The GOP's New Coronavirus Relief Plan

By Yuval Rosenberg

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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