Covid-19 Relief Plan Splits Key Aid, Most Contentious Items

(Bloomberg) -- A bipartisan group of lawmakers released proposed Covid-19 relief legislation that may provide momentum for breaking a months-long impasse, by separating out coronavirus liability protections and state aid -- the two most contentious and partisan items.

After Republicans and Democrats failed to come to a consensus on a liability shield for employers, the group that has been working on a bipartisan compromise released two separate legislative proposals. One is for $748 billion and includes areas of accord like vaccine funding and aid to small businesses, and the other wraps the two most contentious items, including $160 billion for regional authorities.

Senator Dick Durbin, the No. 2 Democrat in that chamber and one of the negotiators, said state and local aid and liability are both “critically” important but said House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell should allow votes on the $748 billion consensus measure in coming days. He said the aid it contains is “desperately needed.”

“This is our consensus bill. We all agree on it. It’s ready to go. There’s no excuse for either the speaker or the leader,” Durbin said at a press conference unveiling the bills. “You’ve got to give us a vote. Don’t let us go home for Christmas without a vote on this.”

McConnell has for days said that the two biggest roadblocks should be set aside, with lawmakers proceeding with the remainder -- which includes aid for small businesses, help for the unemployed, funding for vaccine distribution and rescue money for airlines and other transportation providers.

Pelosi, Schumer

If endorsed by Pelosi and Senate Minority Leader Chuck Schumer, a separate vote on the $748 billion in Covid-19 relief could offer the first bipartisan backing of both houses of Congress for a stimulus bill since the spring -- after months of stalemate. Pelosi and Schumer have argued that the funding for states and localities is too important to allow consideration for a more targeted bill.

The group of about a dozen senators, joined by leaders of a centrist House caucus, highlighted that they were able to put together actual bill text, not just an outline -- enabling lawmakers to proceed to votes quickly.

“Bipartisanship and compromise is alive and well in Washington,” said Democratic Senator Joe Manchin of West Virginia. “Now it’s up to the leadership to take it and make this happen on a timely basis.”

Aside from Manchin, Democratic members of the bipartisan group didn’t support the compromise language on liability protection, illustrating the challenge with proceeding with the second part of the two-bill proposal.

Spending Components

The bipartisan group’s $748 billion package includes $300 billion for help to small businesses, including through the Paycheck Protection Program, $180 billion for additional unemployment insurance, $45 billion for transportation including airlines and $82 billion for education. Other provisions include $25 billion for housing assistance, $16 billion for vaccine distribution and testing, and $10 billion each for child care, the U.S. Postal Service and rural broadband. Also offered is $25 billion in emergency rental aid and an extension in a moratorium on evictions to Jan. 31.

Lawmakers from both sides of the aisle have warned about the potential bankruptcy of smaller enterprises across the country without a renewal of the Paycheck Protection Program.

“It is essential that we have another round of PPP for our hardest-hit small businesses,” said Republican Senator Susan Collins of Maine, who helped lead the bipartisan initiative.

In the second measure, the liability shield would protect businesses for less time than the proposal backed by McConnell. Instead of four years of protection, the time frame would be just one year after enactment and plaintiffs would be allowed to file lawsuits in state courts. In exchange, the proposal grants a key concession to Republicans by establishing a gross negligence standard for liability, which could allow employers who make good-faith efforts to prevent the spread of Covid-19 from paying damages. The bill would also allow defendants to shift cases to federal court and would require plaintiffs to demonstrate that employers were responsible for their infection.

Work Continues

The $160 billion in state and local aid in the second bill would be distributed using needs-based criteria. The compromise allocates one-third of $152 billion to states and localities based on population and the other two-thirds based on revenue losses. Each state would get a minimum of $500 million. An additional $8 billion goes to tribal governments.

Attempts to get a full consensus continue. The 50-member bipartisan House Problem Solvers group is now working on the liability language and hoping to be able to announce a complete $908 billion package that includes that and state and local aid by Tuesday, lawmakers and aides said.

Top congressional leaders say a stimulus package remains a top priority before lawmakers leave for the year-end break. They say they want to attach relief aid to a year-end spending bill that could move through Congress as early as this week.

Pelosi discussed both measures Monday with Treasury Secretary Steven Mnuchin, with Pelosi reiterating the Democratic opposition to liability provisions according to her spokesman Drew Hammill. Pelosi and Mnuchin also discussed two more minor disputes on the $1.4 trillion spending bill involving wage rates for public-works projects and whether to attach legislation to reduce surprise medical bills.

Talks on the omnibus funding bill made progress Monday, with the biggest hurdle being overcome. Lawmakers agreed to keep the Veterans Affairs Mission Act under the $1.4 trillion budget cap, a significant victory for House Republicans who insisted on this provision, according to two congressional aides

The $12.5 billion for VA health care improvements will be paid for with savings elsewhere in the budget. One Democratic aide called the pay-fors “gimmicks,” which don’t harm spending in vital programs.

Senate Appropriations Chairman Richard Shelby, an Alabama Republican, told reporters the omnibus would be filed “later this week,” possibly Tuesday. He also said he “hopes” to have Covid-19 relief, but that still needs to be worked out.

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