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Negotiators face more contentious issues than state, local aid

Deep disagreements exist over direct relief structure, liability protections, immigration and election provisions

Health care workers wait between appointments at a COVID-19 drive-thru testing facility at George Washington University in Washington, D.C., on Tuesday.
Health care workers wait between appointments at a COVID-19 drive-thru testing facility at George Washington University in Washington, D.C., on Tuesday. (Caroline Brehman/CQ Roll Call)

A dispute over aid to state and local governments in the next coronavirus relief package is getting a lot of attention, but negotiators will have far more contentious issues to tackle.

Difficult decisions await on issues championed almost solely by one party: President Donald Trump wants to cut payroll taxes and block funding for sanctuary cities. Republicans insist on liability protections for businesses as they reopen and some want to cap unemployment benefits. Democrats are pushing relief for undocumented immigrants and to require states to conduct the presidential election with mail-in-ballots.

Here’s an overview of some of the most contentious issues negotiators face:

Liability protections

For more than a week, Senate Majority Leader Mitch McConnell has said Republicans will not support new funding for state and local governments that Democrats are seeking without liability protections for businesses to guard against lawsuits from customers or workers who may contract the coronavirus as states reopen.

On Tuesday, McConnell said preventing a “litigation epidemic” is a “red line” for Senate Republicans, but noted that liability protection can be “narrowly crafted” so it wouldn’t protect somebody from gross negligence.

“If there is another bill that passes in the Senate, it will include liability protections,” the Kentucky Republican said.

Democrats don’t see room for compromise.

“We would not be inclined to be supporting any immunity from liability,” Speaker Nancy Pelosi told reporters last week, saying Democrats are focused on protecting workers.

House Minority Leader Kevin McCarthy also supports liability protections and wants to add another condition on state and local aid — that none would go to state pension systems. 

“Why don’t you say that it can’t pay for any pensions or anything else, that it only has to be for COVID-19, have people sign up and show the accountability of what they’d lost during the time period?” the California Republican told reporters on a conference call last week.

McCarthy said states have underfunded pensions because governors and state legislatures mismanaged their budgets.

“If they think they are going to make hard-earned taxpayers pay for their mistakes, they are wrong,” he said.

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Democrats agree that state and local aid should stem from coronavirus needs, but their calculus includes sales and other state tax revenues lost because of the pandemic. They assert that Trump agreed to pension funding in previous negotiations but congressional Republicans blocked it.

Payroll tax cut versus direct payments

Trump has drawn his own red line on payroll taxes.

“We’re not doing anything unless we get a payroll tax cut,” he said Sunday during a Fox News town hall, recounting the message he delivered to his lead negotiator, Treasury Secretary Steven Mnuchin, earlier that day.

Senate Majority Whip John Thune acknowledged the GOP is unlikely to get Democrats to agree to both liability protections and a payroll tax cut.

“Hopefully, we can kind of unify around the things that we want,” the South Dakota Republican said.

Democrats have also yet to unify around the best approach to providing direct relief to Americans. Many want more direct payments to individuals and families, which Pelosi has signaled will be included in a bill Democrats are drafting. Trump sees the payroll tax cut as an alternative that does not require mass distribution.

Progressives want to go further with guaranteed income. A proposal from Washington Rep. Pramila Jayapal, who co-chairs the Congressional Progressive Caucus, would provide employers a grant to be spent on three months of payroll for their workers earning salaries of up to $100,000, as well as on employer-sponsored benefits like health insurance. The grants would also cover essential business expenses like rent.

Pelosi has acknowledged the proposal is a “tall order” but said it’s worth considering because it can streamline aid that previously came from a combination of direct payments, expanded unemployment benefits and forgivable small-business loans.

Unemployment cap versus expansion

When Congress expanded unemployment benefits in a previous relief bill, some Republicans balked, saying the additional $600 per week from the federal government on top of state benefits would allow some individuals to earn more from unemployment than work.

A last-minute amendment to cap the benefit at 100 percent of a claimant’s previous income was rejected by the Senate mostly along party lines.

Several Republicans have since said they’d like to fix that. Sen. Tim Scott, one of the amendment sponsors, said there’s a way to alter the proposal to address the objection Democrats and some administration officials raised that not all states have unemployment systems with technology that could be deployed to speedily implement a cap.

“What I would like to see in Phase Four is just a few sentences that basically says that we will provide $600 not to exceed 100 percent of income in those states where they can do so, or making it applicable state by state wherever possible,” the South Carolina Republican told CQ Roll Call. “The language should be kind of simple. But I don’t think we should do it across the board yet.”

Trump said he warned Democrats when they pushed for the expanded benefit that some people might want to stay on unemployment because of it, but he doesn’t seem to view a cap as a top priority.

“It’s short term and we’re being very generous with people who lost their job, so it’s not the biggest problem I’ve ever heard,” the president said.

Labor Department guidance says furloughed workers who refuse to return to work when called back by an employer should not qualify for the benefit.

Democrats resisted the previous GOP effort to scale back the enhanced benefit and are looking to expand unemployment aid further.

The party has not coalesced around a proposal, but several Democrats have pushed for making the extra $600 per week available beyond the end of June, when it’s set to expire.

Virginia Rep. Donald S. Beyer Jr., the vice chairman of the Joint Economic Committee, and Sens. Jack Reed of Rhode Island and Michael Bennet of Colorado are proposing extending the full benefit until 30 days after the national emergency declaration for the pandemic ends, and then phasing it down over 13 weeks.

Wisconsin Rep. Mark Pocan, who co-chairs the Congressional Progressive Caucus, is proposing a “work share” benefit that would allow employers to reduce workers to part-time pay and partial unemployment benefits to supplement the lost income.

The Progressive Caucus held a remote hearing on the proposal last week along with the guaranteed income bill from Jayapal. Pocan said work share will allow small businesses that are reopening to make payroll decisions based on business volume.  

“That way the employee can still get paid by the employer, get that [unemployment insurance] money and have more money in their pockets,” he said. “The small business can ramp up as necessary. And the state UI accounts essentially get less pressure put on them. It is a win-win-win across the board.”

Immigration provisions

Immigration, long a divisive issue, has crept into the coronavirus debate.

Trump, like McConnell and McCarthy, has a condition for more state and local aid. He wants to block funds from going to so-called sanctuary cities — localities that decline to report undocumented immigrants or share information about them with federal authorities.

“In the bigger picture, I don’t see helping cities and states if they’re going to be sanctuary because all sanctuary means to me is protecting a lot of criminals and others,” the president said at a White House event last week.

But Democrats want to give undocumented immigrants more protection, not less. They want to ensure such people have access to free coronavirus tests — a guarantee provided in a previous bill to U.S. citizens — and treatment as many unauthorized immigrants don’t have access to health insurance.

Another priority Democrats are pushing is to ensure citizens married to an undocumented immigrant get direct payments since the prior relief package did not allow for that.

“All this is happening for no other reason than lack of empathy from the administration,” Senate Minority Leader Charles E. Schumer said.

Congressional Hispanic Caucus Chairman Joaquin Castro said his group has advocated using individual tax identification numbers to distribute assistance.

“You have a lot of workers who are using ITIN numbers, some of whom may be undocumented, who are still out there on the front lines working, many of them in dangerous jobs — a lot of them in those meatpacking plants that now have hundreds of coronavirus infections. They’re out in the fields, picking fruit and crops to make sure that the grocery stores are still stocked up during this pandemic so that Americans can eat,” the Texas Democrat said.

Election assistance

Another partisan disagreement exists over election assistance for states beyond the $400 million appropriated in an earlier measure.

Democrats are pushing for another $3.6 billion to total the $4 billion they say is needed to fund implementation of vote-by-mail.

Pelosi told MSNBC last week that voting by mail is “very essential,” adding that Congress needs to ensure that registered voters receive an absentee ballot and that same-day registration is available.

“This is what our country is about, the vote, the sacred right to vote,” she said.

McCarthy said further election assistance at this time isn’t necessary since the general election is not until November. He said states can offer more absentee ballots, but he opposes a vote-by-mail requirement, saying it would be ripe for fraud.

David Lerman, Katherine Tully-McManus, Jennifer Shutt, Niels Lesniewski and Chris Cioffi contributed this report.

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