The GOP's New Coronavirus Relief Plan

Monday, July 20, 2020

What’s in the GOP’s New Coronavirus Relief Plan?

Congress is back in Washington this week and getting down to the difficult task of negotiating the next, and potentially final, coronavirus relief package. The parties are far apart, with House Democrats having passed a $3 trillion package and Republicans eyeing the $1 trillion range — and still needing to settle some internal differences over what should and shouldn’t be in the legislation.

To that end, President Trump met Monday with Senate Majority Leader Mitch McConnell (R-KY) and House Minority leader Kevin McCarthy (R-CA). Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows are reportedly set to meet Tuesday with Senate Republicans to discuss the GOP plan.

What may be in the Republican plan: The focus of the package will be "kids and jobs and vaccines," Treasury Secretary Steven Mnuchin told reporters, according to Bloomberg News. McConnell said that the plan "would neither be another multitrillion-dollar bridge loan to make up for a totally shut down economy, nor an ordinary stimulus for a nation ready to get back to normal."

The bill being crafted as a Republican starting point for negotiations is reportedly expected to include:

a payroll tax cut, an employee retention tax credit and other tax credits meant to help reopening businesses with costs like personal protective equipment, workplace cleaning and testing;
a new round of direct payments to individuals, though the details could be different from the $1,200 payments approved in March;
as much as $150 billion in additional funding for the Paycheck Protection Program of small business loans;
provisions tying school funding to students returning to classrooms and about $70 billion for elementary and secondary schools to help pay for costs associated with reopenings. The administration has said it will push for 10% of the funding to go to "nonpublic schools and education freedom scholarships." The Post says it’s still unclear how the money would be structured to incentivize schools to reopen or what might qualify as reopening;
a liability shield protecting businesses from coronavirus-related lawsuits.

The Washington Post adds that, "Trump administration officials have also floated new spending caps for next year’s budget, as well as seeking funding for other non-coronavirus related projects, such as $250 million for FBI renovations, said GOP lawmakers and aides."

What may not be in the plan: The proposal would also reduce the $600-a-week in enhanced federal unemployment benefits, which is set to expire in most states at the end of this week. And it is expected to leave out more aid for states and cities, according to the Post, instead allowing governors and local leaders more flexibility in spending the $150 billion in aid provided by the March coronavirus relief law. Democrats have pushed for an additional $1 trillion in aid to state and local governments.

The Post’s Erica Werner and Jeff Stein reported this weekend that the administration is also complicating negotiations by trying to prevent the coronavirus bill from including some $25 billion to states for virus testing and contact tracing and $10 billion more that Republican senators want to provide the Centers for Disease Control and Prevention. The administration is also reportedly looking to block billions in pandemic funding for the Pentagon and State Department.

The White House position has reportedly angered some senate Republicans, and some lawmakers are pushing for the money to stay in the package. "Senate Republicans have asked for funding to help states purchase test kits in bulk," Sam Hammond, a policy expert at the right-leaning Niskanen Center think tank told the Post, which notes that the center has been working with those GOPers on testing legislation. "As it currently stands, the main bottleneck to a big ramp-up in testing is less technical than the White House’s own intransigence."

Payroll tax pushback: Trump and administration officials continue to emphasize their desire for a payroll tax cut, with the president on Monday calling it "very important" and an incentive for companies to rehire workers. Trump has suggested he might not sign a bill that doesn’t include the tax cut.

"The administration is eyeing structuring the payroll tax cut in the legislation as a deferral rather than an outright cut, which would keep down the technical cost of the overall bill," The Washington Post reported Monday, citing a person briefed on the package. "Such a deferral could require Americans to pay back the tax cut at a later date, but lawmakers could later decide to wave the repayment entirely."

GOP leaders in Congress aren’t sold on the idea. Senate Finance Committee Chairman Chuck Grassley (R-IA) warned Monday that cutting the payroll tax funding Social Security could be a public relations problem for Republicans.

"Go to the fact that Social Security people think we're raiding the Social Security fund. And we are raiding it, but we have always put in general fund revenue in it so it is made whole. But that creates — it might create political problems — but it creates a public relations problem," Grassley told reporters, according to The Hill.

Sen. John Cornyn (R-TX) expressed similar concerns, The Hill reported. "I think it's problematic because obviously the trust funds for Social Security and Medicare are already on their way to insolvency. ...I'm not a fan," Cornyn said.

The time factor: There’s some urgency to the talks, and not only because of the alarming surge of Covid-19 cases sweeping across many states. Critical coronavirus aid programs including enhanced unemployment insurance and federal eviction protections are also set to expire within days — and lawmakers have just a few weeks before they are scheduled to go on another recess. The House is currently scheduled to depart at the end of the month, a week ahead of the Senate, though members have reportedly been told not to make plans for the first week of August.

What’s next: A fight, clearly. Democrats have already begun to criticize the Republican approach as prioritizing corporate interests over workers and Main Street businesses.

"Unfortunately, by all accounts the Senate Republicans are drafting legislation that comes up short in a number of vital areas, such as extending unemployment benefits or funding for rental assistance, hazard premium pay for frontline workers, or investments in communities of color being ravaged by the virus, and many other necessary provisions," Senate Minority Leader Chuck Schumer wrote in a letter Monday, urging his caucus to stick together. "Democrats will need to fight hard for these important provisions."

Food Stamp Enrollment Soars Amid Pandemic

About 43 million people are now receiving food stamps, and millions more could soon turn to the Supplemental Nutrition Assistance Program if Congress allows enhanced unemployment benefits to expire this month.

According to an analysis by The New York Times, the first three months of the coronavirus pandemic saw the fastest growth in participation in the federal food stamp program on record, with enrollment soaring by more than 6 million from February to May — a growth rate of 17%.

Total participation is still below the record high of 48 million set in 2012 in the aftermath of the Great Recession, but that may change soon. At the end of July, about 20 million Americans could lose the $600-per-week boost to unemployment benefits provided by the CARES Act, and many of those households will then qualify for food stamps.

Spending on SNAP, which cost $60 billion last year, has grown even faster than enrollment, in part because Congress has temporarily allowed all applicants to receive maximum benefits. For example, households with three people are now receiving the maximum of $509 per month in food aid, a big jump from the average of $378 per month from before the pandemic hit. (The Center on Budget and Policy Priorities has a rundown on the pre-pandemic SNAP numbers, as well as a more recent analysis of the current state of the program.)

Some details from the Times report:

About one in eight Americans is now participating in SNAP.
Thirty states (of the 42 the Times could collect data for) saw double-digit growth in enrollment.
Only one state, Arizona, saw a decline.
More than 200,000 people signed up in both Miami and Los Angeles, while more than 100,000 joined in Atlanta.
In Michigan, where roughly 1.5 million people received benefits in May, cases have grown by 30% and spending by 90%.
In the Atlanta area, cases grew more in wealthy, suburban Cobb County (55%) than in urban Fulton County (40%).
Cases grew the most in Florida, where nearly 1 million people joined the food stamp program.

What’s next: The coronavirus pandemic has produced a ceasefire in the long-running political battle over SNAP, at least for now. The Trump administration has eased its efforts to reduce participation in the program, and thanks to the pandemic there are now more people on food stamps than there were when Trump took office. But Democrats, citing an increase in food prices, are looking for a permanent 15% increase in benefits, a change that will likely be part of the negotiations over the size and content of the next coronavirus relief package.

Chart of the Day: Sales Tax Revenues Plunge

The coronavirus recession has produced the largest drop in state sales tax revenues on record, says Lucy Dadayan of the Tax Policy Center. "May state sales tax receipts shrank by nearly $6 billion, or 21 percent, compared to May 2019," Dadayan writes. "State stay-at-home orders, decisions to close businesses, states’ sales tax filing and payment deadline extensions, and COVID-19 cases all contributed to the freefall of sales tax revenues." States that rely on the leisure and hospitality sector, such as Florida and Texas, have been particularly hard hit.

It’s Not the Testing: 26 States Saw Covid Case Counts Rise Because Disease Spread

President Trump keeps claiming that Covid-19 case counts are rising because the United States is doing much more testing. "Cases are up because we have the best testing in the world and we have the most testing," he said in his Fox News interview.

So Sharon Begley of STAT News did the math. Her conclusion: Trump is wrong. The spread of the virus accounts for far more of the increase than ramped up testing. "In only seven states was the rise in reported cases from mid-May to mid-July driven primarily by increased testing," Begley writes. "In the other 26 states — among the 33 that saw cases increase during that period — the case count rose because there was actually more disease."

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The GOP's New Coronavirus Relief Plan