House Democrats postponed consideration of a stand-alone emergency funding package for the ongoing pandemic response until at least next week, after opposition from rank-and-file lawmakers to one of the offsets forced party leaders to strip the COVID-19 money from a broader $1.5 trillion fiscal 2022 omnibus bill.
The new bill is mostly identical to the earlier $15.6 billion pandemic aid piece of the omnibus, with one major exception: $7 billion of it is no longer offset by rescinding unspent state aid appropriated last year. House Appropriations Chair Rosa DeLauro, D-Conn., said her chamber would vote on the new version of virus aid separately from the omnibus, which will both get votes Wednesday night.
The decision to remove the pandemic aid from the omnibus, which Speaker Nancy Pelosi announced in a letter to her caucus Wednesday afternoon, came after some Democrats threatened to vote against a procedural rule needed to advance the omnibus.
Sinking the procedural rule, which governs floor debate on the omnibus bill, would have derailed speedy passage of a long-sought measure that would fund the government through September, address the pandemic and provide $13.6 billion in new aid to Ukraine as it fights a Russian invasion.
After weeks of partisan haggling over the omnibus and the pandemic aid, Democrats and Republicans agreed to provide $15.6 billion in new money for COVID-19 vaccines and therapeutics. But at the insistence of Republicans, the omnibus would have offset that spending by tapping unspent aid from previous pandemic relief laws. That included nearly $7.1 billion in undisrupted state fiscal relief funds.
"Sadly, Republicans have insisted on offsets for those emergency resources that some Democratic Members cannot support,” DeLauro said in a statement. “To complete our work on the omnibus today, we are removing the coronavirus supplemental funding and considering it as standalone legislation without any problematic offsets."
House Democrats left in $8.6 billion worth of rescissions from other unspent coronavirus relief funds. But House Republicans complained the COVID-19 relief bill isn't fully offset, as initially agreed to, and warned it is unlikely to pass the Senate, where at least 10 GOP votes would be needed to end debate.
“It will pass here in the House, but it won't pass in the Senate,” Rep. Fred Upton, R-Mich., said, noting he plans to vote against it.
A coronavirus relief law enacted last year provided $350 billion to state and local governments to make up for projected revenue shortfalls from the pandemic. Of those funds, $195.3 billion was set aside for state governments, with the remainder parceled out to municipalities, territories and tribes.
But some states weren’t given their full allotment of aid after the law was enacted. The program called for placing a priority on states with unemployment rates that were at least 2 percentage points above their pre-pandemic levels. While those states received their full allotments, the remaining 30 states have yet to receive their second installments set to be delivered in the coming months, a year after the first tranche.
As a result, the second tranche those 30 states are waiting on — and in many cases budgeting for – is sitting in the Treasury, available for Congress to try to claw back. The formula in the bill wouldn't affect some big states like New York, California and Texas, while states like Florida, Michigan, Wisconsin and Minnesota are among the more populous states with funding that could be taken back.
Some Democrats, led by those from the Midwest, said their states would have been unfairly targeted if the money was clawed back.
Rep. Angie Craig, D-Minn., said it was “completely unacceptable” that "flyover" states like hers would bear the brunt of the rescinded funds. She said Minnesota had $253 million at risk.
“This deal was cut behind closed doors,” Craig said after leaving Pelosi's office Wednesday morning, where members were gathered to discuss their concerns. “We fought like tooth and nail to get these dollars home to our state governments.”
In an interview Wednesday, Michigan Rep. Debbie Dingell said Michigan would have lost $584.3 million, or the most of any state save Florida under the offset provision.
"My job is to defend my state so it’s not fair that some states like New York and California got all their money and I felt like the Midwest was being picked on," Dingell said, adding that some smaller states like New Hampshire, Maine and Vermont also would have been hit.
Fellow Michigan Democrat Dan Kildee said about a dozen Democrats had joined the fight against the clawback. He was willing to look at other options, including equitably spreading the pain across all states.
"There's no justification for the unspent money that is parked in Washington to be used as a pay-for from the 30 states, and the unspent money that is parked in a state capital to be allowed to remain,” he said. “It was just the disparate treatment that was not acceptable.”
But Wisconsin Rep. Mark Pocan said he doesn’t think that option would have worked.
“We looked at many options,” he said.
Pocan also said that while Republicans are viewing the state funds as “unspent,” many states have already accounted for that funding in their budgets.
“My hope is that between the White House and our leadership we can find another way to get this done,” he said.
House Democratic leaders’ decision to delay consideration of the COVID-19 funding altogether came after a frantic day of negotiations.
As the snafu over state and local aid funds became evident, House Democratic leaders held open a separate procedural vote for hours — it began at 10:17 a.m. — while they worked behind the scenes to tamp down a revolt.
A House Democratic aide, who spoke on condition of anonymity to be candid, said the revolt was driven largely by "Frontline" program members — those getting extra help from the party's campaign arm — from states that would lose funds. "They've got to bring home money already promised to their states," the aide said.
In addition to meeting with members personally, Pelosi sent a letter to her caucus suggesting all states would be treated equitably. “Republicans continued to insist on state cuts, but we were able to ensure that all states receive at least 91 percent of the state funds that they expected to receive,” she wrote.
After the procedural vote finally was gaveled to a close shortly before 3 p.m., House Rules Chairman Jim McGovern, D-Mass., went to the floor to withdraw the earlier rule for floor debate in preparation for another meeting of his panel to consider the revised bill.
The committee adopted a new rule that stripped the pandemic aid from the omnibus and set up debate on the standalone bill. The House adopted the rule, 218-204.
But shortly after that vote, House Majority Leader Steny H. Hoyer's office sent a floor notice saying further consideration of the COVID-19 aid measure until next week.