McConnell Sets Up Vote on Republican Relief Plan Pelosi Rejects

(Bloomberg) -- Congressional leaders hardened their battle lines on additional fiscal stimulus on Tuesday, with House Speaker Nancy Pelosi labeling Republican Senate Majority Leader Mitch McConnell’s proposal for a slimmed-down package “fraudulent.”

The Republican bill, featuring some of the aspects of a $1 trillion proposal they put forth a month ago, is expected to cost $500 billion to $700 billion, with some of that covered by unspent funds allocated to support Federal Reserve facilities. The bill -- a far cry from the $2.2 trillion relief that Democrats want -- will get a Senate vote on Thursday.

“We want to agree where bipartisan agreement is possible -- get more help out the door and then keep arguing over the rest later,” McConnell said on the Senate floor Tuesday. The so-called skinny bill focuses on restoring supplemental jobless benefits and extending small-business help, areas where McConnell said “bipartisanship should be especially possible.”

Pelosi said in an interview with Bloomberg Television that McConnell’s proposal “isn’t even an attempt to do the right thing.” She said “we have tens of millions of people who are unemployed in this country,” and that requires sufficient stimulus.

Pelosi and Senate Democratic leader Chuck Schumer said in a joint statement earlier that the Republican bill is a “check-the-box” effort to give endangered incumbents cover in the November election. Democrats can block it from debate on the Senate floor because it needs the support of 60 members to advance under filibuster rules.

Bill Components

The pared-back bill, released Tuesday afternoon, provides a $300-per-week unemployment benefit enhancement, $105 billion for schools, a $10 billion grant to the U.S. Postal Service, $258 billion for the Paycheck Protection Program for small businesses, $47 billion for vaccines and testing needs, and liability protections for employers.

It doesn’t include another round of $1,200 checks to individuals -- something that President Donald Trump has said he wants -- or any aid to state and local governments, a key demand of Democrats. Also absent: additional help for airlines.

The bill also included what Schumer on the Senate floor said Tuesday are “poison pills.” These include a tax break for paying for private school costs, liability protections for companies and funds for the coal industry. “If you wanted to draft a bill that was destined to fail, this is it,” the Democratic Senate leader said.

While Democrats have criticized the smaller package as as insufficient, McConnell said that Democrats had adopted a piecemeal approach of their own in recent weeks -- when the House voted on funding specifically for the Postal Service. “The American people don’t need us to keep arguing over what might be perfect. They need us to actually make a law.”

“The stumbling block is aid to state and local governments,” White House Chief of Staff Mark Meadows said on Fox Business Network Tuesday, reiterating his opposition to the Democrats’ proposal for almost $1 trillion in aid for regional authorities that have seen their revenue devastated by the Covid-19 crisis.

States Aid

The Trump administration has characterized the assistance as a reward for poorly run, mainly Democratic states. Pelosi in Tuesday’s interview that the GOP has “excuses,” not real reasons for opposing the effort. She suggested that restrictions could be placed to meet any objections.

McConnell tried and failed for weeks to get most of the Senate’s 53 Republicans on board with the broader $1 trillion plan in the face of opposition from deficit hawks concerned about adding to this year’s $3.3 trillion budget deficit. He’s previously said that as many 20 Senate Republicans were against any additional spending.

The trimmed-back effort has wider support. Senator John Cornyn said he’s confident there will be at least 51 GOP votes on the bill Thursday.

The White House and congressional Democrats have been more than $1 trillion apart on the stimulus since negotiations broke off Aug. 7. Democrats lowered their demand from $3.4 trillion to $2.2 trillion but haven’t budged beyond that. Pelosi on Tuesday said the top-line level could be reduced through shifts in timing, while noting that she’s “certainly” not negotiating with Meadows at this point.

The looming election will create pressure points for Trump as well as for incumbents in the House and Senate. The White House is pushing for stimulus payments for individuals to go out before the Nov. 3 election.

Vulnerable Incumbents

Immediately before their August break, two Senate Republicans trailing their Democratic challengers in polls -- Susan Collins of Maine and Martha McSally of Arizona -- helped introduce a bill that has a higher unemployment benefit enhancement than the one in the scaled-down proposal.

In the House, Democrats from swing districts are poised to increase pressure on Pelosi to get a deal. The moderate Blue Dog Coalition sent Pelosi a letter on Aug. 21 urging compromise, and vulnerable first-term Iowa Democrat Cindy Axne followed up last week with a letter demanding action on a smaller package.

The monthly jobs report released Friday by the Labor Department, which showed the nation’s unemployment rate fell by almost 2 percentage points in August to 8.4%, also eased some pressure on Republicans to move closer to the Democrats’ plan.

Still, it didn’t fully erase concerns about the economy. Payrolls remain about 11.5 million below the pre-pandemic level, and the number of permanent job losers rose from last month by more than half a million to 3.41 million. A host of companies, from airlines to casinos to beverage businesses, have announced plans to cut workers who were initially furloughed.

Meantime, the two parties will this month have to negotiate a stopgap spending measure to prevent a government shutdown when the fiscal year ends on Sept. 30. Pelosi and Treasury Secretary Steven Mnuchin have agreed they don’t want the stimulus impasse to hinder work on the stopgap.

A key decision is the timetable for a temporary government spending resolution.

Mnuchin said Sunday his expectation is that a stopgap deal would run through the beginning of December, although specifics have not been ironed out.

Averting Shutdown

“The most important thing is to make sure at the end of the month, we don’t shut down the government and we get something past the election,” Mnuchin said.

Some Democrats are pushing for a stopgap into early 2021, to avoid the possibility of having to negotiate with a lame-duck president if Trump loses. But the House speaker said Tuesday that she is “certain” of an agreement on stopgap spending bill this month.

©2020 Bloomberg L.P.