Congress’s new stimulus and Covid-19 relief plans, explained
December 1, 2020
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A bipartisan group of senators and members of the House unveiled a new $908 billion plan for emergency Covid-19 relief funding on Tuesday to extend unemployment benefits and small business loans.

The proposal comes after months of stalemate on stimulus talks, and during a critical time in the Covid-19 crisis. About 14 million Americans receiving unemployment benefits will see those programs expire at the end of the month unless Congress takes action, and cities and states around the country are also facing massive budget shortfalls.

The plan, spearheaded by Sens. Joe Manchin (D-WV) and Susan Collins (R-ME) and also supported by the bipartisan House Problem Solvers Caucus, is designed to be a short-term extension of federal aid heading into a winter where Covid-19 cases are spiking again and unemployment claims are ticking up. The funding would extend benefits until April 1, around when many public health experts expect widespread distribution of a vaccine to be underway.

“This is going to get us through the most difficult times,” Manchin said at a Tuesday press conference announcing the framework.

The question going forward is whether the plan can garner the support of Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi. Multiple Senate votes for a “skinny” $500 billion stimulus bill backed by McConnell and Republicans have failed, with no Democratic support. House Democrats, meanwhile, most recently passed a revised $2.2 trillion version of their HEROES Act in October.

“We have not had assurances from them on that for a vote, but I think the American people will put [on] the pressure,” Manchin told reporters. “We’re determined not to go home until we do something, so it’s up to them to work with us. We want to work with them.”

No new coronavirus aid package is going to get through the Senate without bipartisan support, so the new plan is a signal that Republicans and Democrats are indeed talking. Lawmakers supporting the plan emphasized on Tuesday that while each party is not going to get exactly what they want, their framework contains key points of agreement.

McConnell is circulating his own proposal among Senate Republicans, after he and House Minority Leader Kevin McCarthy met with White House officials on Tuesday to suss out what President Donald Trump wants to come out of a coronavirus relief deal. McConnell’s version of an emergency package is more limited, providing just a one-month extension of unemployment benefits, rather than the three-month extension in the bipartisan proposal. Pelosi and Senate Minority Leader Chuck Schumer also sent McConnell a separate proposal on Monday night.

“Additional COVID relief is long overdue and must be passed in this lame duck session,” Pelosi said in a statement Tuesday.

With the November election in the rear-view mirror and coronavirus cases spiking across the country, there could be new momentum behind getting a deal done. But there’s still a long way to go, and Trump — who has proved the wild card for many a congressional deal — is still very much in the picture.

What’s in the bipartisan proposal

This new proposal is a $908 billion package that repurposes $560 billion in unused funds from the CARES Act, the $2.2 trillion stimulus package that passed in March, meaning that this new proposal adds only $348 billion in new spending. It’s much smaller than the $2.2 trillion revised HEROES Act that House Democrats passed in October, but larger than the $500 billion Senate Republicans were proposing in October.

Two large sticking points in negotiations have been whether there should be another round of stimulus checks (a priority for Pelosi and Trump) and liability protections for businesses worried about being sued for exposing customers and workers to Covid-19 (a priority of McConnell’s). Republicans came out on top on both of these issues (at least in this initial proposal) — stimulus checks are not included in this new bipartisan proposal and the framework provided by Sen. Manchin’s office notes that the proposal will “provide short term Federal protection from Coronavirus related lawsuits with the purpose of giving states time to develop their own response.”

Both Pelosi and Trump have signaled support for another round of stimulus payments going out to working Americans.

Here’s what actually made it into the proposal:

  • $160 billion for state, local, and tribal governments. For context, US cities alone are facing a $360 billion shortfall and are being forced to pursue austerity measures to balance their budgets and as Emily Stewart has reported for Vox, state budget shortfalls could exceed $500 billion. In other words, this money could be a drop in the bucket. State and local government woes have been lower on McConnell’s list of priorities — at one point he suggested that states declare bankruptcy.
  • $180 billion in unemployment insurance (UI). The CARES Act gave unemployed Americans a weekly $600 lifeline on top of state unemployment insurance, a move widely regarded as staving off catastrophe for the millions of Americans who lost their jobs this year. As Dylan Matthews has reported for Vox, research has shown that “the average UI recipient is getting 134 percent of their previous salary,” and it may have temporarily lowered the poverty rate.

This program expired in August, so any relief will be welcome for those still unemployed. Congress originally estimated that the UI program would cost $260 billion which the Tax Policy Center viewed as an underestimate, so it’s likely this extension wouldn’t cover the full cost of unemployed workers’ needs. The Washington Post reported that this amount would cover an additional $300 a week for four months.

  • $288 billion in support for small businesses. This support will partially come through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans. As Forbes has reported, an August 2020 survey from the US Census showed that almost 79 percent of small businesses reported being negatively affected by Covid-19.
  • $25 billion in rental assistance. Notably, the new bipartisan proposal only provides for $25 billion in rental assistance even as economists are predicting that tenants could owe nearly $70 billion in back rent by year’s end. Vox has reported that policy experts and advocates have been pushing for $100 billion to be included in stimulus negotiations in order to prevent an eviction crisis that could impact as many as 40 million Americans.

The framework also includes $45 billion for transportation including airlines and Amtrak, $16 billion for vaccine development and more Covid-19 testing and tracing, $82 billion in federal education funding, $10 billion for the struggling US postal service, and $10 billion for child care, among other things.

“This is emergency relief, this is designed to get us through this next quarter,” Sen. Lisa Murkowski (R-AK) told reporters. “We know we have more to do, but … we cannot abandon the American people.”

What’s next for this proposal

In the coming weeks, Collins, Manchin, and the others will have to reach out to a lot of senators to see if they can increase the support for the bill. They’ll also have to do a lot of additional work to get McConnell and Senate Minority Leader Chuck Schumer on board.

Trump is still president until Biden is sworn in on January 20, and McConnell told reporters he doesn’t want to pass anything that Trump won’t sign. That said, McConnell and Trump in the past have supported two very different numbers for stimulus relief. McConnell repeatedly tried to pass a $500 billion package, while Trump voiced support for a package closer to $1.8 trillion.

McConnell’s version of an emergency package he sent to his Republican members on Tuesday contains no funding for state and local aid, no money for rental assistance, and provides just a one-month extension of unemployment benefits rather than the bipartisan proposal’s three-month extension. McConnell’s bill contains $332.7 billion for PPP loans, $100 billion for education funding, and $47 billion for vaccine distribution and testing and tracing.

But Democrats are also wary of what Trump — still stinging over his election loss and refusing to concede to Biden — will do with a stimulus package should it reach his desk.

Congressional and White House leaders may be talking, but there’s a long way to go in a short amount of time before a deal can be reached.

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