McConnell Deals a Blow to Covid Relief Talks

McConnell Deals a Blow to Covid Relief Talks

Printer-friendly version
Plus, jobless claims jump to 3-month high
Thursday, December 10, 2020
 

McConnell Deals a Blow to Covid Relief Talks

Senate Majority Leader Mitch McConnell has called himself the “grim reaper,” relishing his role in killing off the legislative priorities of Democrats led by House Speaker Nancy Pelosi.

McConnell may have swung his scythe again, as his staff reportedly told congressional leaders Wednesday night that Senate Republicans likely would not support the $908 billion Covid-relief package being negotiated by a bipartisan group of lawmakers.

Two issues have proved to be major sticking points in reaching any deal on additional aid: money to help state and local governments, which Democrats want but Republicans have resisted, and legal protections for businesses, hospitals and schools against coronavirus-related lawsuits, a priority for Republicans that Democrats reject.

McConnell earlier this week suggested dropping both provisions and proceeding with a narrower package, but Democratic leaders quickly dismissed the idea and said that the ongoing bipartisan talks on a compromise package represented the best hope for a deal.

“What McConnell is putting forth in terms of liability is such an assault on American workers that I hope that the group goes nowhere near what he is presenting,” Pelosi told reporters.

Negotiators still working to finalize their plan:
Lawmakers working on the compromise package reportedly have reached agreement on how to distribute $160 billion in aid to state and local governments and continue to discuss a compromise on liability protections. “The bipartisan group has tried to come up with a middle-ground approach that, instead of blanket immunity, would provide businesses with an ‘affirmative defense’ for fighting lawsuits if they follow certain health standards, but the group has struggled to nail down the language,” Roll Call reports.

But even as negotiators work to finalize details of their plan, McConnell’s staffers reportedly told leadership offices that the majority leader did not see a path toward a deal that would be acceptable to Senate Republicans.

“McConnell has repeatedly emphasized that he believes more assistance is needed to help the economy, but he has framed the emerging bipartisan package as unworkable,” The Washington Post’s Mike DeBonis and Jeff Stein report. “His staffers warned that Senate Republicans would reject the group’s potential agreements on a temporary liability shield for businesses, as well as on aid to state and local governments.”

McConnell on Thursday again demanded a broad liability shield, and he blamed Democrats for blocking a deal Republicans would accept. “Our Democratic colleagues have not even let us pass noncontroversial money to invest in vaccine distribution — not unless the two parties settle a whole list of issues that are controversial the way they want," he said.

What’s next:
In a sign that prospects for a deal have dimmed, House Majority Leader Steny Hoyer (D-MD) sent members home Thursday and told them they won’t need to return until at least Tuesday evening. That would leave Congress less than four days to finalize a spending deal needed to prevent a government shutdown, assuming the Senate can approve legislation already passed by the House extending the current December 11 funding deadline by a week. But lawmakers were reportedly uncertain Thursday about how the Senate would get that done.

Pelosi indicated that talks on the emergency relief legislation could drag on beyond Christmas, even as several key aid programs are set to expire by the end of the month, potentially causing millions of Americans to lose unemployment benefits and protections keeping them from being evicted.

Chart of the Day: Comparing the Relief Plans

Treasury Secretary Steven Mnuchin on Tuesday offered Pelosi a $916 billion relief package. Democrats called the offer progress since it was similar in many respects to the $908 billion plan they had endorsed as a framework for talks, but they objected to the Mnuchin plan’s replacing a $300 weekly federal supplement to unemployment benefits with a onetime direct payment of up to $600 per person for lower-income families.

The Committee for a Responsible Federal Budget on Thursday analyzed the economic effects of the two plans. “Though the packages differ in significant ways, we estimate both would boost economic output enough to close almost half of the output gap over the next three years – which would be equivalent to fully closing the output gap for 2021,” the group said in a blog post.

CRFB’s estimates found that the Mnuchin plan would boost the economy by about $640 billion, while the bipartisan plan would provide a $660 billion boost. “Importantly, we do not account for the effects the plans might have on expediting the end of the COVID pandemic, nor the impact of other non-fiscal policies such as changes to COVID liability rules,” the group said.

Quote of the Day

“We are in the timeframe now that probably for the next 60 to 90 days we're going to have more deaths per day than we had at 9/11 or we had at Pearl Harbor.”

– CDC Director Robert Redfield, speaking Thursday at an event hosted by the Council on Foreign Relations.

Jobless Claims Jump to 3-Month High

While lawmakers in Washington remain deadlocked over a new fiscal package, the economy is sending signals that it needs more help. New jobless claims rose sharply to 853,000 last week, the Labor Department announced Thursday, the largest weekly number since September. Another 428,000 people applied for Pandemic Unemployment Assistance, the temporary federal program that aids self-employed and gig workers, bringing the total of initial claims to 1.3 million, an increase of 276,000 from the week before.

Some economists see the report as another sign that the economy needs a boost. “The jump in claims is consistent with our expectation that the next jobs report will likely deliver a negative print, reinforcing the need for immediate fiscal stimulus to support the economy,” Eliza Winger of Bloomberg Economics said.

“[L]ayoffs appear to be rising, consistent with the resurgent virus,” Heidi Shierholz of the Economic Policy Institute wrote, while also noting that “last week was the 38th straight week total initial claims were greater than the worst week of the Great Recession.”

Joseph Brusuelas, chief economist at the consulting firm RSM, noted that while the data may be distorted to some extent by the timing of the Thanksgiving holiday, “there is simply no rational case to be made that the underlying condition in the domestic labor market is improving as the pandemic intensifies. ... There are officially 9.8 million unemployed people, 19 million on some form of unemployment insurance and millions who have exhausted their benefits.”

“If it was not clear before, it is very clear now that this condition demands policy attention in the form of fiscal aid,” Brusuelas added.

Rand Paul Delays Defense Bill, Increasing Risk of a Shutdown

The House passed the $741 billion National Defense Authorization Act on Tuesday with enough votes to overcome a threatened veto by President Trump, and the Senate was expected to follow suit in short order. But Sen. Rand Paul (R-KY) is delaying passage of the bill, in a move that creates the risk of a government shutdown on Saturday.

Paul told Politico Thursday that he objects to a provision in the NDAA that would limit the president’s ability to remove troops from Afghanistan. “That amendment alone is enough to make me object to it, as well as the amount of spending,” he said. But that amendment can’t be removed without forcing lawmakers to start from scratch on the overall agreement.

Paul’s filibuster is also delaying the Senate vote on the one-week government funding bill that was passed by the House on Wednesday. The Kentucky Republican has reportedly offered to allow a quick vote on the funding bill in exchange for delaying the defense bill vote to Monday, but his holding maneuver was still in effect late Thursday afternoon, raising concerns that Paul could once again force a government shutdown, however brief.

“Drama on the floor ahead of a deadline is nothing new to Paul, who exerts major leverage over the Senate by seizing on imminent deadlines and pushing his priorities,” Politico said. “Paul forced a brief shutdown in 2018 over his moves to cut spending, and using the shutdown deadline to try and get extra concessions on the defense bill is vintage Paul.”

McConnell, who has broken with President Trump by supporting the defense bill, said Thursday that while it could be delayed, he expects the vote to occur before the shutdown deadline late Friday. “For the information of all senators, we should expect the potential for a late night tonight and the possibility of votes tomorrow,” he said.

Happy Hanukkah! Send your feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can sign up here for their own copy of this newsletter.

News
Views and Analysis