Stimulus Deal Gains Steam as McConnell, Pelosi Talk
The prospects of a coronavirus relief bill of some sort passing before the end of the year picked up momentum on Thursday, as House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Mitch McConnell (R-KY) spoke by phone about a deal and more Senate Republicans voiced support for a bipartisan package unveiled earlier this week.
Pelosi and McConnell spoke by phone “about their shared commitment to completing an omnibus [spending bill] and COVID relief as soon as possible,” according to a spokesman for Pelosi. The lawmakers are racing to come together on both coronavirus relief and a larger spending package ahead of a December 11 deadline, when current government funding is set to expire.
Their conversation came a day after Pelosi and Senate Minority Leader Chuck Schumer (D-NY) said that a $908 billion framework introduced by lawmakers this week should serve as the basis for negotiations, signaling a willingness to back off of earlier demands for a package in the $2 trillion range — and from a private $1.3 trillion offer the Democrats made to start the week.
Pelosi and McConnell — “frequent rivals but proven dealmakers,” the Associated Press notes — each had made optimistic comments earlier on Thursday. Pelosi told reporters “we will have an agreement” on a coronavirus package by December 11. McConnell said on the Senate floor that “it’s been heartening to see a few hopeful signs in the past few days.” He made clear that sharp differences remain, but again suggested that Congress pass legislation addressing the narrow areas where the parties can agree. “Compromise is within reach. We know where we agree. We can do this,” he said.
The reality: Pressure for a deal is building, with Republican Sens. Kevin Cramer of North Dakota, Lindsey Graham of South Carolina, John Cornyn of Texas and Joni Ernst and Chuck Grassley of Iowa all signaling their openness to the $908 billion compromise. Sen. Dick Durbin (D-IL), the No. 2 Senate Democrat, called for a vote on that package.
But for all the optimistic talk and undeniable momentum, it’s still not clear that the two sides can bridge their differences. McConnell, with additional leverage following November’s elections and Democrats’ softening demands, appears to be taking a hard line. He rejected the $908 billion bipartisan proposal when it came out and he continues to call for a deal along the lines of his roughly $550 billion package. (See here for a side-by-side comparison of the two plans.)
Schumer said Thursday that McConnell “does not seem inclined to compromise” on a relief deal. "Once again the Republican Leader argued that the Senate should pass only what Republicans approve of and leave the rest for later,” Schumer said.
“As far as I can tell, McConnell and other Republicans believe their bill *is* the compromise,” Politico’s Burgess Everett tweeted Thursday morning. Everett noted that the biggest obstacles to a Covid-relief deal have not changed: “Many Republicans oppose sending money to blue states and cities,” he wrote, and “Democrats don't like the coronavirus liability shield for businesses.”
The Washington Post reports that conservative senators have already objected to the bipartisan plan’s proposal for $160 billion in state and local aid, which is already much less than Democrats had been seeking.
McConnell will face some pressure from rank-and-file members, but probably not from the White House. Trump told reporters Thursday that he wants a stimulus deal. “I think they are getting very close and I want it to happen,” Trump said. But a White House spokesman clarified to the Washington Post that the president talking about McConnell’s plan, not the bipartisan proposal.
The bottom line: A narrow Covid-relief deal appears more likely than it has in months. Lawmakers may still stumble as they try to also finalize a $1.4 trillion omnibus spending package, in which case the Covid legislation could be tied to a stopgap spending deal — meaning that we could be talking about both another coronavirus stimulus and a spending package again before long.
Chart of the Day: How Stimulus Could Help Save Jobs
Amid signs of progress in the effort to provide more stimulus, The New York Times’ David Leonhardt highlights this analysis from Moody’s Analytics of the impact of different levels of stimulus on the unemployment rate. Under current policy — no additional stimulus — the unemployment rate is projected to increase in the coming months, rising to close to 10% by the second quarter of 2021. A $630 billion stimulus package would limit that increase significantly, while a $1.5 trillion package is projected to all but eliminate it.
Jobless Claims Drop to Lowest Level of Pandemic
Layoffs eased during the Thanksgiving holiday week, with about 712,000 people filing new jobless claims, the Labor Department said Thursday, a drop of more than 60,000 from the week before. Another 288,000 filed for aid through the federal Pandemic Unemployment Assistance program, which provides benefits for self-employed and gig workers, bringing the weekly total of new claims to roughly 1 million.
Although the state claims numbers reached the lowest level since March, they are still higher than any week before the pandemic began – and have been so for 37 straight weeks. All told, about 20.2 million people are receiving some kind of unemployment aid, according to the report, a decline of nearly 350,000 from the week before.
Despite the better-than-expected results for last week, many economists worry that the numbers will deteriorate in December, as a new wave of Covid-related shutdowns starts registering in the data. “The plunge in initial claims does not refute the idea that the trend is rising; we expected a sharp fall because of the difficulty of adjusting for Thanksgiving,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note. “Expect a rebound next week.″
Trump Doubles Down on Defense Bill Veto Threat
Despite pushback from both sides of the aisle, President Trump on Thursday reiterated his threat to veto the annual National Defense Authorization Act if lawmakers fail to include in the bill a repeal of legal protections for tech companies.
Acknowledging that some members of his own party oppose his effort to use the defense policy bill to repeal Section 230 of the Communications Decency Act of 1996, Trump tweeted, “Looks like certain Republican Senators are getting cold feet with respect to the termination of Big Tech’s Section 230, a National Security and Election Integrity MUST. For years, all talk, no action. Termination must be put in Defense Bill!!!”
Although a handful of lawmakers have expressed support for Trump’s effort, more have criticized it, and the president’s tweet Thursday doesn’t seem to have changed many minds.
Sen. Jack Reed of Rhode Island, the top Democrat on the Senate Armed Services Committee, told Politico that it was too late to start debating new provisions in the bill, especially ones that are unrelated to defense policy. “At this last minute, this sudden threat on an item that’s not even part of a defense bill … I don’t think we could do it in a thoughtful, logical way at all.”
Speculating about Trump’s motivation, Reed said, “It seems to be more out of spite than anything else.”
Most Americans Support Higher Tax on High Earners: Poll
About two thirds of Americans support President-elect Joe Biden’s proposal to raise taxes on households earning more than $400,000 a year while keeping taxes on those below that level the same, according to a new poll by The New York Times and Survey Monkey.
“Nearly all Democrats and Democratic leaners (88%) support this proposal, along with 70% of independents and nearly half of Republicans and GOP leaners (45%),” Survey Monkey’s Laura Wronski wrote. “Even among those with household incomes of $150,000 or more, the highest category for which we collect data, 62% of people support an increase in taxes for those making at least $400K.”
Questioning 3,477 adults online from November 9 to November 15, the poll also found majority support for making college tuition-free for students from families earning less than $125,000 per year; an emergency paid leave plan for sick workers or gig economy workers during the pandemic; and a national effort to control the coronavirus, even if it hurts some businesses.
- Biden Should Go Big, and Then Brag About It – Bryce Covert, New York Times
Biden’s Economy Lesson From Trump Shows Solo Action Doesn’t Work – Jenny Leonard and Katia Dmitrieva, Bloomberg
- After the Pandemic Recovery, We Must Tackle the National Debt – Maya MacGuineas, CNN Business
The Economy Is Screaming Out for Help. Washington Needs to Listen – Matt Egan, CNN Business
There Is No Plan D for Fighting the Pandemic – Peter Coy, Bloomberg Businessweek
- Lessons From 2008 for Fighting the Pandemic of 2020 – Timothy L. O'Brien and Nir Kaissar, Bloomberg
Trump Lays the Groundwork for a Massive Government Purge on His Way Out the Door – Catherine Rampell, Washington Post
- A Tax on Remote Work: Yes or No? – Renu Zaretsky, Tax Policy Center
- Five Reasons to Worry About Faster U.S. Inflation – Bill Dudley, Bloomberg
- Why Republicans Are Resorting to Anti-Socialism Hysteria – Jennifer Rubin, Washington Post