keep the virus in check.

“We are learning where the big risks are and what we can do to reduce those risks and what we can do ourselves to get control of the outbreak. The sooner we have control of the outbreak, the faster things will go back to normal.”

To watch the webinar in its entirety, go to: Economic Forecast:

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As Congress this week returns to Capitol Hill to consider its fourth major pandemic relief and response bill (a fifth bill updated elements contained in a previous bill), I anticipate that there are seven major elements that will be included in some form or fashion.

The Wall Street Journal had an excellent over the weekend that laid out the various issues that the next bill might address. Here’s my take on the items identified in the story:

Unemployment benefits.

The first aid package contained a massive expansion of unemployment benefits at $600 above a state’s existing unemployment insurance payment. Lawmakers approved the enhanced benefit knowing that, for many workers, the additional dollars would deliver a temporary income higher than what they were previously earning at their job. It’s unlikely a similarly generous payout will be repeated.

Still, given that unemployment levels remain high, supplementing regular state unemployment insurance is justified, but it should be at a level that does not exceed a worker’s pay before a furlough or a layoff. There are some creative bipartisan proposals that deserve consideration to encourage a return to work without pulling the rug out from under struggling households.

Additional stimulus pay.

The original CARES Act provided up to $1,200 per adult and $500 per child in direct cash assistance. Again, given the current high unemployment levels, additional relief makes sense. How much, exactly, and how it is targeted still needs to be settled.  

This moment also offers policymakers the chance to consider ways to improve the Earned Income Tax Credit, a refundable tax credit aimed at low- and moderate-income working families. One reform could include automatically issuing the credit to qualifying households without requiring the filing of a tax return. 

Schools reopening.

I strongly disagree with those who believe that schools should be penalized if they’re not open during a pandemic for legitimate safety reasons. We cannot and should not force teachers, support personnel, or students into a classroom or school environment where they don’t feel safe.

A carrot approach would be better, delivering funds attached to each student who is attending an in-person educational setting to reflect the increased costs. Funding must be available for face masks, cleaning products, PPE, and the implementation of any other healthcare protocols necessary to improve school safety and hygiene.

Funds should also be available for distance learning, which will be necessary to provide resiliency if schools must close or for students who have underlying health conditions and for whom a return to in-person learning might be delayed.

There should also be funds allocated for all parents and guardians, perhaps subject to income limitations, for expenses related to transportation and connectivity like WiFi or laptops.

In Arizona, it’s estimated that the cost to provide for a safer in-person learning experience is $485 per child. 

Liability reform.

Liability reform is essential not just for regular businesses attempting to reopen safely and responsibly, but for schools, cities and towns, non-profits as well as healthcare providers. We don’t want concerns over dubious lawsuits to delay our recovery.

This protection should provide certainty for those acting in good faith to follow applicable state and CDC health guidelines. Ideally, there would be safe harbors in any protection.

Bad actors who are grossly negligent or who engage in willful misconduct should not be protected, and the relief should be temporary and targeted to Covid-19.

State and local aid.

Any additional aid to states and cities should provide maximum flexibility to these jurisdictions as long as funds are used to respond to the economic fallout from Covid-19. In other words, federal tax dollars should not be used for things like pension bailouts or other problems that existed long before the pandemic.

It’s important to point out that Congress did appropriate $150 billion in March for state and local governments. It would be useful to have a report on how those dollars were spent and any lessons learned that could be applicable to additional aid. It is worth considering additional aid for U.S. border communities whose finances have been devastated by the prolonged closure to most cross-border travel.

Additional business aid.

The Paycheck Protection Program is arguably the most successful business assistance program in the history of the world. Thus far, this small business rescue effort has provided about 5 million forgivable loans representing more than $515 billion.

In Arizona, the numbers are staggering. More than 81,000 small businesses have received these loans worth more than $8.5 billion.

There’s still about $130 billion left in the program, which after extensions is now set to expire August 8. Congress should extend the program again and more dollars should be added, and all loans already distributed should be completely forgiven if they’re under $150,000.

For smaller businesses, say those with 100 or fewer employees, or businesses in hard hit sectors like hospitality, a second round of lending should be allowed.

Congress should also expand the Employee Retention Tax Credit, which has bipartisan support. The credit helps employers keep their workers on the payroll while relieving a percentage of employment taxes. The president’s payroll tax holiday is truly stimulative and, along with the administration’s deregulatory efforts, could provide the building blocks for a structurally sound recovery. 

With the continued tensions between the U.S. and China and the USMCA now in effect, incentives for vital supply chains for things like medical supplies and semiconductors to return to or expand in the U.S. deserve support.

Dealing with the virus.

Additional aid should be directed to testing and contact tracing, as well as building a robust public health infrastructure. It also makes sense to direct money at boosting the number of Americans who get the flu vaccine this year. A raging influenza season on top of Covid-19 could be devastating.

Dollars should be allocated for small- and medium-sized businesses for costs related to PPE and other protocols to make the workplace safer. Arizona Rep. David Schweikert has a good idea to help businesses offset the costs of providing tests for workers.

A massive PR campaign on wearing masks—the closest we have to a silver bullet when people are in public—is needed.

It’s easy to be a critic, but thus far Congress and the administration have risen to the occasion in supplying aid and direction in previous Covid-19 relief bills. I want to particularly thank our U.S. senators, Kyrsten Sinema and Martha McSally, for working tirelessly and turning their offices into virtual MASH units in assisting their constituents in dealing with this crisis.

Glenn Hamer is president and CEO of the Arizona �鶹��ýӳ�� of Commerce and Industry. 

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With Congress eyeing the next Covid-19 economic relief package, Arizona Rep. Andy Biggs, R, held a wide ranging with the members of the Arizona �鶹��ýӳ�� of Commerce & Industry last Thursday about the elements the next bill is likely to contain.

At the outset of his remarks, Biggs stressed that the U.S. economy prior to the pandemic was in very strong shape and that it could return to a similarly good place.

“One of the things that I think is important is that the economic foundation is still solid, we just have to have an opportunity to let it work and, if we do, then I think the foundation is there,” Biggs said. 

Biggs is concerned, however, what the next relief package will mean for the country’s overall debt and deficit position.

“When we had the robust economy, we had a trillion-dollar structural deficit already projected for this year,” Biggs said. “And now that structural deficit is going to be north of $4 trillion, and could be as high as $8 trillion depending on whose bill comes out in the next couple of weeks.”

Biggs said the country is facing a generational wealth transfer due to the trillions in dollars that have been deployed in the previous relief packages. 

“If you take the total national debt and compare it to our total gross domestic product, total economy, you start moving into a debt-to-revenue ratio that’s probably 110 to 112 percent, maybe even higher depending on who’s doing the calculating,” Biggs said. “That is a dangerous, dangerous place to be, and so we start worrying about a sovereign debt crisis.”

Extended enhanced unemployment benefit

A bill backed by Speaker of the House Nancy Pelosi would extend the $600 enhanced unemployment benefit that supplements state-level unemployment payments, something Biggs says worries him for the way it could delay Americans’ return to work. 

“I get from a lot of businesses when I talk to them, they say, ‘Please, end that, because we can bring back employees. They don’t want to come back because they’re getting a $600 bonus on a weekly basis from the feds.’” Biggs said. “(Pelosi’s) package would take that into next spring and, actually, in some instances increase that unemployment package.”

Liability protections a priority

Biggs says ensuring Congress adopts a liability protection bill for businesses remains a priority issue for him.

“One of the things we’ve tried to convey to the Senate is please don’t trade off $2 trillion of debt for a weak-sauce liability protection,” Biggs said. 

The East Valley congressman says he’s spoken with senators who agree with him and he says that Senate Majority Leader Mitch McConnell is also committed to adoption of a liability protection bill. Biggs says what form such a bill takes will likely depend on what emerges from negotiations over the next Covid relief package.

Payroll tax relief 

Biggs says he agrees with the Trump administration and economists who believe that a payroll tax relief policy designed to help employers retain employees would continue to have a helpful stimulative effect on the U.S. economy and can be accomplished with manageable costs. 

Direct payments

Biggs breaks with the White House, however, on whether to issue another round of direct payments to Americans. 

Biggs says he would like to know whether data exists to indicate whether a previous round of payments was successful. 

“I have to ask those questions and find out as we look at this,” Biggs said.

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As summer vacation beckons, Arizona’s hospitality industry is going “above and beyond” to protect travelers from the coronavirus, said the head of the Arizona Lodging and Tourism Association (AzLTA). 

AzLTA has launched a new program to certify member hotels, casinos, resorts and attractions that undertake an exhaustive checklist of cleanliness and safety measures, said Kim Sabow, AzLTA president and CEO.

More than 20 locations statewide now are certified through the program –  called – with more to come, Sabow told �鶹��ýӳ��. 

“Health and safety standards are foundational for us anyways, so we’re going above and beyond that as an industry that prides itself and builds itself on consumer cleanliness and well being,” she said.  

The AZSAFE+CLEAN certification provides protocols including requiring staff to wear personal protective equipment, frequent sanitizing of public areas and rooms, and posting signs and floor markings in guest and employee areas for social distancing.

Reviving a fractured industry 

While most hotels already are taking extra precautions during the pandemic, this is another tool to restore consumer confidence, Sabow said.

“We’re a resilient industry that is facing this head-on, and this new campaign is an initiative to begin to restore that consumer confidence that is so critical in these unprecedented times.”  

AzLTA hotels and resorts who receive the certification can display the AZSAFE+CLEAN certificate on their websites and at their properties. As properties become certified, they are placed on a list on the website at: .

Multi-billion dollar revenues disappear “overnight”

Before COVID-19, the Arizona Office of Tourism was logging revenues for the industry. In 2018, 45.5 million visitors spent $24.4 billion in the state. That generated  $3.63 billion in tax revenues, resulting in an annual tax savings of $1,360 for every Arizona household. 

That all changed when the pandemic hit in March at the height of travel season with spring break, spring training and visitors flying in from across the globe. 

“Normally, our occupancy rates would be in the 80 percent range, but those numbers dropped to single digits virtually overnight,” Sabow said. “It was a deep, swift, blunt-force trauma.”

And while hotels were allowed to stay open as essential businesses, few visitors were arriving at their front lobbies, she said.  

“Although hotels were never mandated to be closed, we didn’t have the amenities to sell with the room. It’s kind of difficult to sell a room if you don’t have dining or a pool or a spa or a gym to enjoy.”  

When Gov. Doug Ducey eased shutdown restrictions to allow pools, fitness centers and limited inside dining to open back up last month, some properties saw occupancy jump to the 30 percent range over Memorial Day weekend, Sabow said. 

“The easing of that guidance was a nice shot in the arm for this industry that so desperately needed it.”

Arizona’s certification program is in partnership and modeled after the American Hotel and Lodging Association’s that builds upon sanitation best practices and recommendations from national hospitality and public health experts.

For more information about Arizona’s program, go to:. 

More than 20 Arizona locations AzSAFE+CLEAN certified 

Arizona Grand Resort & Spa

Audio Visual Management Solutions 

Castle Hot Springs

DoubleTree Suites by Hilton Phoenix

Four Points by Sheraton at Phoenix Mesa Gateway Airport

Hacienda Del Sol Guest Ranch Resort

The Hermosa Inn

Hotel Congress

Hotel Valley Ho

Mountain Shadows Resort Scottsdale

OdySea Aquarium

Omni Scottsdale Resort & Spa at Montelucia

Omni Tucson National Resort

Sanctuary Camelback Mountain Resort & Spa

Scottsdale Camelback Resort

Sedona Rouge Hotel and Spa

The Scottsdale Resort at McCormick Ranch

The Phoenician 

W Scottsdale 

We-Ko-Pa Casino Resort

Westgate Painted Mountain Golf Resort

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