What to Know in Washington: Congress Under Pressure on Stimulus

Congress faces intense pressure to negotiate an interim rescue package this week as the impact of the coronavirus pandemic accelerates across the country.

Some 17 million Americans have lost their jobs in the past month, $349 billion in funding for a small-business relief program may run out within days, and the Covid-19 death toll in the U.S. has soared past 22,000.

And yet partisan deadlock reigns in Washington. Republicans want to add more money to the small business loan program while Democrats demand urgent funding for states and municipalities and for struggling hospitals.

While the stock market soared last week, trimming some of its sharp year-to-date losses, the economy faces fierce headwinds that have leaders in both parties proposing massive additional spending.

The nation’s governors are demanding Congress provide half a trillion dollars in economic aid, far more than even the Democrats have suggested so far, to plug revenue gaps.

Without “unrestricted” money from Washington, “states will have to confront the prospect of significant reductions to critically important services all across this country, hampering public health, the economic recovery, and — in turn — our collective effort to get people back to work,” Govs. Larry Hogan (R) of Maryland and Andrew Cuomo (D) of New York wrote on Saturday in a bipartisan statement for the National Governors Association.

The partisan stalemate in Congress continued over the weekend in advance of a pro-forma session in the Senate today, which would be the first day that any additional aid could begin moving.

Treasury Secretary Steven Mnuchin, who brokered the $2.2 trillion rescue package that passed in late March, talked with Senate Minority Leader Chuck Schumer (D-N.Y.) and Speaker Nancy Pelosi (D-Calif.) last week, though there was no sign of a breakthrough.

Schumer, after talking to Mnuchin on Friday, sounded a hopeful note about bipartisan talks and the possibility of reaching an agreement early this week. “There’s no reason why we can’t,” Schumer said.

President Donald Trump also struck an optimistic tone. “Despite what you’re reading — you know, there’s back and forth — but we are getting along with the Democrats,” he said at a White House briefing on Friday. Steven T. Dennis has the latest.

How to Measure Recovery’s Strength: The strength or weakness of the country’s rebound, whenever that comes, will be heavily influenced by actions taken today and over the coming months. Economists pointed to three crucial areas they say will matter most. For one, the speed with which small and mid-sized business aid finds its mark. Second, the level of support for states and cities later this year. And third, something — anything — to restore public confidence in getting back to life, and business, as usual. Christopher Condon and Katia Dmitrieva take a deeper dive on these areas.

Tech Slows Stimulus Checks: The pandemic has exposed aging, inflexible computer systems at the heart of the U.S. economy — and a shortage of experts to fix the problem. This is slowing the government’s effort to get billions of dollars in stimulus checks to millions of newly unemployed citizens.

The $2.2 trillion CARES Act passed in late March includes a $600 weekly increase in unemployment benefits. That money won’t reach anyone until state agencies update technology systems to reflect the law and handle the flood of new applications.

Oklahoma, for example, is trying to implement CARES as quickly as it can, but some claims are taking as long as two weeks to process because of a mainframe computer that runs on a 60-year-old programming language called COBOL. “It is the largest issue with regards to implementation in the CARES program,” said Robin Roberson, executive director of the Oklahoma Employment Security Commission. “Our mainframe is literally over 30 years old. It’s very difficult to program, it doesn’t do much. COBOL programmers are somewhat scarce.” Read more from Ian King.

What to Watch Today

The Senate will meet for a pro forma session at 10 a.m. The House meets tomorrow at 10 a.m.

The White House coronavirus task force will hold a press briefing at 5 p.m.

More Economic Actions & Industry Pains

Fed’s Kashkari Says U.S. May Face Rolling Shutdowns: Without an effective therapy or a vaccine for the novel coronavirus, the U.S. economy could face 18 months of rolling shutdowns as the outbreak recedes and flares up again, Federal Reserve Bank of Minneapolis President Neel Kashkari said. “We’re looking around the world. As they relax the economic controls, the virus flares back up again,” Kashkari said yesterday on CBS’s “Face the Nation.” Kashkari is a voter in 2020 on the Fed’s policy-setting Federal Open Market Committee. “We could have these waves of flareups, controls, flareups and controls until we actually get a therapy or a vaccine. I think we should all be focusing on an 18-month strategy for our health care system and our economy.” Read more from Matthew Boesler.

Optimistic Outlook From Goldman: U.S. stocks are unlikely to make fresh lows thanks to the “do whatever it takes” approach of policy makers, according to Goldman Sachs Group. A combination of unprecedented policy support and a flattening viral curve has “dramatically” cut risks to both markets and the American economy, strategists including David Kostin wrote in a note today. If the U.S. doesn’t have a second surge in infections after the economy reopens, equity markets are unlikely to make new lows, they said. Read more from Joanna Ossinger.

Airline Plan Seeking Partial Repayment Draws Rebukes: Treasury Secretary Steven Mnuchin’s insistence that America’s major airlines partially repay taxpayer funds aimed at shoring up the industry has set up a clash between the Trump administration and the carriers. At least some of the large carriers are unhappy with the terms—specifically, that large airlines repay 30% of any grant within five years—and are seeking to negotiate with the Treasury Department, said a person familiar with the discussions.

The leader of one trade group said the offer violated “both the letter and the spirit of the law” written to provide help for an industry reeling from the coronavirus pandemic, which has seen air travel grind to a halt. Flight attendant groups were also livid. The large carriers are set to receive billions of dollars each in payroll assistance. Read more from Alan Levin, Saleha Mohsin and Mary Schlangenstein.

Defense Firms to Vie for Virus Aid: U.S. defense contractors and a huge network of their suppliers are expected to seek some of the $17 billion pool of federal money designated for companies vital to national security and contending with coronavirus disruptions. Problem is, no one knows who will qualify for the funds, what the application process will be, or when Mnuchin will distribute the money.

An even bigger unknown is whether Boeing, the No. 2 U.S. defense contractor, will tap—and possibly exhaust—the national-security fund. The money comes with a condition that could turn the Chicago-based company away from seeking some of the $17 billion pot: It must give the U.S. an equity stake in return for the money. Read more from David McLaughlin and Julie Johnsson.

Research, Treatment & Coordination

Fauci Says Reopening Could Start in May: Parts of the U.S. may be ready in May to ease emergency measures taken against the coronavirus pandemic but there’s no universal “light switch” to flip on, Dr. Anthony Fauci said. There’s also the possibility of a Covid-19 rebound in the fall which could be a factor in November’s elections, he said.

“It could probably start at least in some ways maybe next month,” Fauci, director of the National Institute of Allergy and Infectious Diseases, said on CNN’s “State of the Union” yesterday. “We are hoping by the end of the month we can look around and say, okay, is there any element here that we can safely and cautiously start pulling back on, if so, do it,” he said. Fauci said there’s “not going to be a light switch that we say, okay, it is now June, July, or whatever — click — the light switch goes back on.” Read more from Hailey Waller and Ros Krasny.

• Meanwhile, Trump’s top adviser on coronavirus testing said that by May the U.S. will be in the “ballpark” of the diagnostic capacity it needs, should the president decide to recommend parts of the country relax economy-crushing social distancing practices. Admiral Brett Giroir said in an interview Saturday the U.S. is working on four forms of diagnostics it needs to reopen the economy: widespread surveillance to catch new flare-ups; testing of people who have specific symptoms; contact-tracing for confirmed cases; and antibody testing to know who’s recovered from the virus, which he said is weeks away. Read more from Josh Wingrove.

New York Death Toll Remains High: New Yorkers continue to die of Covid-19 at a “terribly high rate,” with 758 more fatalities reported yesterday, but the trend shows that the epidemic is peaking and the state can begin to plan to reopen, Gov. Cuomo said. Yesterday marked the sixth straight day of fatalities over 700. The record was 799 on April 9. Total deaths in the state reached 9,385. Cases reached 188,694, a rise of 8,236, the state Department of Health reported, around one-in-ten of reported cases around the world. “Can you ever get numb to these numbers?” Cuomo asked at a news conference in Albany. “Everyone has a face and a name and a family that is suffering.”

He noted positive trends that now appear to be taking stronger hold. Only 53 new cases were admitted to the hospital overnight, a number Cuomo said was the lowest since the epidemic began. Intensive care admissions and intubations “ticked up” slightly but not significantly, he said. Read more from Ian Fisher and Henry Goldman.

• Spain reported today the smallest number of new coronavirus infections since March 20 and saw the daily death toll decrease. Over the past 24 hours, there were 3,477 new cases detected, bringing the total number to 169,496, the health ministry said. The country saw 517 more people die from Covid-19, bringing the total to 17,489, Rodrigo Orihuela reports.

States Prepare Test-and-Trace Programs: Several states have launched new efforts to contain Covid-19, laying plans to test aggressively and track the potentially infected with help from nonprofits, universities and the private sector. Massachusetts, Utah and North Dakota are among those working on the kinds of comprehensive strategies that public-health experts agree are needed to arrest the coronavirus’s spread and lift the social-distancing measures that have shuttered much of the U.S. economy. “Even if the curve does flatten, we won’t be able to go back to work and school and regular life unless we chase the virus down much more significantly,” said Joia Mukherjee, chief medical officer of Partners in Health, a nonprofit working with Massachusetts to expand the state’s capacity to trace contacts of Covid-19 patients.

The question is how quickly the efforts that have begun can advance with beleaguered diagnostic testing programs across the U.S. still facing shortages of swabs, chemicals and other supplies that severely limit capacity at many labs. Read more from Emma Court and John Tozzi.

Insurers Instructed to Waive Copays: The Trump administration Saturday moved to require group health plans and other insurers to cover both coronavirus testing and some related treatment services with no copays or other cost sharing to beneficiaries, including tests that determine if a person has previously had Covid-19. The Centers for Medicare & Medicaid Services, along with the Departments of Labor and the Treasury, issued guidance Saturday that clarified that Americans with private health insurance should have access to testing and certain other related services, including antibody testing, at no cost. Read more from Alex Ruoff.

Pentagon Bankrolls N95 Mask Production: The Pentagon will award $133 million in contracts using funds allowed under the Defense Production Act for production of N95 masks needed by heath care workers and other first responders, a spokesman said. The funding, to be awarded as early as next week, marks the first use of the Korean War-era DPA authorities that allow for targeted investments for critical capabilities. Delivery would be within 90 days, Tony Capaccio reports.

U.S. Meat Workers Test Positive: There’s been a spike in coronavirus cases at meat plants in the U.S., with hundreds of reported infections in just the last week. That’s adding to questions over the fragility of the food-supply chain and raising concerns over worker safety. As many as 50 people at a JBS SA beef facility in Colorado’s Weld County tested positive, adding to more than 160 cases at a Cargill meat-packaging plant in Pennsylvania, union officials said on Friday. South Dakota Gov. Kristi Noem on Friday reported 190 cases at a Smithfield Foods pork facility, the Associated Press said. Read more from Isis Almeida and Vincent Del Giudice.

WHO Says 70 Vaccines in the Works: There are 70 coronavirus vaccines in development globally, with three candidates already being tested in human trials, according to the World Health Organization, as drugmakers race to find a cure for the deadly pathogen. The furthest along in the clinical process is an experimental vaccine developed by Hong Kong-listed CanSino Biologics and the Beijing Institute of Biotechnology, which is in phase 2. The other two being tested in humans are treatments developed separately by U.S. drugmakers Moderna and Inovio Pharmaceuticals, according to a WHO document.

Progress is occurring at unprecedented speed in developing vaccines as the infectious pathogen looks unlikely to be stamped out through containment measures alone. The drug industry is hoping to compress the time it takes to get a vaccine to market — usually about 10 to 15 years — to within the next year. Read more from Lisa Du.

Elections & Politics

Biden Tackles Running Mate Decision: Joe Biden, now the presumptive Democratic presidential nominee, is in the earliest stages of choosing a running mate who can help him defeat Trump in November, a decision complicated by the effects of the coronavirus crisis on the country and the campaign. Biden, who is far behind Trump in fund-raising and hamstrung by social distancing rules, is preparing to begin his vetting process in the coming days, according to a person familiar with the plans. Yet alongside the usual political considerations, he will have to add a new criteria for the candidates: Who can best address the challenges of the coronavirus era.

High profile senators — and former presidential candidates — Kamala Harris (D-Calif.), Amy Klobuchar (D-Minn.) and Elizabeth Warren (D-Mass.) are all sure to get consideration. Yet the crisis has also raised the profile of Michigan Gov. Gretchen Whitmer (D), who Biden said he was watching closely even before the pandemic struck. Read more from Jennifer Epstein and Tyler Pager.

Biden’s ‘Return to Normalcy’ Campaign Has Echoes of 1920: A politically inexperienced and highly divisive president, a presidential campaign waged under the shadow of a deadly pandemic, and an establishment candidate from the opposing party who promises to restore the country to a less turbulent time. Those were the elements of the U.S. presidential election exactly 100 years ago that swept Warren G. Harding into office. The similarities to the 2020 race and Biden‘s quest to unseat Trump in November are unmissable. Ryan Teague Beckwith has more.

What Else to Know Today

Oil Price War Ends with Deal to Cut Output: The world’s top oil producers pulled off a historic deal to cut global petroleum output by nearly a 10th, putting an end to a devastating price war but not going far enough offset the impact of the coronavirus pandemic. A week-long marathon of bilateral calls and ministerial video conferences brought the OPEC+ alliance and the Group of 20 nations together for an unprecedented agreement.

Despite skepticism, the agreement still represents an important victory for the alliance between the Organization of Petroleum Exporting Countries and allies including Russia, which just a few weeks ago appeared to be dead. And it wasn’t easy, with talks almost falling apart late last week because of resistance from Mexico. They came back from the brink after a weekend of urgent diplomacy, and an intervention from Trump, helped to broker the final compromise. Read more from Javier Blas, Salma El Wardany and Grant Smith.

• Vladimir Putin’s deal with OPEC to cut oil output and boost prices three years ago was a triumph for the Russian leader, bolstering his clout on the global stage. But now he’s had to to make stinging concessions after Trump stepped in. Amid relief in Moscow at the unprecedented deal with Saudi Arabia and other major producers to slash oil output, the accord marks a painful setback for Russia, said two people close to the Kremlin. Evgenia Pismennaya, Ilya Arkhipov and Henry Meyer have more.

China Still Implementing U.S. Trade Deal: China’s ambassador to the U.S. said his country is still implementing the first phase of a trade agreement signed with the U.S. earlier this year and called for both nations to assess the changing situation as the coronavirus presents global economic challenges. “Even for the last few weeks, when we are faced with this very serious, critical situation, people are still working on the implementation of this phase one deal,” Ambassador Cui Tiankai said in an interview with Eurasia Group’s Ian Bremmer on the broadcast show Gzero World on April 3, according to a transcript posted on the Chinese embassy’s website Sunday. Read more.

Abortion Clinics Ask High Court to Ease Texas Limits: Texas abortion clinics sought emergency U.S. Supreme Court intervention to ease sweeping restrictions on the procedure imposed by state officials during the coronavirus crisis. The filing Saturday came after a federal appeals court let the state block most abortions as a way to conserve masks, gloves and other personal protective equipment needed to shield health-care workers from the virus. The clinics are seeking to let pill-induced abortions resume, saying they don’t require protective equipment. Until Texas imposed the temporary ban, it had allowed medication abortions through the 10th week of pregnancy. Read more from Greg Stohr.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com; Michaela Ross at mross@bgov.com