McConnell’s COVID plan has business tax breaks — but $0 for unemployment boost and direct payments

McConnell’s COVID plan has business tax breaks — but $0 for unemployment boost and direct payments
Mitch McConnell // (U.S. Navy photo by Chief Mass Communication Specialist F. Julian Carroll)

Senate Majority Leader Mitch McConnell, R-Ky., on Tuesday rejected a bipartisan compromise to break the months-long delay of coronavirus stimulus funding, instead offering a counterproposal which includes few of the priorities economists say are crucial to saving the economy.

McConnell, who has already rejected a $3.4 trillion offer and a $2.2 trillion compromise from House Democrats, shot down a $900 billion short-term deal urged by a bipartisan group of legislators that included GOP Sens. Mitt Romney, R-Utah, Susan Collins, R-Maine, and Bill Cassidy, R-La. The Republican leader alternatively presented another $500 billion proposal providing even less relief for jobless Americans than his previous offers, which will be dead-on-arrival in the House of Representatives.

Though McConnell's previous proposal included an extension of a federal unemployment boost at $300 per week, or half of the rate included in the Cares Act, his latest proposal includes $0 for the unemployment boost. McConnell's spokesman declined to say why the unemployment boost was scrapped entirely.

The plan does include a temporary one-month extension of Pandemic Unemployment Assistance (PUA), which provides unemployment benefits to contractors and gig workers, and the Federal Pandemic Unemployment Compensation (FPUC), which extends "base" unemployment benefits, The Washington Post's Jeff Stein reported. The proposal was unveiled after Trump reportedly seemed to lose "interest in the stimulus" following his election loss.

McConnell's proposal, which is otherwise essentially a rehash of previous offers that went nowhere, also includes no funding for a second round of $1,200 direct payments to Americans, despite bipartisan support, nor much-needed aid to cash-strapped state, local and tribal governments before they are forced to lay off millions of workers.

The proposal does include an "array of tax cuts" for companies, including a 100% deduction on business meals, The New York Times reported. It also includes a legal liability shield for companies, which watchdog groups warned was "breathtakingly broad."

The bill would provide $300 billion for Paycheck Protection Program loans to small businesses, $31 billion for vaccine distribution and $16 billion for testing. But it would terminate the Federal Reserve's ability to lend unspent money from the Cares Act and create new barriers for people seeking unemployment benefits, Stein noted.

"Leave it to Mitch McConnell and Donald Trump to propose a bill that creates tax write-offs for fancy lunches and gives the middle finger to working families and 20 million unemployed Americans," Rep. Don Beyer, D-Va., who sits on the House Ways and Means Committee, tweeted. "This is not a serious proposal, it is a slap in the face to people who need help."

"There are upwards of 150,000 COVID cases per day and miles-long lines at food banks nationwide, and Leader McConnell wants to do tax breaks for three-martini lunches and broad legal immunity for his corporate donors," Sen. Ron Wyden, D-Ore., the top Democrat on the Senate Finance Committee, said in a statement. "It's insulting to the American people."

McConnell's proposal came after he shot down the most conservative compromise offer yet. The bipartisan group of senators, which also included Sens. Mark Warner, D-Va., Joe Manchin, D-W.Va., and Angus King, I-Maine, called for a short-term $908 billion plan that would extend key relief programs through March.

The plan did not include a second round of $1,200 direct payments but extended the federal unemployment boost at $300 per week for four months — roughly half of what Democrats have called for — and would provide $160 billion in aid to state and local governments — which Republicans have staunchly opposed despite many red states being forced to make drastic cuts, because they do not have enough tax revenues to cover their budgets. The plan also included $288 billion for PPP loans to small businesses and a temporary liability shield for businesses sought by the GOP.

"Our action to provide emergency relief is needed now more than ever before. The people need to know we are not going to leave until we get something accomplished," Manchin said at a news conference on Tuesday. "I'm committed to seeing this through."

But McConnell quickly rejected the plan.

"We just don't have time to waste time," he told reporters. "We don't have time for messaging games. Ee don't have time for lengthy negotiations. The issue is: We want to get a result."

Murkowski rejected McConnell's comments in a private call with fellow Republicans, saying his plan was just a "messaging" bill that was "offensive" to Americans suffering from the pandemic, according to The Times. Collins also pressed her GOP colleagues to back the bipartisan proposal.

McConnell also told reporters that Speaker of the House Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., had sent a secret relief offer to senior Republicans. Democratic aides would not say what was in the offer, but Schumer said it was a "private proposal to help us move the ball forward," according to the Washington Post.

Some Democrats also expressed unease about the $900 billion compromise, arguing that it should not include a liability shield. Sen. Dick Durbin, D-Ill., the No. 2 Democrat in the Senate, said he was "not happy with a lot" of the funding decisions in the proposal but hoped it would at least come to the floor for debate.

"That's what it's all about in this world of the United States Congress," he said. "You come together, willing to sit down and listen to the other side, and if necessary, compromise."

Economists have urged Democrats to accept a lower unemployment boost rate than the $600 per week being sought, but many experts said the compromise offer was still not enough given the infection spikes around the country and new business restrictions. Most economists believe the next round of relief needs to be at least $2 trillion to $3 trillion in order to be effective.

Indeed, Democrats who back the bipartisan proposal say the government would still need to pass a larger package by March after President-elect Joe Biden is inaugurated.

"Additional COVID relief is long overdue and must be passed in this lame duck session," Pelosi said in a Tuesday statement.

Business groups have also warned that the partisan stalemate could severely damage the economy.

"Large parts of the business community are running out of patience," Kip Eideberg of the Association of Equipment Manufacturers told Bloomberg News. "It is beyond surreal that they are still bickering over politics when they should be focused on policies."

A group of five Democrats led by Wyden, Schumer, and Sen. Sherrod Brown, D-Ohio, the top Democrat on the Senate Banking Committee, have introduced a piecemeal bill which would retroactively extend the federal unemployment boost at $600 per week through next October.

"With the economy backsliding as COVID-19 cases explode nationwide, Senate Republicans are set to push millions of American families off a cliff," Wyden said. "Whether or not you can pay rent or feed your family should not depend on whether or not Mitch McConnell sees it in his political interest."

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