Republicans fighting internally on COVID-19 relief as financial crisis looms for millions
The next phase of coronavirus relief is a moving target bogged down in demands from the White House, Sen. Mitch McConnell's obsessions, and vulnerable Senate Republicans' fears. Treasury Secretary Steven Mnuchin says he's looking for a deal by the end of next week, but Trump's chief of staff Mark Meadows says that's too soon. Meanwhile, expanded unemployment insurance (UI) benefits, the $600/week boost, expires this weekend. Rent is due in 10 days.
Trump is still obsessing about his payroll tax holiday and no more funding to states for coronavirus testing and contact tracing. McConnell still wants to tie state and local funding to school reopening and to absolve all businesses and schools from liability for future coronavirus infections and deaths they might cause by prematurely reopening. He is declaring it will have $105 billion to school reopening, another tranche of funding to the troubled Paycheck Protection Program (PPP), another round of direct payments to individuals, and some form of aid to businesses to beef up safety procedures to reopen. (Disclosure: Kos Media received a Paycheck Protection Program loan.) Because just giving everyone enough money to live on and keep their businesses solvent so they can stay safely at home and flatten the COVID-19 curve is too "socialist," apparently.
The White House has apparently realized that the politics of the payroll tax cut are bad when it comes to Social Security since that would mean a cut in funding to the trust fund, so they are now talking about making it even worse by structuring it as a deferral rather than a cut. Which would mean people who still have jobs and are still on payrolls would see a larger paycheck now, but would have to pay it back later. That could be waived by Congress, and almost certainly would be waived by Congress, which would mean we're back to Social Security being harmed. Even Republicans remain cool to this idea of Trump's because even they realize that you don't get any economic stimulus out of a payroll tax cut when tens of millions of people are not on a payroll. There's a fight between Senate Republicans and the White House on this. Mnuchin told reporters Monday night that it was already in the bill. McConnell said "we're all going to be discussing it."
Republican leadership, however, doesn't seem to be entirely united on what McConnell wants, particularly when it comes to state and local aid that their own constituents need. Those running for reelection need to be spending the August recess talking about how much money they secured for their states, like Sen. John Cornyn from Texas, who told The Wall Street Journal that the bill is likely to have that funding because House Democrats have prioritized it. "I do believe there will be something in there," he said, since Speaker Nancy Pelosi had made clear "that's a red line for her."
Senate Republicans are also pushing back against Trump's efforts to stop money for testing. "To open schools, we need more tests," Senate Health Committee Chairman Lamar Alexander from Tennessee pointed out. "We ought to provide whatever financial support we should to make it safe for schools to open and that includes widespread testing." The same goes for money to the Centers for Disease Control and Prevention (CDC), which Trump is trying to stop—including funding for vaccine distribution. "The vaccine is not very good if it's not properly distributed," said Sen. Roy Blunt, a Missouri Republican and chair of the Appropriations Committee's health panel.
There will be more relief, albeit late and inadequate. The House-passed HEROES Actmfrom way back in May should be the floor for a relief package at $3 trillion. The $1-ish trillion they're talking about now is going to be woefully underfunded, though at least it doesn't do harm.
There's consensus in direct payments, though McConnell will fight to impose income limits on eligibility. There will almost certainly be an extension of expanded UI benefits, though probably not at $600 a week. Which means the country is going to limp into fall, and the election, barely surviving. That's unless Trump decides to blow it all to hell and veto this bill because it doesn't have a payroll tax cut or eliminate his hated CDC. That's not outside of the realm of possibility, though it's not likely. Even he is smart enough to know that he can't kill everyone off and have a chance at winning in November.