The House passed a financial relief measure that would provide paid sick leave, free diagnostic testing and expanded food aid to help families and businesses cope with the economic fallout of the COVID-19 pandemic.
The 363-40 vote came in the wee hours of Saturday morning after a protracted day and night of negotiating that produced a bipartisan compromise. President Donald Trump tweeted his support for the package (HR 6201) Friday evening, allowing Republican lawmakers to support a deal negotiated between House Democrats and Treasury Secretary Steven Mnuchin.
The Republican-controlled Senate planned to take up the measure early next week, and House Minority Leader Kevin McCarthy, R-Calif., said he expected the Senate would pass it.
The deal reached Friday night capped a nearly weeklong battle as Democrats pushed for paid sick leave and Trump sought a payroll tax cut. As late as Friday morning, Trump made a public pitch for his tax cut on Twitter. But by nightfall, he declared his support for the brokered compromise.
“This Bill will follow my direction for free CoronaVirus tests, and paid sick leave for our impacted American workers,” Trump tweeted shortly before 9 p.m. “I encourage all Republicans and Democrats to come together and VOTE YES!”
Speaker Nancy Pelosi, D-Calif., was the first to announce a deal between the White House and House Democrats early Friday evening, though the announcement appeared to catch the Trump administration off guard and Republicans initially disputed that a final deal had been reached. Mnuchin later confirmed the deal in a television interview after meeting with Trump.
“We are proud to have reached an agreement with the Administration to resolve outstanding challenges,” Pelosi wrote to Democratic lawmakers Friday evening.
Republicans had denounced the initial Democratic bill as unworkable and too burdensome on businesses.
Republicans didn’t like that the paid leave was required, arguing that it would be too costly for small businesses. Ultimately, the provisions were softened with generous tax credits to offset employers’ added responsibility. But some Republicans still thought smaller businesses would be harmed because the tax relief wouldn’t come fast enough to defray the added costs.
In announcing the compromise, Republicans took credit for tax credits that they said would help small businesses provide paid leave without financial hardship. “So we do that through the tax policy and they’re able to get that funding ahead of time so the cash flow is there for them,” McCarthy told reporters.
Trump, in a series of tweets announcing support for the measure, said he’d directed Mnuchin and Labor Secretary Eugene Scalia to issue regulations “that will provide flexibility so that in no way will Small Businesses be hurt.”
Rep. Kevin Brady, R-Texas, ranking member on the Ways and Means Committee, said in a statement that he’d support the bill despite “serious flaws” after speaking with Trump about the forthcoming regulations.
Democrats claimed credit for many of the provisions that survived from their original bill. In the letter to her caucus Friday night, Pelosi said, “I am very proud to write that the provisions we put forth with your input, including paid sick leave, paid family and medical leave, enhanced Unemployment Insurance, food security initiatives and free and widespread testing, are all included in this agreement.”
Paid leave, tax credits
In the biggest change to the Democrats’ original bill, the compromise measure narrows the scope of paid sick leave and emergency leave and includes new refundable tax credits to compensate employers for the financial burden.
The initial Democratic bill would have created a new federal emergency paid leave program under the Social Security Act, requiring workers to be paid for up to three months if they take time off due to being sick with coronavirus, quarantined or caring for others. The benefit would be two-thirds of average monthly earnings.
Under the scaled down version in the House-passed bill, instead of a new federal benefit, the existing Family and Medical Leave Act would be amended to provide up to 12 weeks of paid leave to employees who go into quarantine, care for a family member in quarantine or child whose school is closed. The provision would apply to employers with fewer than 500 employees. The mandated benefit would be no less than two-thirds of pay.
The paid sick leave in the original bill was more sweeping than in the compromise. It would have required all employers to provide 14 days of paid sick leave in the event of any public health emergency, not just the current coronavirus pandemic. Sick leave would have covered days when a worker’s child’s school was closed or when the worker’s employer was closed, as well as when the worker or family member is quarantined.
Under the compromise bill, paid sick leave could still last two weeks, but it would be limited to employers with fewer than 500 employees and government employers. The provision limits pay to two-thirds the employee’s regular rate when caring for a family member or child; the pay would be at the employee’s regular rate to quarantine or seek treatment.
Rather than being permanent, the program is set to expire Dec. 31, 2020.
To defray the costs, employers would get a 100 percent, refundable tax credit applied to the employer portion of the Social Security payroll tax for both paid sick leave and family leave wages.
In the case of sick leave, caps apply to the amount of wages that can be taken into account for the tax credits, with higher caps allowed for workers than for workers caring for family members or a child. Caps also apply to the wages that can be taken into account for the family leave benefit.
Other provisions of the bill include:
- $1 billion for reimbursing the costs of diagnostic testing for uninsured individuals.
- $1 billion for expanded food aid, half of which is through the Women, Infants and Children program.
- Work requirements for those receiving food stamps would be temporarily waived during the COVID-19 crisis.
- $1 billion in emergency grants would be given to states to expand unemployment insurance benefits.
- Federal Medicaid assistance to states would be increased to help alleviate state budget shortfalls in an economic downturn. But instead of the 8 percent increase that Democrats initially sought, the compromise measure would provide a 6.2 percent increase.
- Protection from liability for manufacturers of “personal respiratory protective devices,” like the masks made by 3M. McCarthy told reporters that if “3M has protection, they can sell a million more masks that they’re creating to the medical field.”
Game of telephone
Pelosi spent hours on the phone with Mnuchin over the past couple of days trying to hammer out an agreement after Republicans raised objections to Democrats’ initial legislation.
Conspicuously absent from the compromise measure was Trump’s top priority: a broad payroll tax cut for all workers. He tweeted earlier in the day that such a move would be “something that is really meaningful. Only that will make a big difference!”
At an afternoon news conference Friday, Trump said he hadn’t agreed to anything yet. “We don’t think the Democrats are giving enough,” he said.
Pelosi and McCarthy both said another economic aid package would be necessary. Mnuchin and Trump both mentioned the airline and cruise line industries as being in particular need of assistance.
“That’s an economic problem for the country we’re going to have to look at,” McCarthy said. “Airlines, cruise ships. . . . We want to make sure this economy comes back strong.”
Pelosi told reporters late Friday that aid to selected industries could be considered in the next round of aid, mentioning airlines, hospitality and potentially the energy sector, which has been hit hard by the recent oil price crash. She suggested lawmakers would take a little more time to put that package together.
“When we do the next bill it’s going to be more in terms of regular order,” Pelosi said. “I don’t think any of us went to sleep all week.”
She also said Democrats would push for expanded Occupational Safety and Health Administration protections for health care workers, which was dropped in the final bargaining over the current bill, in the next package.
And the White House and top Republicans are certain to put Trump’s payroll tax cut back in the mix, too. “I think you’ll see that continue to come forward,” McCarthy added.
But Pelosi made clear that Democrats will be loath to embrace a payroll tax cut that they say would do little to help many workers. ”We’re talking about our bill tonight,” she said. “I’m not into political payroll tax cuts.”
Doug Sword, Katherine Tully-McManus, Griffin Connolly and Chris Marquette contributed to this report.