Congress is negotiating the next round of Covid-19 aid. Here’s what that means for the food industry.
SNAP spending, liability protections for restaurants and meatpacking companies, and pork barrel spending are all on the table.
This week, the Senate returned from its July 4 recess and began negotiating the fourth round of Covid-19 relief, likely to be the last round before November. The Democrat-controlled House passed a $3 trillion relief package back in May, hinting at the party’s priorities heading into negotiations. So far, there’s a wide gap between Democrats’ and Republicans’ wish list, and the White House may prove a wild card in negotiations: The president has continued to push for a payroll tax cut, a policy without broad support from Democrats or Republicans.
The two parties will have to find middle ground on several major points of contention, including whether to continue expanded unemployment benefits, how to extend the Payroll Protection Program, and whether or not to send another round of direct payments to individuals. So far, it appears they have a long way to go. As an anonymous administration official told Politico’s Playbook Tuesday morning, “the divide between Nancy Pelosi and Senate Republicans is bigger than the Grand Canyon,” adding that “the real problem is ultimately going to be everybody adding non-related things to the bill.”
Indeed, food industry interest groups have already begun lobbying for more direct payments to farmers, a bailout for restaurants, money for disposing hog carcasses, and more. Here are some of the proposals we’re watching as negotiations progress.
More money for SNAP
As The New York Times reported this week, more than 6 million people have signed up for the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) since the pandemic began. Typically, SNAP benefit levels are calculated based on income and family size and can range from $16 to more than $700 per month.
SNAP is an entitlement program, so Congress does not have to act in order to ensure that it stays funded. But it does have to act if it wants to increase the amount of money people receive each month. In March, Congress amended the rules so that everyone could receive the maximum-allowable benefit based on their household size. That means a single person who previously received $16 would automatically qualify for $192. The move effectively meant a huge increase in SNAP benefits for a lot of families: According to the Center for Budget and Policy Priorities, the average monthly benefit for a single-person household in 2019 was $131. By automatically increasing that benefit to $192, Congress effectively gave the average SNAP recipient a 46 percent boost. Those enhanced benefits currently apply for the duration of the public health emergency declaration.
In the new legislation passed by the House, maximum SNAP benefits stand to increase by an additional 15 percent per household. Republicans blocked a similar measure earlier this year; it remains unclear whether they will agree to extend the maximum benefit policy or to an additional 15 percent expansion.
For weeks, Republicans have held up liability protections for businesses as a make-or-break component of the next round of Covid-19 aid. Specifically, Republican Senate Majority Leader Mitch McConnell has called for five-year liability protections to shield schools, hospitals, and businesses from Covid-19-related lawsuits from customers and workers. “Unless you’re grossly negligent or intentionally engaged in harmful behavior, you shouldn’t have to be penalized by getting sued on top of everything else,” McConnell told The Washington Post. Democrats oppose the policy.
This legislation would have major implications for all facets of the food industry, but especially for restaurants, bars, and meatpackers. As we reported in May, the notion of a “liability shield” is still quite vague. Employers are already shielded from employees’ medical claims by the workers’ compensation system. Furthermore, in order to collect workers’ compensation payments, an employee’s illness or injury must be deemed “work-related.” It’ll likely be very difficult for a worker to prove they contracted Covid-19 on the job. That means it may already be close to impossible for employees to sue their employers for catching Covid-19 on the job, assuming their employers have followed workplace safety guidelines from the Centers for Disease Control and Prevention (which certainly isn’t guaranteed).
Indeed, successful employee lawsuits may hinge on their ability to prove that their employers were negligent or intentionally engaged in harmful behavior. Already, the families of three workers who died of Covid-19 have sued Tyson on these grounds, claiming their managers lied to them about the extent of the pandemic’s spread in their workplace. If a judge finds that Tyson was negligent, a liability shield may not do much for the company.
Liability protections may actually do more to protect businesses from claims by customers than from claims by employees. If 98 bar patrons get sick after a busy weekend and the bar has enforced reasonable social distancing and sanitation measures, the logic goes, the patrons should not be able to sue the bar.
PPP extension likely, though fate of chain restaurant carve-outs is unclear
Both Democrats and Republicans appear to support another round of funds for the Payroll Protection Program, an imperfect policy that has been credited with saving many small businesses but faulted for supporting large companies.
As we reported back in April, restaurant owners had trouble with the program from the start. Initial loan forgiveness rules required employers to spend the money on payroll within a few months of receiving it. Yet many restaurateurs doubted their businesses would reopen in time for the deadline, and they fretted about other costs associated with reopening: paying old invoices, utility bills, purchasing fresh ingredients. As the pandemic dragged on, Congress loosened the program rules, extending the payroll forgiveness period to six months and reducing the proportion of forgivable funds that must be spent on employees’ paychecks to 60 percent. A new round of PPP funds may allow restaurant owners to continue supporting employees as business remains slow.
In the initial legislation, the restaurant industry succeeded in slipping in a provision that allowed individual chain restaurants to qualify for PPP loans. The policy drew a lot of criticism, and some big-name chains like Shake Shack even returned their loans. Yet when the federal government disclosed the list of loan recipients last week, many chains were on the list. Other large food companies also benefited from the loans, including a large poultry processor and a grocery chain reporting record sales.
It’s unclear whether the carve-out for chain restaurants will make it into the next round of legislation, or whether Congress will strengthen loan requirements to ensure recipients need the money.
Pork for pork, gas money for ethanol, a bailout for restaurants, and more cash for farmers
Various lobbying groups are calling for carve-outs of their own in the new legislation. In a press call on Monday, the National Pork Producers Council reiterated its request for compensation for farmers who euthanized healthy animals due to pandemic-related slaughterhouse closures. Industry representatives said that slaughterhouses are currently running at 95 percent capacity, but that a backlog of living animals due to plant closures in April and May may lead to more euthanization in the fall.
The first round of Covid-19 relief appropriated $16 billion for direct payments to farmers, and more than $6 billion has already been paid to more than 440,000 producers, including $394 million to hog producers. The new relief bill passed in the House doubles the funding earmarked for cash payments to growers. It’s unclear where Republicans stand on direct payments to farmers, though the White House has supported them in the past.
Elsewhere, the National Restaurant Association has released its Blueprint for Revival, which calls for $120 billion for restaurants and bars. The industry wants an extension of the Payroll Protection Program, a long-term loan program for restaurants, tax credits for investments in employee health, and liability protection.
The ethanol industry has also asked the government for relief, claiming that decline in demand for gas reduced revenue by $3.4 billion.
Lastly, the fate of the Farmers to Families Food Box program, which has delivered 43.5 million boxes of food since mid-May, also remains unclear. Congress appropriated $3 billion for the program earlier this year, and the USDA is authorized to continue purchasing boxes until the money runs out. The program’s rollout was decidedly rocky—the agency awarded lucrative contracts to inexperienced distributors who didn’t deliver, and our reporting found the government was paying more for milk in the food boxes than grocery stores were charging. No word yet on whether the new relief bill will provide another round of funding for the boxes.