Bottom line: For most recipients of the $600 federal unemployment benefit enhancement, the final checks went out a few days ago. The official deadline is July 31. The federal eviction moratorium expired last week. Republicans are, just on Monday, releasing their opening bid, which President Donald Trump’s administration is already moving away from in order to pitch a scaled-back proposal Democrats have already rejected. This is, to say the least, not an ideal way to kick off long-delayed bipartisan talks.
The Senate Republican proposal will sit around $1 trillion and include $105 billion for schools, a second round of direct payments to individuals and families, $16 billion in new money for testing, a second, more targeted round of forgivable small business loans from the Paycheck Protection Program, a myriad of tax incentives for employers to rehire, retain and retrofit their offices for employees. It will also include Senate Majority Leader Mitch McConnell’s redline: liability protections for businesses, schools, hospitals and non-profits.
It will also cut enhanced federal unemployment benefits — set to expire at the end of this week — to $200, from the current level of $600, as states transition to implement a system designed to provide approximately 70% wage replacement for laid off workers, according to two people familiar with the proposal.
One thing there hasn’t been much talk about on the GOP side in recent weeks has been what they planned to do about the federal eviction moratorium that expired last week. Well, CNN’s Jake Tapper got White House economic adviser Larry Kudlow, the director of the National Economic Council, to tip their hand on that Sunday.
“We will lengthen the eviction” moratorium, Kudlow said. “We will lengthen it.”
The ‘skinny’ push
Both Mark Meadows, the White House chief of staff, and Treasury Secretary Steven Mnuchin used appearances on Sunday news talk shows to float the idea of moving forward on a narrow set of issues, most notably an extension of the federal unemployment benefit, while saving the broader issues for future legislation.
“Perhaps we put that forward, get that passed, as we can negotiate on the rest of the bill in the weeks to come,” Meadows said on ABC News’ “This Week.”
This was planned, sources tell CNN. Over the last several days, they have made clear in talks with Senate Republicans that they don’t view a broad deal as feasible given where Democrats stand at the moment. The Sunday comments were meant to test the waters and lay the groundwork for moving forward on a scaled-back deal this week.
The goal is two-fold — first, try and get something done before the Friday deadline on unemployment benefits, and given the scale of the proposals, narrowing to a few key issues can help spur talks. Second is to try and jam Democrats, either through messaging or bringing a narrow proposal up for a vote, by saying they are trying to block the unemployment extension.
Where Democrats stand
House Speaker Nancy Pelosi has made crystal clear Democrats will not settle for moving piece by piece on this round of relief legislation.
“This is a package,” Pelosi told reporters last week. “We cannot piecemeal this.”
Pelosi’s point is — like the $2.2 trillion CARES Act that passed almost unanimously in March — the pieces of this measure are designed to be interconnected. Direct payments tie in with unemployment benefits, which are bolstered by the small business loan program, which are all connected incentives for employers to try and retain or rehire workers.
Split one or two pieces off and it creates a hole — one that’s unlikely to be filled. McConnell himself has made clear this will be the final relief package, and his members grow less and less amenable to new spending by the day.
Mostly, Democrats say they just want to finally start negotiations.
“We’ve been anxious to negotiate for two weeks and 10 days,” Pelosi said Sunday.
Also, several Democratic aides got a kick Sunday night out of the idea that Republicans, who still haven’t put a proposal on the table when House Democrats passed their $3 trillion offer in May, could win a messaging battle or jam Democrats.
The genesis of paring things back
White House officials have grown increasingly wary of the possibilities for a broad deal with Democrats over the last few days. It’s something that Meadows and Mnuchin told GOP senators and aides became very apparent, at least to them, after their initial (and to this point, only) sit down with Pelosi and Senate Democratic Leader Chuck Schumer.
The confusing thing to many on Capitol Hill, of course, is that traditionally both sides in a negotiation press the hardest line in the initial meeting to lay the groundwork for future compromises. And given Republicans didn’t even have a public proposal at the time of that meeting — and technically still don’t — the idea that broader talks had suddenly become out of range has struck many as odd.
Yet with the July 31 deadline bearing down, a narrow proposal is likely to get a big push this week.
Graham’s astute point
If you’ve paid attention to this note the last two months, you’d recall regular mentions about how drastically things have shifted inside the Senate Republican conference in terms of this relief package. Week after week, senators and aides have told CNN just how divided the conference is in their closed-door lunches about new spending, and what the next bill should look like. It’s the primary reason McConnell took so much time in crafting the GOP’s opening offer and there is no sense Republicans will be lining up behind any final deal in large numbers in the days or weeks ahead.
Sen. Lindsey Graham, a South Carolina Republican who has been in those lunches, put it bluntly (and fairly accurately based on my back-of-the-envelope math) on Fox News: “Half the Republicans are going to vote no to any Phase 4 package. That’s just a fact.”
Several GOP officials supportive of a deal for both economic and political reasons have made the same point to CNN in recent days: this is a point where the front-line Senate GOPers up for reelection are going to have to emerge and make clear what they want and why they want it. McConnell’s primary goal in any scenario is protecting his majority — and he’ll do the same here, even if that means losing a large number of GOP votes in his conference. But at some point, the most endangered Republicans are going to have to bolster the Kentucky Republican’s hand in these talks, both inside the Senate GOP conference and in his talks with Democrats.
As one GOP campaign official put it to CNN: “There’s no Senate Republican majority if the economy craters and our guys know that. At some point, they are going to have to make a public point of that.”
Where things stand on unemployment insurance
The Senate Republican coronavirus relief proposal would cut the enhanced benefits to $200 as states transition to implement a system designed to provide approximately 70% wage replacement for laid off workers, according to two people familiar with the proposal.
This has long been in the works — CNN reported Republicans planned the two-month transition period at a flat rate of $200 last week — but the mechanics of implementing the system have been the subject of lengthy negotiations between the White House and Senate GOP staff in recent days. Republican staff were briefed on the proposal on Monday morning.
Lawmakers are grappling with a similar problem they faced in March, when they settled on the $600-per-week flat rate after it was deemed impossible for states, many of which operate with antiquated technology and overloaded systems, to implement a more precise percentage on top of the state benefits. Under the GOP proposal, states would have two months at the flat rate of $200-per-week to transition to the percentage based system, and would be allowed to apply for a waiver for an additional two months, the people said.
Meadows and Mnuchin trekked to Capitol Hill both Saturday and Sunday to work through a series of outstanding issues with McConnell’s staff — some central to the proposal, others extraneous issues that crept into talks late (much to the frustration of GOP congressional aides, several told CNN). But the biggest issue by far has been trying to structure the GOP’s offer on unemployment insurance.
Democrats proposed extending the $600 federal enhancement through the end of the year.
Republicans are opposed on the ground the flat rate would pay some workers more to stay on unemployment than go to go back to work.
Back in March, nobody set out to create a $600 flat rate. They landed there because percentages, or placing major burden on the states to figure out the specific federal plus state total, was deemed basically impossible due to the patchwork of systems and antiquated technology in various states.
“Let me just say: the reason we had $600 was its simplicity,” Pelosi said Sunday.
Mnuchin and Meadows have acknowledged the difficulty here — and made clear their proposal will take into account states capable of implementing the percentage rate immediately and those that will take time to ramp up. How that is done and, with some states, whether it can be done at all, is still an open question.
To make it all more complicated: Democrats are opposed to this GOP proposal.
Topline rundown of what is in the GOP proposal
According to people briefed on it:
- Second round of direct payments
- Some form of an extension, at a reduced rate, to the federal enhanced unemployment benefit
- Second round of Paycheck Protection Program loans, targeted toward the hardest hit small businesses based on lost revenue and expanded to include more flexibility to forgive money used for operational and supplier costs
- $105 billion in education funds, split as $70 billion for K-12, $30 billion for colleges/universities, $5 billion for governors to utilize
- $16 billion in new funds for state testing grants, plus an administration commitment to designate $9 billion in unused funds from the CARES Act (making the total $25 billion)
- $26 billion for vaccine research and distribution
- $15.5 billion for the National Institute of Health
- Increased flexibility and time window for states to utilize initial CARES Act funds, but no explicit new funds
- Liability protections to create a safe harbor for businesses, schools, health care providers and nonprofits
- Enhanced employee retention tax credit
- Deductions for employer purchases of testing, PPE and other supplies
- Increase in business meal deduction to 100%, from 50%
- Extension of federal eviction moratorium.
This story has been updated with additional developments Monday.