Pelosi Wants Democrats to Move First in Devising Next Stimulus

(Bloomberg) -- Speaker Nancy Pelosi is pushing Democrats to get out of the gate first with another multi-billion-dollar virus relief package to give the House leverage in negotiations with Senate Republicans, who are trying to put the brakes on any new round of expansive aid.

Pelosi’s strategy of ensuring that the next economic measure originates in the House -- unlike the earlier $2.2. trillion version -- was underscored in a memo to fellow House Democrats Monday from Appropriations Chairwoman Nita Lowey.

“In the coming days, House Democrats will release our full proposal for the next phase of relief,” Lowey wrote.

She also laid out a few more details about one of the biggest priorities for Democrats -- and points of conflict with Republicans: state and local aid. She wrote that the bill will have equal pots of money for county and city governments. Every county would receive funds based on population.

But President Donald Trump is pushing his own set of counter demands, including changes to tax law, that would complicate negotiations on an eventual bill.

“Well run States should not be bailing out poorly run States, using CoronaVirus as the excuse!” Trump wrote in a tweet Tuesday. “The elimination of Sanctuary Cities, Payroll Taxes, and perhaps Capital Gains Taxes, must be put on the table. Also lawsuit indemnification & business deductions for restaurants & ent.”

Dueling Appearances

Pelosi and Senate Majority Leader Mitch McConnell have been negotiating through dueling media appearances, while the real work of fashioning a piece of legislation that can pass the GOP-controlled Senate and the Democratic-majority House is likely still weeks away.

Democrats want to change one key piece of the last stimulus bill, the Paycheck Protection Program, which provides small businesses with loans of up to $10 million that can become grants if proceeds are spent on payroll and certain expenses within two months. Pelosi said on a webinar hosted by the Small Business Roundtable that Democrats are exploring extending the forgiveness period for PPP loans, as well as adding a set-aside for small firms of fewer than 25 people.

Small business owners and advocacy groups on the webinar called for other changes including allowing more than 25% of proceeds to be spent on non-payroll expenses, letting more types of non-profits participate and requiring the release of more data about what companies are getting loans.

Democrats, on a separate caucus call, also discussed extending the loan repayment term to five years from two years.

“I think you’ll be pleased with what you’ll see in the legislation,” Pelosi said on the webinar.

Take a ‘Pause’

McConnell told reporters Tuesday that Republicans aren’t ruling out more aid in the next bill but that Congress needs to take a “pause” to evaluate past aid now.

During negotiations on the last round of stimulus, Republicans accused Pelosi belatedly trying to force long-time Democratic priorities into the legislation to appease her party’s progressive wing. Pelosi now wants to put down the first marker. But that hasn’t quieted Republican criticism.

“This is a pattern from Democrats: Instead of working to actually defeat this virus and get our nation back on track, they want to exploit the coronavirus emergency for their socialist agenda,” a statement from House GOP leader Kevin McCarthy’s office said.

Several moderate House Democrats have expressed concern that Pelosi and other are focusing on legislation that would only appeal to Democrats, according a senior House aide. During talks on the $2.2 trillion aid package, Democrats drew scorn from Republicans by trying to insert provisions such as rental assistance and voting by mail late in the talks.

Those Democrats, who represent swing districts, want to keep the next bill focused on the coronavirus and limited to the duration of the pandemic, not making permanent changes to aid programs, the aide said.

Pelosi said on MSNBC Tuesday evening she wants the next virus relief legislation “to be bipartisan.”

Block Grants

Senate Minority Leader Chuck Schumer told reporters Tuesday he agrees with Pelosi on a package for state and local governments of $1 trillion to help them keep police officers, firefighters and bus drivers on the job.

According to Lowey’s letter, the aid for cities would be distributed based on a complex formula that is still being developed. Seventy percent would be for cities with more than 50,000 people using a version of the Community Development Block Grant that takes into account population, poverty and housing levels. The remaining 30% would be set aside for smaller localities, be based on population.“

“Unlike the initial CARES Act, I think it is vital we have separate programs for state and local governments, so there is less competition between governors, municipal leaders, and county executives,” Lowey said in the letter.

Trump remains the wild card in any future negotiations. He is adding some long-held priorities of his own into the mix, including restrictions on state aid, a payroll tax cut and other changes to the tax law.

McConnell sidestepped a question about whether he backs Trump’s insistence that a payroll tax cut be part of the next package.

For the Senate GOP majority, “if there is any red line it’s on litigation,” McConnell said. The Kentucky Republican has said he will hold out for language protecting businesses and health-care workers from lawsuits by patrons and employees who may be exposed to the virus.

Republicans are working on “narrowly targeted” liability language, McConnell said. “It won’t protect someone from gross negligence.”

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