Coronavirus stimulus: Three key takeaways on what's dividing Trump and Republicans

Analysis: Tea Party conservatives muddy the waters, Trump gets bailed out on his payroll tax cut, and Pelosi rejects stopgap extensions of key programmes

Griffin Connolly
Thursday 23 July 2020 18:11 BST
Nancy Pelosi rebrands coronavirus 'The Trump Virus'

Just a few minutes before Senate Majority Leader Mitch McConnell was scheduled to exit his office suite inside the US Capitol on Thursday morning, turn left, march roughly 80 paces to the Senate floor, and introduce the GOP’s latest coronavirus aid bill, he got a last-minute visitor: White House Chief of Staff Mark Meadows.

Mr Meadows just wanted to make sure everything in Mr McConnell’s bill conformed with what the Trump administration and the Senate Republicans agreed to last night regarding the roughly $1trn aid package, he told reporters.

But when Mr McConnell kicked off proceedings in the Senate half an hour later, he did not give his customary opening remarks for the day.

Instead of officially solemnising a deal with the White House as expected, he commenced the voting process on a series of amendments to the annual defence spending bill without a word.

Mr McConnell then retreated to his office without answering reporters’ questions, just about the only thing that didn’t seem out of the ordinary over the preceding half hour.

The scene on Thursday morning at the Capitol underscored just how fragmented the GOP is regarding its response to Covid-19, as deadlines loom at the end of next week to extend certain key programmes.

Here are three takeaways on what’s holding things up, who the key players are, and where negotiators go from here.

1. Tea Party icons are flexing their muscles

Senator Ted Cruz of Texas is one of several Senate Republicans who have publicly bucked party leadership in recent days on the proposal Mr McConnell has been putting together behind closed doors with Donald Trump’s top economic advisers.

Mr Cruz and other Tea Party-affiliated conservatives wary of a mounting federal debt predict, correctly, that Mr McConnell’s bill comes with a low-water mark price tag for a fifth phase of coronavirus relief bill. That's because it almost inevitably will swell once Democrats get involved.

"As it’s written right now, I’m not only a no, I’m a hell no,” Mr Cruz told reporters of Mr McConnell’s plans on Wednesday.

“This is the swamp in a feeding frenzy. Everybody’s lobbyist has their hand out saying, 'Well, look, if you’re spending trillions of dollars I want to get some,'" the Texas Republican said.

Mr McConnell drew a rough sketch of Republican priorities in his opening remarks on Tuesday.

Republicans are intent on authorising "another round of direct payments to help American families keep driving our national comeback," he said, though he did not specify who would qualify for a second round of stimulus checks, or how much they would get.

The majority leader has been adamant any coronavirus bill brought to the Senate floor for a vote include measures to shield businesses, health care providers, and schools from lawsuits stemming from possible exposure to Covid-19.

And he announced earlier this week that the first draft of the GOP bill would include $105bn in funding for public schools so they can safely re-open for in-person classes this fall, something Democrats at both the federal and local levels are sceptical administrators can do, regardless of how much money lawmakers throw at school systems.

Mr McConnell noted on Tuesday that the $105bn proposal for schools is “more money than the House Democrats set aside for a similar fund, by the way”.

But Democrats have fired back, saying that’s because they passed their 1,800-page, $3trn bill more than two months ago – before the recent resurgence in Covid-19 cases across the country made it necessary to infuse the system with billions more.

They’re now asking for more than $400bn in emergency funding for schools, just one example of how the ultimate price tag of the package, to Mr Cruz and other Tea Partiers’ point, will climb as negotiations commence in earnest between Democrats and Republicans next week.

"The majority of Republicans are now no different than socialist Democrats when it comes to debt," Kentucky Republican Senator Rand Paul tweeted earlier this week, putting him at loggerheads with the other senator from his own party and state who is leading the entire process, Mr McConnell.

2. Republicans were never going to pass a payroll tax cut in an election year

Treasury Secretary Steven Mnuchin conceded on Thursday that Mr Trump will not get his wish to include a payroll tax cut in Mr McConnell’s bill.

“It won’t be in the base bill,” Mr Mnuchin said in an interview with CNBC.

“Let me be clear: We think the payroll tax cut is a very good pro-growth policy, but the president’s focus is he wants to get money into people’s pockets now,” he said, making clear the White House’s support for a second round of direct payments to millions of Americans similar to the $1,200 most taxpayers received this spring.

The unwillingness of Republican senators to include the payroll tax holiday in the opening version of the bill, which has not been influenced by Democratic input, demonstrates how universally unpopular the president’s position was even within his own party.

For one, it would create a “public relations problem,” Senate Finance Chairman Chuck Grassley of Iowa said earlier this week, alluding to the fact that the revenue generated from taxing businesses’ payroll expenses goes directly to funding programmes such as Medicare and Social Security, on which many seniors depend.

Even though Congress would likely feel ample pressure to find ways to refill those programmes’ coffers, older Americans who benefit from them — and whose support is essential to Mr Trump’s and Senate Republicans’ election prospects this November — could see a payroll tax cut as the government “raiding” their benefits, Mr Grassley said.

“The Social Security and Medicare trust funds are not exactly on solid ground” as it stands now, Senator John Cornyn said this week.

"We need to do something in that space anyway, but cutting the revenues by payroll tax is problematic because eventually you're going to have to raise [the payroll tax rate] anyway, and you're just exacerbating the already difficult status that both of those trust funds are in," the Texas Republican and McConnell ally said.

Republicans believe that by nixing the payroll tax cut proposal, they’re saving the president from doing damage to his own re-election odds in addition to their own hides.

The GOP cannot afford to lose a net of four seats in the Senate if they wish to maintain their slim majority in the chamber.

Four Senate Republicans are fighting for their legislative lives this fall in races rated Tossup by elections handicapper Nathan L Gonzales of Inside Elections.

Two more Republicans, Senators Martha McSally of Arizona and Cory Gardner of Colorado, are in even more trouble, with Inside Elections rating their races Tilt Democratic.

3. Congress will likely have to ram through a stopgap measure to help the unemployed

Millions of Americans have lost their jobs during the coronavirus pandemic, which is why, in March, Congress included a provision in the $2.2trn so-called CARES Act to cut checks worth $600 per week in federal assistance to people filing for state unemployment benefits on top of what their local governments already give them.

That federal programme expires on 31 July, ostensibly putting a deadline on Congress to reach a deal on its next coronavirus package by next Friday.

Such an ambitious timeline for a bipartisan deal appears exceedingly unlikely given the current pace of negotiations just within the GOP, where four days into formal discussions, the White House and Senate leaders still have not reached a deal.

Never mind that Republicans and Democrats will then have to stick the landing on crumbly common ground somewhere between their respective $1trn and $3trn proposals.

Democratic leaders Chuck Schumer and Nancy Pelosi have excoriated their Republican counterparts for procrastinating until July to hammer out a deal after Mr McConnell indicated in May he was hitting the “pause” button on any federal relief beyond the $2.7trn Congress commissioned this spring to fight coronavirus.

"Republicans dithered and delayed for so long, there will be an interruption in unemployment benefits. Eviction protections will expire, no matter what we do, because they waited until the last minute, and even at this last minute can't seem to get their act together," Mr Schumer of New York said on Thursday, referring to a moratorium on evictions and rent payments in federally subsidised housing included in the CARES Act.

Word began trickling out from Republicans on Wednesday, though, about passing a brief extension of the unemployment benefit from the CARES Act, despite many having railed against the programme in recent weeks for disincentivising people returning to work because they’re making more than they were at their former jobs.

“The question is length and price in total dollars,” Senate GOP Conference Chairman John Barrasso of Wyoming told reporters about a stopgap extension of the federal unemployment benefit.

Democrats have publicly opposed that emergency extension plan, in an apparent attempt to maintain negotiating leverage and milk promises from Republicans on the broader subsequent package.

"No, no, no. This is a package," Speaker Nancy Pelosi of California said on Thursday. "We cannot piecemeal this."

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