Monday 6 July 2020

Congress departs for two-week recess without addressing coronavirus spikes, economic strains

The House and Senate have adjourned for a two-week recess without addressing the alarming new rise in coronavirus infections, setting up an intense struggle when they return over what might be the final major relief package for the pandemic.
Ignoring Democrats’ demands for immediate action, Senate Majority Leader Mitch McConnell (R-Ky.) has focused on other issues in recent weeks, such as an annual defense policy bill and confirming President Trump’s nominees. When the Senate comes back into session July 20, McConnell plans to turn his attention back to the coronavirus, giving lawmakers just three weeks to negotiate and pass a big rescue bill before they adjourn again through Labor Day.
It appeared many states were going to accelerate their reopening plans last month, but a number of governors have reversed course after a large increase in cases in the past several weeks. Several governors have ordered bars to stay closed, and many small businesses remain shuttered. Another 1.4 million Americans sought unemployment benefits last week, an elevated level that has persisted for more than three months. 
With some Republican senators resistant to spending any more money after pumping $3 trillion into the economy, McConnell has said the next bill will be their final effort. But he will face a challenge finding consensus among Senate Republicans and with a Trump administration that is itself divided, even before starting negotiations with Democrats, who are pushing for much more new spending than Republicans support.
“I think the key right now is to try and get sort of the White House and Republicans on the Hill in the same place,” Sen. John Thune (R-S.D.) said Thursday. “Senate Republicans are doing this assessment, determining where we think the greatest needs are going to be, watching what’s happening in the economy as it opens up. But definitely going to be heavily focused on the health-care crisis and making sure that we can get the schools open in the fall.”
Already, thorny disputes are shaping up over what to do about enhanced unemployment benefits that expire July 31, additional aid that Democrats are demanding for state and local governments, and a possible new round of stimulus checks to individual Americans favored by Treasury Secretary Steven Mnuchin but opposed by some in the GOP. 
A better-than-expected jobs report on Thursday bolstered sentiment among some Republicans that Congress has already done enough and that little if any additional economic assistance is needed, even though millions remain unemployed. At the same time, record new levels of coronavirus infections across the South and beyond are forcing lawmakers to reassess what they might need to put in the package, such as more money for hospitals, schools, testing and vaccine development.
“I think on the health-care part, there’s realization we’re going to have to do more, because unfortunately in some of our states we’ve seen the numbers start to go back up again,” said Sen. Rob Portman (R-Ohio). “So we have to be attentive to that.” 
Congress passed four bipartisan relief bills in March and April totaling about $3 trillion for individual stimulus checks, unemployment insurance and support for the health-care system, state and local governments, and more. That included more than $600 billion for small businesses through the Paycheck Protection Program, which administration officials credit with saving millions of jobs. 
There have been no bipartisan negotiations since, even though Democrats have repeatedly demanded them. Republicans point out that more than $1 trillion of the money already authorized has yet to be committed, and they have continually argued for a wait-and-see approach before taking new steps.
In the meantime, McConnell has put down some markers that will make the next round of negotiations even tougher than the last ones, especially as the election nears and partisan tensions rise. McConnell has said repeatedly that the next bill must contain liability protections for businesses, health-care providers and schools, something Democrats oppose and where there is no obvious compromise. McConnell also has stressed to top administration officials that the price tag on the next bill should not exceed $1 trillion.
Many Democrats view that as a paltry sum. The Democratic-led House passed a sweeping coronavirus response bill in May called the Heroes Act that cost more than $3 trillion. McConnell brushed it aside and Trump threatened to veto it. 
Arguing for robust additional action, Senate Minority Leader Charles E. Schumer (D-N.Y.) said Thursday that the new jobs figures, showing the economy added 4.8 million jobs in June, “may just be a slight peak in a much larger valley.”
“The Republican majority has been out to lunch since we passed the Cares Act way back in March,” Schumer said on the Senate floor. “It’s been over three months since the Republican Senate has considered major covid-relief legislation. Weekly unemployment claims are measured in the millions. States are shedding public service jobs in the tens of thousands. The number of new cases is accelerating in nearly half of our states. … Just how much more assessment do we need?”
At a celebratory news conference Thursday on the jobs numbers, Trump said that work was underway with Congress on the fifth package. “Talking about payroll tax cuts, we’re talking about more money being infused,” the president said. Trump has long been focused on a payroll tax cut, something congressional Republicans have resisted but have begun to sound more open to of late. 
Complicating matters for the next round of talks, divisions within the Trump administration have made the president’s priorities unclear. The White House has not taken a position on a range of critical policy questions, including the issue of state and local aid, which Democrats are demanding should be increased beyond the $150 billion approved in the Cares Act in March.
Many congressional Republicans oppose sending any additional money to states, saying some governors still have not shared the money they already got with localities. Instead, Republicans say they would favor giving states additional flexibility in how they spend the money they have received.
There has also been talk of “repurposing” money that has gone unspent so far, including more than $130 billion in the Paycheck Protection Program, which Sen. Marco Rubio (R-Fla.) and others hope to direct to businesses or industries that have been hit particularly hard, such as restaurants and hotels, perhaps with a renewed focus on smaller and minority-owned businesses. 
Some lawmakers have remarked on the fact that there’s been tepid demand for some lending facilities in a $500 billion Treasury Department and Federal Reserve fund, suggesting some of that money could be redirected, but it’s unclear how that might be resolved.
Various factions within the administration are jockeying for competing priorities. For instance, Mnuchin has pushed internally for sending out another round of stimulus payments to millions of Americans, and the president has expressed support publicly for doing so. But several conservative senior White House economic officials have voiced skepticism about a new round of checks, arguing Americans are more likely to save those benefits than spend them in the economy, a concern voiced by some Senate Republicans as well.
Senior White House economic adviser Peter Navarro has said the next stimulus package should include a major infrastructure component, and Transportation Department officials are working on such a proposal. Many congressional Republicans are skeptical of a big infrastructure overhaul, and talk of such an effort has become something of a running joke on Capitol Hill because of how unsuccessful infrastructure negotiations have been. 
Navarro and some conservative Republicans have also said the next stimulus package should include measures to sanction China over its handling of the coronavirus and its crackdown on Hong Kong, but those ideas are polarizing within conservative circles and face an uncertain path to passage.
Among the most contentious issue facing lawmakers is what to do with the $600-per-week additional unemployment benefits approved by Congress in March, which expire July 31.
Trump and senior Republican lawmakers have said the payments should be ended or dramatically scaled back, arguing the large benefit discourages workers from trying to find a job. Democrats and many economists say doing so would sharply reduce the incomes of more than 30 million people — months before the presidential election — and could drain the economic recovery of hundreds of billions in stimulus spending. 
White House officials have signaled to outside allies that they may accept a compromise measure in which the payment is reduced from an extra $600 per week to something closer to an extra $200 or $300 per week, while also getting behind another round of $1,200 stimulus checks. Administration officials have said they are exploring a “back-to-work” bonus that would give workers additional compensation for returning to their jobs, an idea supported by some key congressional Republicans.
In confusing remarks on Wednesday, the president appeared to endorse another round of stimulus checks while continuing to voice concern about the impact of higher unemployment benefits on the labor market.
“It was an incentive not to go to work. You’d make more money if you don’t go to work. That’s not what the country is all about,” the president said. “So we don’t want to have that. We want to have people get out.”

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