Battle lines forming over next round of coronavirus aid
Top Democrats pledge quick action on 'bold' package, but McConnell wants more time for debate
By week’s end, the fourth coronavirus relief package is almost certain to become law.
But passing a fifth one, which lawmakers have already promised, is shaping up to be a far more costly and contentious undertaking.
President Donald Trump called this week for a new bill providing aid to state and local governments, infrastructure spending, a payroll tax cut and tax breaks for restaurants, sports and entertainment interests.
Senate Minority Leader Charles E. Schumer told reporters he would push for a “big, bold, broad” package that would include money for infrastructure, housing, election security, a "heroes fund" for frontline workers and first responders, a postal service rescue and “robust” state and local aid.
Speaker Nancy Pelosi has her own wish list that includes extending enhanced unemployment insurance benefits past their current July 31 expiration, and another round of tax rebate checks. She also wants more money to protect the integrity of elections and let people vote by mail.
But Senate Majority Leader Mitch McConnell made clear he intends to pump the brakes on any new major spending initiative. Within minutes of the Senate passing the fourth relief measure Tuesday, the Kentucky Republican held a news conference to signal a go-slow approach amid concern about rising debt.
“Let’s see what we’re doing that’s succeeding, what is not succeeding, what needs less and what needs more,” McConnell said. “Let’s weigh this very carefully because the future of our country, in terms of the amount of debt we’re adding up, is a matter of genuine concern.”
The House is taking up that $483 billion package, which Trump says he'll sign, on Thursday. Even before the latest aid bill emerged, independent forecasters said they expect this year’s budget deficit to nearly quadruple the pre-coronavirus estimate, reaching nearly $4 trillion.
That amount of red ink in a single fiscal year would dwarf the deficit peak of $1.4 trillion during the Great Recession and, as a share of the economy, approach levels not seen since World War II.
The current legislation, combined with aid packages enacted last month, is likely to add nearly $2.5 trillion to deficits over the coming decade, according to estimates from the Congressional Budget Office.
Treasury Secretary Steven Mnuchin tried to push back against debt concerns when pressed on the point in a Fox Business interview Wednesday.
“The good news is interest rates are very low, so the cost of carrying the debt to the American taxpayer is quite low,” he said. “But I think we're all sensitive to that this is a war and we need to win this war and we need to spend what it takes to win the war.”
Even so, he said, “we are sensitive to the economic impacts of putting on debt. That’s something that the president is … reviewing with us very carefully.”
Assuming debt concerns are overcome, several other ideological clashes promise to trip up negotiations.
Among the biggest stumbling blocks may be how and whether to provide additional aid to state and local governments suffering revenue losses from the economic shutdown. The $2 trillion package enacted last month provided $150 billion to states and localities for coronavirus relief, but there is nothing in this week’s bill to augment that aid.
States and local governments are begging for more relief, the cost of which will only rise the longer the pandemic forces businesses to stay closed. A bipartisan plan from Sens. Bob Menendez, D-N.J., and Bill Cassidy, R-La., calls for a $500 billion infusion into state and local coffers to replenish shrinking revenue.
But McConnell suggested Wednesday he would resist more direct federal aid to states.
States could seek bankruptcy protection instead of asking “the federal government to borrow money from future generations to send it down to them now,” McConnell said on conservative commentator Hugh Hewitt’s radio show. “That’s not something I’m going to be in favor of.”
Lawmakers are also likely to clash over proposals to extend unemployment insurance benefits. The third relief package increased those benefits by $600 a week through the end of July, at a cost of about $268 billion over a decade. Pelosi has suggested extending those payments into the fall.
But several Republican senators opposed that provision last month.
Sen. Lindsey Graham, R-S.C., and others said the enhanced benefit would allow many low-wage workers to earn more on unemployment than they did at work, a disparity that would make it harder for employers to hire back needed workers when they reopen. Democrats dismissed that concern, saying the enhanced benefit was only temporary and that most workers still want a steady job.
Infrastructure could be another costly component, although it’s unclear how it would be handled. Pelosi suggested earlier this month that it would be treated separately from coronavirus relief, but Trump and Schumer appear eager to include it in the next aid package.
Before the pandemic took hold, Democrats and Trump endorsed the concept of a $2 trillion initiative to build and renovate roads, bridges, water systems, airports and more. But they have never agreed on how to pay for it. Borrowing the money, as part of coronavirus relief, might avoid a financing fight.
It’s also not clear whether the next package would include more funding for a popular small-business program enacted last month which offers up to two months' of loan forgiveness to keep workers employed. This week’s bill provides $310 billion to replenish a $349 billion loan fund that ran dry in less than two weeks.
[Obama small-business chief says Democrats should act now on loan funds]
“We would expect this is the last tranche,” Mnuchin said Wednesday on Fox Business. “But obviously, we can always reconsider that but this is a lot of money going out.”
Money for election security would also trigger a fight. Democrats are pushing to help states provide for voting by mail with up to $4 billion, but Republicans have been resistant to the idea.
Lobbyists ready to pounce
Then there's the inevitable lobbying from stakeholder groups across the country, all with what they deem an airtight case for relief from COVID-19's grip.
With pension assets pummeled by the stock market crash, construction and engineering firms and unions want help meeting onerous obligations to retirees they say could bankrupt them and put millions more out of work, for example.
On Wednesday, the distilled spirits industry, citing resources siphoned off into making hand sanitizer instead of their usual wares, weighed in with a pitch for relief from excise taxes, plus grants and low-interest loans. The industry letter included some microtargeting at McConnell and Schumer, from the heads of the Kentucky Distillers' Association and New York State Distillers Guild.
And it’s still unclear under what conditions a new package would be conceived, drafted and debated. With Congress in a prolonged recess, this week’s bill was drafted mostly through phone calls and emails among congressional leaders and staff.
McConnell said he wants the next bill to be handled differently, with Congress back in regular session. “My view is we ought to bring everybody back, have full participation,” he said at his news conference.
That plan could hinge on when lawmakers can safely return to the Capitol for an extended period. Congress is tentatively scheduled to reconvene on May 4 — but that timing may be up to a virus that scientists still can't quite get their arms around.