Second Stimulus: Here Are the 5 Issues Negotiators Are Arguing Over

Millions of people are jobless and the odds of Congress and the White House compromising on a second stimulus package before 2021 appear low, which has left many Americans to wonder what’s holding up the process.

Democrats have proposed a $2.2 million HEROES Act, while the White House has proposed a $1.8 million stimulus bill. Based on public statements, the main negotiators of a second stimulus package — House Speaker Nancy Pelosi and White House Treasury Secretary Steven Mnuchin — have been haggling over five major factors in the next stimulus: unemployment benefits, state and local funding, family support measures, coronavirus testing tracing and coronavirus liability protection for companies when employees get sick.

Here’s a brief look at how exactly those issues are factoring in.

1. Unemployment Supplements Will Be $300, $400 or $600 Per Week

In the updated HEROES Act, the Democrats have sought to keep unemployment supplements at $600, the same level they were in Coronavirus Aid, Relief, and Economic Security (CARES) Act. Republicans in the Senate and at the White House have suggested weekly unemployment supplements of between $300-$400 in their proposals, The Washington Post reported.

Republicans have said they are concerned offering higher amounts of unemployment aid could “disincentivize” workers from returning back to work if they can make more money on unemployment than by working. White House Economic Advisor Larry Kudlow said this early in the pandemic, the Financial Times reported: “The $600 . . . is in effect a disincentive. We’re paying people not to work. It’s better than their salaries,” Kudlow said. “That might have worked for the first couple of months [but] it will end in late July.”

However, during a more recent interview on CNBC’s show, “Squawk Box,” Kudlow suggested additional unemployment insurance would — and should — be present in the next stimulus package. “I think that Senator McConnell wants to move on a so-called stimulus package,” Kudlow said. “It will probably look a lot like some of the targeted areas that we have been discussing, particularly small business loans, the PPP program, things like unemployment insurance, reform of liability insurance, hospitals, schools – we think those are the key areas.”

2. State & Local Funding, Including School Support, Has Long Been an Issue

Early on Republicans and the White House said they were against adding funding for state and local governments in any stimulus package.

In the past, Trump complained that he didn’t want to “bail out poorly run Democratic” states. In a September New York Post interview, Trump said, “I think Congress is inclined to do a lot of things but I don’t think they’re inclined to do bailouts … It’s not fair to the Republicans because all the states that need help — they’re run by Democrats in every case. Florida is doing phenomenal, Texas is doing phenomenal, the Midwest is, you know, fantastic — very little debt.”

The long-standing claim that Democratic-run states need bailouts from Republican-run states was debunked in 2017, when an Associated Press fact check found that “High-tax, traditionally Democratic states (blue), subsidize low-tax, traditionally Republican states (red) — in a big way.”

Republicans such as Senate Majority Leader Mitch McConnell have said they don’t want to include the funding in a stimulus package because fiscal irresponsibility is why states run by Democratic governors are having fiscal issues. Instead of providing state and local government funding in the stimulus, McConnell suggested bankruptcy may be a better option for states facing budget shortfalls during his appearance on Hugh Hewitt’s radio show, CNN reported. “I would certainly be in favor of allowing states to use the bankruptcy route,” McConnell said. “It saves some cities. And there’s no good reason for it not to be available.”

However, an analysis from the Center on Budget and Policy Priorities showed that state and local governments in “red” and “blue” states will face significant fiscal shortages.

Pelosi has requested that aid be distributed to all states and localities, with some deference given to those hit hardest by the virus. The states hit hardest by the virus include Democrat and Republican-run states, such as Florida, Texas, Wisconsin. In fact, the Brookings Institution reported that cases per 100,000 people have been higher in “red states” since June.

Pelosi has also said that she wants to add funding for state and local governments in the stimulus to outfit public servants such as police officers with proper personal protective equipment (PPE) and to subsidize hospitals and clinics with coronavirus tests and PPE. In a November 2 letter, Pelosi wrote, “a response on funding for state, local, tribes and territories that will honor our heroes and prevent devastating cuts to services.”

Both proposed packages offer funding to support schools. The updated HEROES Act proposed allocating $225 billion for K-12 schools and institutions for higher education. The “skinny” $500 billion bill proposed by Republicans in the Senate offered school funding, yet that plan was rejected; it is unclear how much funding, if any, is allocated in the $1.8 trillion offer from the White House.

3. Pelosi Has Said That COVID-19 Testing & Tracing Is a High Priority

CNBC reported that as recently as October 15, Mnuchin has expressed support for testing in a stimulus bill and said as much on CNBC’s “Squawk Box.” Here were his comments:

That issue is getting overblown. We’ve agreed to $178 billion overall for health. It’s an extraordinary amount of money. We’d agreed with the Democrats with $75 billion going to testing, contact tracing. What we have been focused on is the language around testing. When I speak to Pelosi today, I’m going to tell her that we’re not going to let the testing issue stand in the way. We’ll fundamentally agree with their testing language subject to some minor issues. This issue is being overblown.

Pelosi responded to Mnuchin’s comments by saying that the language she had included on the issue was changed in a way she deemed unacceptable. The White House had assured Democrats that they would accept our language on testing with a “light touch,” Pelosi said in a letter dated October 18. “Unfortunately, as the committees of jurisdiction review the White House’s language provision-by-provision, it has become clear that these changes are not a light touch but instead, a deep dive.”

The changes, Pelosi said, occurred when “The White House has removed 55% of the Heroes Act’s language for testing, tracing, and treatment. Especially disappointing was the elimination of measures to address the virus’s disproportionate and deadly impact on communities of color … It is important to note the impact in terms of the disparity facing communities of color: a Latino child is eight times more likely to have to go to the hospital because of COVID-19 than a white child, and a Black child is five times more likely. We want all of our children protected,” she added.

Here is what Pelosi said was changed in her letter:

Instead of recognizing the need for a strategic plan, they have changed words including “shall” to “may,” “requirement” to “recommendation,” and “strategic plan” to “strategy.” These changes make the funding a slush fund for the Administration which “may” grant or withhold rather than a prescribed, funded plan to crush the virus.

This issue does not appear to have been solved since Pelosi wrote that letter, although Mnuchin apparently took offense to Pelosi’s letters criticizing him and Trump. In late October, he tweeted, “I woke up this morning and read @SpeakerPelosi ’s letter to me in the press,” Mnuchin said on Twitter. “Enclosed is my response. Her ALL OR NONE approach is hurting hard-working Americans who need help NOW!” In his public response to Pelosi, he described her representation of what occurred as “inaccurate.”

4. Family Support in the Next Bill Could Come in the Form of Tax Credits & More

Pelosi has been a strong supporter of ensuring tax credits and child care subsidies are added to a stimulus package.

The updated HEROES Act includes a provision that would make the Child Tax Credit of 2020 fully refundable and even send advance payments for the 2021 season to add that money into people’s pockets. The package also seeks to expand how many people could be eligible for the Earned Income Tax Credit and reduce the amount that those with low or moderate incomes owe.

In a letter dated October 2, Pelosi listed this as one of her priorities:

Essential to the well-being of America’s working families is the Child Tax Credit and Earned Income Tax Credit. In the original Heroes Act, we allocated to $149 billion, which we have cut to $57 billion in the updated bill. The Republican proposal had zero. We are hopeful that the Administration will join us at our level for the Child Tax Credit and Earned Income Tax Credit and are awaiting a response.

In that same letter, Pelosi said that she was requesting that Republicans increase the amount being offered in childcare subsidies for parents forced to work while schools are closed. “In terms of child care, we have $57 billion to their $25 billion, and are pushing them to come up to the higher level,” she wrote.

These items still appear to be under negotiation.

5. The Next Bill Could Offer Liability Protection From COVID-Related Illness

Liability protection means that employers whose employees contract coronavirus while working are not subject to lawsuits as long as they are following local, state and federal safety measures.

“We’re not negotiating over liability protection,” McConnell said in a July interview with CNBC’s Kayla Tausche. NPR reported that in other interviews, McConnell has said, “I want to make sure that we protect the people we’ve already sent assistance to who are going to be set up for an avalanche of lawsuits if we don’t act.”

Trump agreed, saying, “We had tried to take liability away from these companies. We just don’t want that because we want the companies to open and to open strong.”

Pelosi has said that while she wanted to protect employers from unfair lawsuits, she had issues with the language McConnell was trying to include.

In an October interview with Bloomberg News, Pelosi said that the language McConnell had added was related to several issues unrelated to coronavirus. “What Senator McConnell has in there is something that is not coronavirus centric. It is for four years, it applies to all kinds of other things and it is not to the point. So, that language should easily be changed,” she said, adding, “You know, he is doing tort reform when we are trying to do safety in the workplace.”

She also said that the language he included would negate existing language from the Occupational Safety and Health Administration (OSHA), which is responsible for enforcing workplace safety standards and regulations. “Now, they have come to good language on OSHA, our safety provisions in the bill, but their overarching McConnell language negates those OSHA regulations,” Pelosi said. “So, we’re saying, if you believe that it does not negate it, write that into the language: nothing in this bill shall undermine the ability of OSHA.”

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