With expanded unemployment insurance benefits sunsetting after July 31, lawmakers are under immense pressure to approve an extension — along with a number of other stimulus provisions — before 33 million people find themselves without the federal money they have relied on for months to pay their bills.
Republicans and Democrats are on track to begin negotiating a new stimulus bill in earnest, although the parties are currently quite far apart: Democrats are prioritizing the extension of expanded unemployment insurance (UI) and additional funding for state and local governments, having laid out many of their top priorities in a $3 trillion bill in May. Republicans, meanwhile, are expected to release their plan later this week and have signaled that they’re particularly interested in providing liability protections for businesses and other entities and reducing the amount of expanded UI, which currently provides unemployed people with an additional $600 per week on top of their state unemployment payments.
On Monday, Treasury Secretary Steven Mnuchin announced that the GOP plan would recommend $1 trillion in aid, a number that remains in flux and is sure to be hashed out in more detail in the coming days.
“What we see as the focus is kids and jobs,” Mnuchin said during a meeting with President Donald Trump, Senate Majority Leader Mitch McConnell, and House Minority Leader Kevin McCarthy. “We’ve said the No. 1 issue is we have to finish the technical fix on enhanced unemployment.” (Republicans have repeatedly expressed concern that the current UI expansion deters people from returning to work because it made some workers’ unemployment payments higher than the wages they made.)
Further complicating the GOP position is dissent between Republican lawmakers and the White House on key policies including a payroll tax cut, which Trump has repeatedly pushed since the start of the pandemic.
The two parties have a tight timeline in which to turn around the next stimulus package. Finding a compromise, however, is looking tougher than with prior coronavirus-related bills given the slew of divergent priorities between them.
What we know about what Republicans and Democrats want
Democrat and Republican lawmakers met Tuesday afternoon to kick off talks about the new stimulus, a proposal on which they currently differ significantly.
The Democrats’ HEROES Act, which was passed by the House in May, is a massive $3 trillion plan that includes more than $900 billion in funding for states and cities, as well as an extension of expanded UI until January 2021. Republicans, meanwhile, have indicated that they plan to unveil a roughly $1 trillion bill; they’ve also shied away from supporting state and local funding, a stance that Democrats — and some Republican mayors and governors — have criticized.
“Unfortunately, by all accounts the Senate Republicans are drafting legislation that comes up short in a number of vital areas,” Senate Minority Leader Chuck Schumer wrote in a “Dear Colleague” letter earlier this week.
GOP lawmakers and the White House, too, are still grappling with disagreements over the inclusion of both a payroll tax cut and funding for testing and contact tracing, the Washington Post reported Tuesday.
Here’s a broad look at where Republicans and Democrats currently overlap and some provisions where they still differ.
Areas where Republicans and Democrats agree
- A second stimulus check: Lawmakers on both sides of the aisle have announced support for another wave of direct payments to Americans, though it remains unclear whether the income threshold for receiving them will change.
“We want another round of direct payments,” McConnell said in a floor speech Tuesday.
Through the CARES Act, which was signed into law in March, most adults who made less than an adjusted gross income (AGI) of $75,000 annually were eligible to receive a $1,200 check, along with an additional $500 payment per qualifying child. Payments were cut off for individuals who had an AGI of more than $99,000.
In the HEROES Act, Democrats proposed that individuals receive up to $1,200 per dependent, capped at three dependents. Republicans, meanwhile, have floated reducing the income threshold for direct payments to $40,000, which means the checks would go out to a much smaller group of people this time around.
- Funding for coronavirus vaccine development, testing, and treatment: There’s bipartisan interest in additional funding for coronavirus testing and treatment, though Republicans still need to sort out pushback from the White House on this front, CNBC reported July 18.
Reducing coronavirus cases is of the utmost importance for any economic recovery since many businesses and industries have had to reduce operations (and lay off workers as a result) as part of efforts to limit the spread of the virus.
“The key to returning the economy to business as usual involves bringing Covid-19 under control, and only then can we start to think about workers returning to work en masse,” said Damon Jones, an associate professor at the University of Chicago Harris School of Public Policy.
Democrats and Republicans will likely have to negotiate on the final funding amount. According to the New York Times, Republicans were interested in allocating $25 billion to states for testing and contact tracing, $10 billion in additional funding for the Centers for Disease Control and Prevention, and $15 billion to the National Institutes of Health. In the HEROES Act, Democrats designated $75 billion for testing and contact tracing.
- Funding for schools: Both Republicans and Democrats have placed major emphasis on providing schools with the funding they need to reopen, though each party is set to propose its own amount and approach.
McConnell announced Tuesday that Republicans are interested in allocating $105 billion for schools, while House Democrats previously proposed $100 billion. Senate Democrats, meanwhile, have introduced a $430 billion package that would also provide funds for day cares, schools, and higher education institutions.
The Trump administration has said it could be interested in tying funds to schools’ decision to reopen their physical locations, a limitation that Democrats and some congressional Republicans have been wary of supporting due to public health concerns.
“These decisions may have to be made locally because of the rate of infection in certain areas, but they have to be made scientifically,” House Speaker Nancy Pelosi said Monday during an appearance on Morning Joe.
- More money for small businesses: Republicans and Democrats are both interested in more support for small businesses, many of which have already seen the funds they previously obtained via the Paycheck Protection Program (PPP) run out.
Republicans say they’d like to do another wave of PPP that better targets the businesses that are struggling the most to stay afloat. Democrats, too, have argued for targeted funding that reaches underrepresented business owners, particularly people of color and women.
What Republicans want
- A “fix” for unemployment insurance: The current UI expansion in the CARES Act adds another $600 to the weekly amount that recipients get from states, and Republicans have long been interested in either eliminating or reducing the extra money because they see it as deterring people from returning to work.
Their critique overlooks the current reality of the pandemic: Right now, the UI is helping people stay home in order to protect themselves and others from the coronavirus. Additionally, the Republicans’ view doesn’t acknowledge the fact that many jobs that have been lost aren’t coming back in the near term.
“There could be an interesting time for that discussion when jobs are actually available,” said Heidi Shierholz, senior economist and policy director at the Economic Policy Institute. “But right now that discussion just rings so false and ideological.”
Republicans are expected to push for a reduction in the expanded UI amount, and Mnuchin previously floated the idea of allocating funds that more closely match an unemployed person’s previous wages.
- Liability protections for businesses: Republicans have also repeatedly said that one of their chief goals is ensuring that businesses and other entities are protected from coronavirus-related lawsuits that emerge from customers and employees.
“One helpful policy would be strong legal protection for schools, colleges, nonprofits, and employers who are putting their necks on the line to reopen,” McConnell said in a June floor speech. “So long as institutions follow the best available guidelines, they should not have to live in fear of a second epidemic of frivolous lawsuits.”
What Democrats want
- Extension of expanded unemployment insurance: Democrats have called for an extension of the CARES Act’s UI until January 2021, arguing that it’s playing an important role in tiding workers over while policymakers work to address the pandemic.
Economists note that UI is helping workers cover vital living costs such as rent and food, and warn that curbing the benefits could result in steep declines in consumer spending and lead to even more job losses.
- Funding for state and local governments: There’s been a recurring push from Democrats for more state funding, which Republicans have been more reluctant to consider.
As Vox’s Emily Stewart has reported, states are suffering from declines in sales tax revenue and rising costs related to addressing public health needs during the pandemic.
In the CARES Act, lawmakers allocated $150 billion to help states deal with this surge in coronavirus-related costs, but that amount was far from enough to cover the more expansive budget shortfalls many now face.
In the HEROES Act, Democrats proposed $500 billion for states, $375 billion for local governments, $20 billion for tribal communities, and another $20 billion for territories including Puerto Rico, Guam, and the US Virgin Islands. But Republicans have warned against giving states funds that they say are being used to address financial issues that existed prior to the pandemic.
Talks are slated to continue in the coming weeks
Lawmakers are, once again, working down to the wire on the next package, given both the July 31 UI deadline and their planned recess that begins August 10. McConnell said that Republicans will introduce their bill later this week, with plans to use the legislation as a “starting point” for negotiations.
Some of the chief points of contention are likely to be next steps on UI, as well as support for state and local governments, both of which are areas where Democrats and Republicans have long been at an impasse. The fight over school funding, too, is set to focus heavily on how the money can best be used to protect teachers and students so schools can reopen safely.
Both parties will need to make concessions in order for any package to move forward. The 53 Senate Republicans will need at least seven Democrats to back a stimulus bill to get it through the Senate, and no bill will be able to make it through the House of Representatives without the support of most Democrats in that chamber.
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