As the COVID-19 pandemic was reaching its early peak in March, bipartisan majorities in both houses of Congress speedily adopted a $2.2 trillion emergency stimulus package. The CARES Act, which was signed into law by President Trump, included an array of loans and grants for large and small businesses; over $300 billion in aid to cash-strapped state and local governments; federal unemployment insurance supplements; significant new public-health and hospital spending; and $1,200 stimulus checks. With much of that aid running out as new COVID-19 cases spike and the economy slows, there’s a new impetus for another package — and at last, it looks like a compromise deal is on the way. Here’s where negotiations stand.
The Latest Manuevers
How close are Democrats and Republicans to the long-awaited stimulus deal? As of Thursday morning — after multiple days of negotiations between House Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer, Senate Majority Leader McConnell, and House Minority Leader Kevin McCarthy — the big moment appears imminent.
For weeks, the two sides were still stuck on the same old issues: Democrats want state and local government assistance and unemployment benefits, while Republicans are set on a corporate liability shield. A deal expected to be reached at any moment sidesteps both matters, as McConnell had proposed doing on December 8.
The Washington Post reports that the emerging agreement, which is expected to come in at around $900 billion, includes a $600 second direct stimulus check and a roughly $300 federal unemployment benefit supplement. Discussions are still underway over possible direct assistance to restaurants, theaters and other businesses closed due to COVID-19 restrictions.
Pelosi has always opposed piecemeal stimulus measures, but the bipartisan group whose proposal she has embraced is also promoting a version with neither state and local assistance or a liability shield. And Democrats claim that they have carved out some indirect aid for states, and will fight for more next year. Meanwhile, Republicans are trying to place limits on the Federal Reserve Board’s emergency lending powers, which could reduce the Biden administration’s ability to keep the economy out of the ditch next year.
Assuming a deal is cut, it will be attached to a separate $1.4 trillion omnibus appropriations bill that will replace the stopgap spending authority due to run out this week (unless it is briefly extended so that talks can be completed).
If talks still somehow collapse, they won’t resume until the next Congress convenes in January, when everyone will have to start all over.
Why Congress Hasn’t Been Able to Reach a Deal for Months
Practically from the day the CARES Act was enacted, discussions began over the possibility of a second major stimulus package. But the on-again, off-again talks over another stimulus package have yet to strike gold. Aside from the overall scope and price tag, the two parties have been most decisively divided on three points:
• Democratic calls for major state and local government assistance (which Trump and Republicans have incessantly called a “bailout” of “failed Democrat states and cities”)
• A continuation of robust federal unemployment supplements
• Republicans efforts to shield corporations from liability over COVID-19-related suffering
Republican disunity has also been a chronic problem, with a sizable number of Senate conservatives opposing virtually any new spending on pandemic relief or economic stimulus.
Trump’s Role in Stimulus Negotiations
The president has delegated the task of negotiating a second stimulus package to Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows (who don’t seem to see eye-to-eye themselves; Meadows has been sort of a conservative watchdog over Mnuchin’s more aggressive efforts to reach a deal with Nancy Pelosi). Yet Trump has regularly chimed in from the sidelines, usually via Twitter. The president seems much more eager than his partisan allies to get a second bill done (despite his not-very-helpful attacks on state and local government aid), and has been conspicuously enthusiastic about the idea of a second stimulus check for broad swaths of the population, while not appearing to share GOP fiscal fears about overspending.
Where Republicans Stand
While Trump has promised to bring along Senate conservatives once a deal is cut, there have been doubts about his willingness and ability to do so, particularly now that he is a lame-duck president. Many Republicans (while paying lip service to Trump’s effort to overturn his defeat via the courts and state legislatures) appear more focused on trying to save their control of the Senate in two Georgia runoffs in January. After the election, Senate Majority Leader Mitch McConnell seemed to take over stimulus negotiations on behalf of Republicans, although Mnuchin suddenly reemerged on December 8 with a new “offer” on the president’s behalf that included a second direct stimulus payment at $600, half the level of the first check.
Where Democrats Stand
House Speaker Nancy Pelosi has taken a notably hard line throughout most of the stimulus negotiations, believing that her united party (which, after all, did pass a second stimulus bill many months ago) has leverage over Trump and the GOP. In the run-up to the election, Republicans were eager to show some effective response to the pandemic after the administration’s fumbling and the president’s demagoguery on the issue. Pelosi also had reason to believe that additional stimulus legislation would be easier to pass post-election.
But the uncertainty surrounding Senate control and shocking House Democratic losses appears to have changed the equation. Even as Republicans and their business-community paymasters grow worried about the intense resurgence of the pandemic, the need to plan for vaccine distribution, and the slowing economy, Pelosi may have decided there’s no time like the present for at least a short-term deal before Joe Biden takes office and can propose more stimulus as part of his administration’s agenda.
On December 2, Pelosi and Senate Democratic leader Chuck Schumer suddenly embraced (at least as a starting point for negotiations) a new bipartisan Senate compromise proposal offering $908 billion in short-term spending. This proposal — sponsored by Republican senators Bill Cassidy, Susan Collins, and Mitt Romney; Democratic senators Joe Manchin, Angus King, and Mark Warner; and the bipartisan House Problem Solvers Caucus — features a little bit of everything both sides have been pursuing, including:
• A small supplemental unemployment insurance provision
• A modest pot of money for state and local governments
• A temporary COVID-19 liability shield
Notably, the legislation does not include another stimulus check for taxpayers, although Democratic Senator Bernie Sanders and Republican Senator Josh Hawley have been vocally pressing for one at the same $1,200 level as the first check authorized by the CARES Act.
If there is a compromise, the emerging idea is to attach some version of it to a must-pass spending measure (either an omnibus appropriations bill or, more likely, a stopgap spending bill to provide more time for an appropriations deal) needed to avoid a December government shutdown.