What to Know in Washington: Congress Turns to Next Stimulus Bill

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Congress has pumped out almost $3 trillion to deal with the coronavirus pandemic, mostly on a bipartisan basis. But there is a bruising election-year confrontation ahead over the next, and perhaps final, round of aid for the economy.

Speaker Nancy Pelosi (D-Calif.) is gathering a long and expensive wish list from her fellow Democrats that would expand the social safety net as well as provide $500 billion to struggling state and local governments.

Senate Majority Leader Mitch McConnell (R-Ky.) hasn’t committed to another big aid package and indicated he’s girding for a massive fight over aid to states, a central issue for Democrats. He and other Republicans also say they want to tap the brakes on the blistering pace of new deficit spending.

The next phase of economic stimulus likely will be the last before the 2020 elections, and any stalemate will escalate the political consequences with control of the Senate, House and White House at stake.

Democrats may have an unlikely ally: President Donald Trump. His re-election may hinge on the economy turning around in the last critical months of his re-election bid, and he’s indicated willingness to include state aid and other spending in another stimulus.

There is a risk the effort to write a comprehensive rescue bill gets bogged down for months or falters given how far apart both parties are now as well as the increasingly bitter exchanges over what should come next and who will be to blame if the economy doesn’t rebound.

One of the biggest battles ahead will be over aid to state and local governments, which are seeing tax revenue plummet and expenses escalate as a result of the pandemic. Read more from Laura Litvan, Erik Wasson and Steven T. Dennis.

Photographer: Sarah Silbiger/Bloomberg
Pelosi wears a protective face covering while arriving at the U.S. Capitol on Thursday.

Democrats Eye Relief to Families: Democrats are pushing for more long-term financial relief for those most affected by the pandemic, after the government issued checks and expanded unemployment benefits in its initial response packages.

Those familiar with current deliberations say even a rapid economic recovery from the pandemic will leave lasting aftershocks, especially for low-income individuals and those who have lost their jobs. Expanding the earned income tax credit and the child tax credit could help the most vulnerable in the years to come, they say. Such a change could do more for the most vulnerable individuals than the $1,200 checks or the additional $600 per week for those receiving unemployment benefits.

The next pandemic relief bill could be the opening for Democrats to again make the case for tax credit expansions and also call for more cash, unemployment, and food assistance. Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) said they want the next package to be “transformative and far reaching,” a sign that Democrats will push for generous provisions. Read more from Kaustuv Basu.

Democrats Press for Reopening Strategy: Sixty members of the New Democrat coalition are asking House leadership to include policies in the next coronavirus stimulus bill to help communities start to reopen. In a letter to Pelosi and Minority Leader Kevin McCarthy (R-Calif.), the group details proposals on testing, surveillance and contact tracing, Emily Wilkins reports.

“Congress must put the measures and standards for a National Recovery Strategy in place now so that widespread, economically challenging countermeasures are not needed again,” lawmakers said in the letter.

BGOV OnPoint:Covid-19 Renews Fight Over Worker Rights, Unions

GOP Senators Press On for Aid: McConnell’s opposition to Democrats’ calls for billions more in aid to cash-strapped cities and states isn’t stopping many of his Republican colleagues from lining up for a piece of the funding they fully expect to be in the next Covid-19 relief package.

In a series of recent virtual town halls, tweets, and private meetings, rank-and-file Republicans made clear they are ignoring the calls from the GOP leader to “push the pause button” on the aid. They’re now working closely with officials in their home states to make sure they will be in line to get a fair share of what could be hundreds of billions of dollars in the next recovery package.

McConnell said after the Senate passed the billion interim package that he’d rather see states declare bankruptcy than give them money to cover lost revenue during the crisis. As the leader was delivering that message during a series of appearances on conservative media outlets, others in the GOP were encouraging state and local officials to carefully draw up documents detailing their losses in anticipation of reimbursement down the road. Nancy Ognanovich has more.

Here’s Where $881 Billion in U.S. Aid Was Spent: The Trump administration has doled out roughly $881 billion from the major components of the pandemic relief package signed into law one month ago, and soon will have a half trillion dollars more to shovel into the economy. The Treasury Department was put in charge of distributing, through multiple channels, nearly half of the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act. While one key piece ran empty within two weeks — aid to small businesses — there’s still has a lot of money left to work with. Laura Davison and Saleha Mohsin provide a tally of what’s been spent or committed so far from the law’s key programs.

The Internal Revenue Service has sent out more than half of economic impact payments it plans to distribute to households to help bolster family budgets as workers face job losses or see their hours cut.

What to Watch Today

The House meets for a pro-forma session at 10:30 a.m.

Pelosi holds a press conference at 11:30 a.m.

Trump participates in a signing ceremony for the Paycheck Protection Program and Health Care Enhancement Act at noon.

Trump receives a briefing on NASA’s Covid-19 response at 2:30 p.m.

The White House Coronavirus Task Force holds a briefing at 5 p.m.

Trump Muddles Response as Support Slides

Trump’s evolving public statements and ad hoc policy swings on the coronavirus outbreak have the White House on defense as surveys show increased doubts about his leadership in crisis.

On Wednesday, Trump rebuked the first governor to try to reopen his state economy — Georgia’s Brian Kemp (R) — after encouraging state leaders for weeks to push forward toward resuming a normal social and business life.

Earlier in the week, Trump declared he would “temporarily suspend immigration” to the U.S. in a late-night tweet, only to roll out a hastily drafted executive order pausing green cards for two months after an outcry from business leaders and their Republican allies.

The coronavirus pandemic is exposing the limits of Trump’s unconventional politics and governance, with more than 47,000 Americans dead since February. Trump’s mastery of a bitterly partisan modern political and media landscape got him to the Oval Office, where unorthodox policy, personal feuds and a consequences-be-damned mentality helped him dominate headlines and dodge controversies that would have sunk most politicians.

Now, the White House is struggling to remain coherent as public confidence in Trump’s handling of the crisis ebbs. More than 50% of Americans now disapprove of his response to the outbreak, compared to 46% that approve — a gap that has widened this week, according to an analysis of polling data by fivethirtyeight.com. The Associated Press and NORC at the University of Chicago published a poll yesterday finding just 23% of Americans consider Trump a trustworthy source of information on the virus, while 52% trust their state and local leaders. Reuters published an Ipsos survey yesterday that found Trump trailing his presumptive re-election opponent, Vice President Joe Biden, in three key Rust Belt states he won in 2016 — Michigan, Pennsylvania and Wisconsin. Read more from Justin Sink.

Georgia County Steels Itself to Reopen Despite 10% Death Rate: Georgia is reopening for business more aggressively than any state in the U.S., after being one of the last to order a statewide shutdown. Earlier this week, Gov. Brian Kemp (R) blindsided both mayors and businesses when he announced that nail salons, gyms, hairdressers, bowling alleys and gyms could open today as long as they follow protocols to protect the public. Restaurants and movie theaters can follow three days later.

Kemp’s plan has been widely criticized as risky, even by fellow Republicans. Democratic mayors in Atlanta, Savannah and Albany, which had one of the worst outbreaks in the U.S., have complained about the order itself and that they didn’t know it was coming. Read more from Margaret Newkirk and Michael Sasso.

More Economic Actions & Industry Pains

Mnuchin Faces Tougher Tests: Treasury Secretary Steven Mnuchin has won bipartisan praise for quickly shoveling billions of dollars in pandemic relief into the economy — a rare bright spot in an administration under intense criticism for its coronavirus response. Yet whether that round of applause is fleeting depends on how quickly the world’s largest economy recovers from the coronavirus outbreak.

Mnuchin is optimistic. He says he doesn’t think the U.S. will suffer rolling shutdowns for 18 months or longer until a vaccine is widely available, the prediction of Minneapolis Fed President Neel Kashkari. “That’s highly unlikely that this goes on for that period of time,” the Treasury chief said in a Bloomberg News interview yesterday. “You’re going to see an opening up in May and June. You’re going to see a strong rebound in the economy in the end of the third quarter and the fourth quarter.”

As Trump’s point person on the economy, Mnuchin negotiated the biggest stimulus in American history last month and added to it this week, working side by side with his boss’s arch-enemy, Pelosi. He’s also partnered with Federal Reserve Chairman Jerome Powell — another frequent target of Trump’s criticism — on programs to shore up small businesses and bolster families’ checking accounts. Read more from Saleha Mohsin.

U.S. Toughens Guidance on Funds: Companies seeking aid from the next round of small business relief will be required to attest to their need for the loan and could be asked to prove it, as the Trump administration seeks to prevent mom-and-pop operations from being crowded out. Mnuchin said the fund is intended for small businesses, and large companies that have already taken loan funding are being given until May 7 to return it without penalty amid an uproar over Shake Shack and the operator of Ruth’s Chris Steak Houses and other firms getting relief aid.

New guidance released yesterday by the Treasury Department and the U.S. Small Business Administration emphasizes companies must “certify in good faith” the economic need for financing under the Paycheck Protection Program, or PPP. Read more from Mark Niquette.

Fed to Name Participants in Cares Act-Backed Loans: The Federal Reserve will disclose the names of borrowers from several of its emergency lending facilities backed by U.S. taxpayer money from the $2.2 trillion coronavirus rescue bill, following congressional pressure for transparency. The Fed said yesterday that it will publish the names and details of participants in its facilities set up in the CARES Act, as well as the amounts that were borrowed and the interest rate charged on its website at least every 30 days. It will also report the overall costs, revenues and fees of each of the facilities. Read more from Catarina Saraiva and Craig Torres.

Mnuchin Weighs Lending for Oil Companies: Mnuchin said he’s considering the creation of a government lending program for U.S. oil companies, who are looking for federal aid as they cope with a devastating plunge in prices. “One of the components we’re looking at is providing a lending facility for the industry,” Mnuchin told Bloomberg News yesterday. “We’re looking at a lot of different options, and we have not made any conclusions.” He would not say whether the lending program would be housed at his agency or at the Federal Reserve, which has created a number of loan facilities for businesses suffering from the economic collapse brought on by the coronavirus outbreak. Read more from Saleha Mohsin.

U.S. Has No Plans for Mortgage Servicer Lifeline: Mnuchin said the U.S. has no current plans to create a Federal Reserve facility to inject funding into non-bank mortgage servicers, as recent government moves will help the firms get through the risk of millions of borrowers missing their mortgage payments. Mnuchin pointed to Ginnie Mae’s decision last month to facilitate payments to mortgage bondholders themselves, thus covering an obligation that would have fallen on servicers. That combined with steps taken this week by the Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac, will “deal with liquidity concerns,” he told Bloomberg. Read more from Saleha Mohsin.

Mnuchin Asks for Equity Stakes in Exchange for $17 Billion Aid: Mnuchin will require public companies deemed critical to national security that seek a share of $17 billion in virus-related relief to offer an equity stake to the government, according to a Treasury Department loan application posted last night. “This pot of money was designed to consider the needs of defense contractors, key suppliers to DOD and other companies that carry classified information,” Mnuchin said yesterday in an interview, referring to the Defense Department.

The requirements are similar to those for passenger and cargo airlines seeking payroll assistance from the $2.2 trillion coronavirus stimulus package passed by Congress. One obvious contender for the funds is Boeing, which has so far said it might not request government support. Mnuchin said he’s had multiple conversations with Boeing’s top executives but declined to say whether it intended to tap government funds. Read more from Saleha Mohsin.

Scalia Pivots to ‘Blue-Collar Bounceback’: A wide range of Labor Department initiatives are helping workers in need during the pandemic, even as the economy prepares for a big rebound, Labor Secretary Eugene Scalia said. “The year started with a blue-collar boom. We’re now working on the blue-collar bounceback,” Scalia said during a call yesterday.

Before highlighting his agency’s efforts on unemployment benefits, safety, and paid leave, Scalia emphasized optimism in a nod to the White House’s plan to assist states in reopening the economy. The secretary said Trump’s “reopening plan puts forward a disciplined, scientific approach for states and locales to reopen for business as it’s safe to do so.” Read more from Ben Penn.

DeVos Releases $13 Billion in K-12 Aid: Education Secretary Besty DeVos said yesterday she was making billions in additional coronavirus relief dollars available to K-12 schools. Congress provided $30.75 billion for education in the Cares Act. After opening up funds for colleges and universities in recent weeks, DeVos is releasing more than $13 billion for public education, Andrew Kreighbaum reports.

Food Aid Recipients Get Temporary 40% Hike: Americans relying on the federal SNAP program, formerly known as food stamps, to buy groceries during the coronavirus pandemic can now receive a temporary bump in monthly benefits. “USDA is providing a 40% increase in SNAP benefits to ensure that low-income individuals have enough food to feed themselves and their families during this national emergency,” Agriculture Secretary Sonny Perdue said in a statement yesterday. Read more from Megan U. Boyanton.

Research, Testing & Coordination

Hospitals Ration Crucial Masks, Gowns: Most hospitals are still rationing masks and other equipment, front-line health-care workers say in a sign that protective gear remains hard to come by as states consider opening up their economies in coming weeks. The rationing shows how under-resourced some areas are, according to health-care unions. They are calling for Congress to compel federal workplace standards that mandate hospitals and other employers to outfit their workers with proper safety equipment, even as the coronavirus pandemic has created an unprecedented need for masks, gowns and other gear. Hospital administrators also aren’t doing enough to update nurses and other staff on safety protocols for protective equipment, they say. Read more from Alex Ruoff.

Coronavirus Dies Fastest Under Light, Warm and Humid Conditions: The coronavirus doesn’t last as long on door handles and other nonporous surfaces when it’s exposed to sunlight, higher temperatures and humidity, according to a U.S. government study, Justin Sink reports. “The virus is dying at a much more rapid pace” from exposure to humidity or heat, Bill Bryan, an undersecretary at the Homeland Security Department, said at a White House news conference yesterday.

Trump appeared intrigued by the research after Bryan’s presentation. “Suppose we hit the body with a tremendous ultraviolet or just very powerful light,” Trump said, following Bryan’s presentation. The World Health Organization has warned against using UV lamps to sterilize any part of the body, saying it can cause skin irritation.

Bryan also said that research had shown bleach could kill the virus in saliva or respiratory fluids in five minutes and isopropyl alcohol could kill it even more quickly. Trump suggested there would be more testing there, too. “The disinfectant knocks it out in a minute. One minute,” he said. “Is there a way we can do something like that by injection inside?” He said it would be “almost a cleaning. It gets in the lungs and does a tremendous number on the lungs.” Bleach is a toxic chemical, and inhaling it could damage the lungs. Read more from Kristen V. Brown and Justin Sink.

Senators Say Minorities Must be Part of Testing: Pharmaceutical companies managing clinical trials for a Covid-19 vaccine or therapeutic drugs must include minorities, women and other under served populations, senators said in a letter to Abbott Labs, AbbVie, AstraZeneca, Bayer and other drug companies. Possibly dangerous outcomes will result for those not represented in clinical trials due to differences in drug metabolism across race and sex. Given the disproportionate impact of Covid-19 on minority populations, it is more important than ever that these groups be represented in any clinical trials, according to the letter from 15 Senate Democrats. Read more from Rossella Brevetti.

Elections & Politics

Summers Advising Biden on Recovery: Former Treasury Secretary Lawrence Summers is advising Joe Biden’s presidential campaign on economic policy, including its plans to revive the U.S. economy after the coronavirus pandemic, according to five people familiar with his involvement. The Obama and Clinton administration veteran’s role will likely roil progressives who view his past work on the 2009 recovery as too favorable to big banks. That’s awkward for the Biden campaign at a time when it is trying to win the trust of former supporters of Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.).

Summers was the first name on the “Biden do not reappoint list” published last month by the American Prospect’s Robert Kuttner, who wrote that Summers in 2009 “not only lowballed the necessary economic stimulus and ended it prematurely, but he successfully fought for rescuing the biggest banks rather than taking them into temporary receivership.” Read more from Jennifer Epstein.

Conservative Watchdog Claims Anti-Trump Group Violated Tax Laws: A high-profile progressive organization, known for its fiery ads against Trump, may have violated its tax-exempt status by blurring the line between nonprofit and political activities, according to a complaint filed yesterday with the IRS by a conservative watchdog group. The Patriots Foundation, a Republican-leaning ethics organization based in Iowa, says American Bridge 21st Century Foundation, a nonprofit, is primarily a political organization, in violation of tax laws. Read more from Bill Allison.

What Else to Know

Amazon May Have Misled Congress, Nadler Says: Amazon may have misled Congress when a company lawyer testified last year that the online retailer doesn’t use data it collects on sales to favor its own products over third-party sellers, the chairman of the House Judiciary Committee said. Rep. Jerrold Nadler (D-N.Y.) said a story in the Wall Street Journal yesterday that reported Amazon used data from sellers to develop competing products raised “deep concerns.”

“Amazon has had opportunities to correct the record on its business practices,” he said in a statement. “It is deeply concerning that, beginning with the hearing last year, they may have misled Congress rather than be fully forthcoming on this matter.” Read more from David McLaughlin.

Alabama Loses Appeal on Virus Abortion Restrictions: Alabama will remain partially blocked from imposing new restrictions on abortions in the name of public health during the coronavirus pandemic, the Eleventh Circuit said. The new ruling doesn’t entirely block the state from enforcing the order against abortion providers. But it does bar the state from “failing to allow healthcare providers to consider and base their decisions as to whether to provide an abortion without delay on certain factors,” including whether a delay would cause the patient to lose her legal right to an abortion under Alabama law after 20 weeks of pregnancy. Read more from Brian Flood.

North Korea in Position to Outlast Kim’s Reign: Whatever the state of Kim Jong Un’s health, he has already put North Korea in its strongest position to resist U.S. pressure in decades. Eight years after Kim filled the power vacuum left by the death of his reclusive father, Kim Jong Il, North Korea is more secure and less isolated. The 36-year-old supreme leader has achieved two key marks of legitimacy long sought by his predecessors: a nuclear arsenal that can credibly deter an American attack and a personal relationship with the U.S. president, including three face-to-face meetings with Trump. Read more from Jihye Lee and Jon Herskovitz.

High-Seas Energy Fight Off Malaysia Draws U.S., Chinese Warships: Malaysia’s push to explore energy blocks off its coast has turned into a five-nation face off involving U.S. and Chinese warships, raising the risk of a direct confrontation as broader tensions grow between the world’s biggest economies. The episode began in December, when Malaysia’s state-run energy giant Petroliam Nasional contracted a vessel to explore two areas in the South China Sea in its extended continental shelf. Those waters are also claimed by Vietnam and China. The situation took a turn for the worse on April 16 with the arrival of a Chinese surveyor known as the Haiyang Dizhi 8. The U.S. this week sent at least two warships within some 50 nautical miles of the Malaysian ship, according to defense analysts privy to the information who asked not to be identified. Secretary of State Michael Pompeo yesterday accused China of “exploiting” the world’s focus on the Covid-19 pandemic with provocations in the South China Sea. Read more from Philip J. Heijmans.

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

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