What to Know in Washington: McConnell Sets Up Senate Showdown

Senate Majority Leader Mitch McConnell (R-Ky.) plans to seek swift passage of a $250 billion boost in small business relief, but he risks failure without a last-minute breakthrough with Democrats who want twice as much for the slumping economy.

McConnell has circulated legislation reflecting Treasury Secretary Steven Mnuchin’s request for the aid, which if approved would bring funding for the small business Paycheck Protection Program to $600 billion.

With most lawmakers out of town, the only way to meet Mnuchin’s goal of getting the additional money passed by the end of the week is by unanimous consent in the Senate and House. But an objection by any lawmaker would thwart that process, and Minority Leader Chuck Schumer (D-N.Y.) and Speaker Nancy Pelosi (D-Calif.) haven’t signed on as they press for more aid for hospitals and state and local governments.

That sets up a high-stakes game of chicken between the top leaders in Congress at a moment today when seesawing financial markets will be open for trading. Unless an agreement is reached, passage could be delayed until members of the House and Senate can reassemble at the Capitol for a vote, potentially next week. Both chambers are scheduled to return to work for the week of April 20.

The Payroll Protection Program is a key part of the $2.2 trillion pandemic response package passed late last month. Stay-at-home orders across the country have particularly squeezed small businesses, which account for almost half of U.S. private employment.

As of midday yesterday, there had been more than 381,000 applications processed totaling $100 billion from more than 3,600 lending institutions, according to the Small Business Administration. That amount hasn’t been given to firms yet, but rather is the value of loans registered for lenders to complete the process and disburse funds.

Pelosi and Schumer have proposed adding $100 billion for hospitals and $150 billion for state and local governments to Mnuchin’s request. They also want half of the additional small business assistance — or $125 billion — channeled through community-based and other financial institutions that serve companies owned by farmers, families, women, minorities and veterans. Read more from Laura Litvan, Billy House and Erik Wasson.

Countries Weigh How to Get People Back to Work: Officials from Rome to Washington are urgently mapping out plans to loosen lockdowns and begin rebooting their economies even as the coronavirus pandemic still rages across swaths of the globe. Trouble is, there’s no master plan.

The juggling act for policy makers will be to reopen without triggering a second wave of infections that leads to a fresh round of lockdowns and yet more economic damage. History serves as a warning: the 1918 Spanish Flu pandemic, the world’s worst health crisis until this one, hit in three waves before finally being contained. Read more from Enda Curran, Frank Connelly and Suzi Ring on the challenge the world’s governments face.

What to Watch Today

The Senate meets at 10 a.m.

House Minority Leader Kevin McCarthy (R-Calif.) will hold his weekly press conference call at 11:20 a.m. and Pelosi will hold her call at 12:15 p.m.

President Trump hosts a call with mental health leaders and advocates at 2:30 p.m.

The White House will hold a Coronavirus Task Force press briefing at 5 p.m.

Economic Actions & Industry Pains

Powell Pushed to Edge of Fed’s Boundaries: By pushing the Federal Reserve into corners of financial markets it has mostly shunned in its 106-year history, Chairman Jerome Powell is running into some thorny questions. Like, for instance, how to maintain independence from the U.S. Treasury when the economic-support package Congress passed says they should work together? Or whether the same guidelines for companies receiving federal aid, which range from compensation limits to off-shoring restrictions, apply to the Fed if it gets more money from Treasury? And how about which companies — and perhaps eventually, municipalities and states — are invited to borrow and at what cost?

These are some of the issues that probably will come up when Powell speaks at a webinar hosted by the Brookings Institution at 10 a.m. in Washington — in one of his few public appearances since the spread of the coronavirus took hold in the U.S. Read more from Craig Torres.

Banks Get Big Capital Break for Small Business Loans: The Federal Reserve and other regulators are planning to grant a sweeping capital break for banks providing loans to small businesses as part of the government’s response to the coronavirus-fueled economic crisis. A rapidly written rule acknowledges that lending through the Paycheck Protection Program doesn’t pose a risk for U.S. banks, according to documents posted on the Federal Deposit Insurance Corp.’s website. As a result, regulators won’t make lenders maintain capital buffers as a protection against loans going bad, the documents show. Read more from Saleha Mohsin, Lydia Beyoud and Jesse Hamilton.

GOP Senators Eye Bailout for Coal: A group of Republican senators want to make sure the bailout program administered by BlackRock on behalf of the federal government won’t leave fossil-fuel companies behind. The U.S. government tapped BlackRock, the world’s largest asset manager, to become the buyer of corporate bonds as part of a $454 billion effort to bail out companies hit by the pandemic. That triggered a letter from Greenpeace, Sierra Club, 350.org and other environmental organizations last month urging Fed Chairman Powell to weigh climate risk in its guidelines for BlackRock as it decides what sectors of the economy get financial support.

Now, in a letter sent this week, a group of 17 Republicans including Jim Inhofe (Okla.) and Ted Cruz (Texas) want both Powell and Mnuchin to ensure that fossil-fuel companies aren’t excluded. Read more from Akshat Rathi.

Covid-19 Sparks Lobbying Boom: Business has boomed on K Street since the coronavirus outbreak, with lobbying firms bringing in more than 100 new clients to work on congressional relief efforts and issues tied to Covid-19. The influx represents about 40% of all new lobbying clients that were signed between Feb. 24 and April 7, according to a Bloomberg Government analysis of lobbying disclosures maintained by the Senate. Hires by the health care industry comprise about one-third of all new Covid-19-connected lobbying contracts, with pharmaceuticals, telemedicine companies, medical device manufacturers, and medical centers or clinics all bringing on lobbying firepower. Read more from Megan R. Wilson.

Stimulus Said to Help Prevent Joblessness: U.S. unemployment could hit 11% by the third quarter of fiscal 2020, but it would have been higher without the stimulus package signed into law late last month, according to a study from the University of Pennsylvania’s Penn Wharton Budget Model. Unemployment would have grown to 12% by the third quarter without the stimulus law, which Penn Wharton projects to salvage about 1.5 million jobs, Jack Fitzpatrick reports.

U.S. gross domestic product is projected to shrink by an annualized rate of 30%, according to the analysis. Without the stimulus, the number would’ve been 37%. The law’s $2.2 trillion in spending and tax measures are projected to lead to an $812 billion GDP increase over the next two years. The most efficient measures in terms of their returns on investment are the funds for health-care providers and other disaster relief spending, which total $225 billion in spending and are projected to increase GDP by $174 billion over the next two years.

CDC Issues Critical Worker Protection Guidance: The Centers for Disease Control and Prevention is changing its guidance for workers in critical industries to say that the people exposed to the coronavirus should return to work if they don’t have symptoms of the illness, instead of self-quarantining for 14 days. Workers can return as long as they have no symptoms of the disease, wear a face mask, practice social distancing and monitor their body temperature for fever. There’s no standard, national definition of what constitutes essential work, leaving states and local governments to make those decisions. Read more from Mario Parker.

Airlines Squeezed By Delays in Aid: U.S. airlines’ desperate bid for $29 billion in government rescue funding is being frustrated by a lengthening process and demands that companies provide more detailed financial information, sources familiar with the situation said. Carriers that filed April 3 for the grants intended to help meet payroll costs expected the checks to begin arriving days ago, said people familiar with the aid discussions. Instead, Treasury officials have asked for another round of data that appears to be more related to a separate loan process instead of the cash grants, further delaying the relief, the people said. Read more from Mary Schlangenstein, Alan Levin and Justin Bachman.

Deaths Expose Food-Supply Chain Fears: Some of the workers who help produce America’s food are starting to die because of the coronavirus. Plants across the U.S. are starting to reduce output or idle as cases spread from the main cities to rural America. At least three people who worked at plants owned by top U.S. meat packer Tyson Foods and a local unit of Brazil’s JBS were reported to have died from the pandemic. Companies including Cargill, Sanderson Farms and Perdue Farms have also reported infections. Smithfield Foods has 80 cases at a facility in South Dakota. Read more from Isis Almeida and Lydia Mulvany.

Research, Treatment & Coordination

Trump Urged to Limit Patent Rights on Ventilators, Treatments: Medical device makers and scientists around the world are waiving their intellectual property rights to encourage companies to restore depleted stockpiles of emergency equipment and develop new tests and treatments for the Covid-19 pandemic. But it might not be enough. Some researchers and lawmakers are calling on Trump to follow the lead of Germany and Israel in restricting patent rights for work on coronavirus treatments. Read more from Susan Decker and Malathi Nayak.

Aid to States Said to Fall Short: The House Oversight and Reform Committee released a report yesterday saying the federal government failed to distribute enough personal protective gear and other medical supplies to states. The Trump administration is leaving states “to fend for themselves, to scour the open market for these scarce supplies, and to compete with each other,” Oversight Chairwoman Carolyn Maloney (D-N.Y.) said in a statement. Read more from Polly Mosendz, Margaret Newkirk and Vincent Del Giudice.

  • HHS staff told lawmakers the agency won’t be shipping any more personal protective equipment from the Strategic National Stockpile to states, according to the statement from the House Oversight Committee, Shira Stein reports. Agency staff told the committee on Tuesday that they have dispersed 90% of the stockpile’s PPE inventory. The remaining 10% would be kept for federal workers, the staff said.
  • Meanwhile, bipartisan House and Senate lawmakers pressed FEMA to increase the allotment of emergency medical supplies to the Washington, D.C. region, which the White House said is on track to become a virus hotspot in the coming days and weeks. “In their most recent request, Virginia, Maryland and the District received a very small percentage of the equipment they asked for from FEMA,” the lawmakers wrote.

U.S., China Must Show ‘Honest Leadership’ Versus Virus, WHO Says: The U.S. and China should work together to show “honest leadership” or risk transforming the pandemic into a bigger crisis, the head of the World Health Organization said in unusually stern comments on the two superpowers. At the height of the Cold War, the U.S. and the Soviet Union still came together to fight and eradicate smallpox, Director-General Tedros Adhanom Ghebreyesus said. He urged all countries, political parties and the media to stop trying to use the coronavirus issue to divide people. Read more from Thomas Mulier and Corinne Gretler.

Health Insurers Say Virus Costs Could Surpass $500 Billion: Health insurers’ costs for testing and treating Covid-19 could be as high as $556 billion in 2020 and 2021, a trade association for health insurers said yesterday. America’s Health Insurance Plans commissioned Wakely Consulting Group to study Covid-19 costs to U.S. health insurers. Wakely came up with a wide range: $56 billion to $556 billion over the next two years. Read more from Sara Hansard.

Biden Pushes Health Insurance Subsidies: Presumptive Democratic nominee and former Vice President Joe Biden yesterday said the next round of stimulus should include a full federal subsidy for the private health insurance premiums of workers who lose their jobs during the pandemic. “The government should pick up the full cost of Cobra premiums right now,” Biden said during a virtual town hall on unemployment, suggesting that the support should be part of the next coronavirus response bill that lawmakers are starting to discuss. Jennifer Epstein has more.

Pharmacists OK’d to Test for Covid-19: Pharmacists can administer Covid-19 tests, the HHS announced yesterday, expanding the workforce needed for rapid virus testing and cutting commute times to testing sites. Serology testing is included in pharmacists’ new authority, which will be crucial to quickly reopen the economy and test patients who might be eligible to donate plasma for Covid-19 treatments. Read more from Jacquie Lee.

Republican Senators Want Free Antibody Tests: Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-Tenn.) and Senate Appropriations HHS Subcommittee Chairman Roy Blunt (R-Mo.) urged Health and Human Services Secretary Alex Azar in a letter to affirm that Americans who have recovered from Covid-19 can get free antibody testing, which they say would help restart the U.S. economy sooner. Read their letter here.

Bipartisan Lawmakers Call for End to Live Animal Trade: More than 60 lawmakers, including Sens. Cory Booker (D-N.J.) and Lindsey Graham (R-S.C.) called for a “permanent global ban” of live wildlife markets and the international trade of live wildlife, which is thought to have sparked the spread of coronavirus, in a letter to the World Health Organization yesterday.

Coronavirus May ‘Reactivate’ in Cured Patients: The coronavirus may be “reactivating” in people who have been cured of the illness, according to Korea’s Centers for Disease Control and Prevention. About 51 patients classed as having been cured in South Korea have tested positive again, the CDC said in a briefing on Monday. Rather than being infected again, the virus may have been reactivated in these people, given they tested positive again shortly after being released from quarantine, said Jeong Eun-kyeong, director-general of the Korean CDC. Read more from Kyunghee Park.

Politics & Elections

Biden Looks to Unify Party: Joe Biden’s most urgent task as the presumptive Democratic nominee will be to unify a divided party for a bruising general election fight against Trump while the coronavirus consumes voters’ attention and halts traditional campaigning. The more than 16-month nominating contest, in which a historically large field of Democrats presented a range of visions for the country, ended Wednesday with Sen. Bernie Sanders (I-Vt.) quitting the race and leaving the progressive wing without a standard-bearer.

Biden, who won the primary with a pitch centered on steady leadership and pragmatism, has to persuade Sanders’s impassioned supporters to not only accept him but actively work to help beat Trump’s well-financed operation. Biden has to walk a tightrope between now and the fall to unite the party’s two wings and maintain that unity, while holding to the centrist positions that earned him the nomination in the first place. The pandemic has made that even trickier, as progressives argue it has laid bare the problems with income inequality and health care that their policies are designed to solve. Read more from Tyler Pager and Jennifer Epstein.

Harris Joins Biden for Fundraiser: Sen. Kamala Harris (D-Calif.) joined Biden for a virtual fundraiser yesterday as speculation swirled about who he will choose for his running mate. The move by Harris, who will headline her first solo virtual fundraiser with the DNC today, could signal her desire to be on the ticket with Biden, who said he’d choose a woman as his running mate, and is under pressure from some Democrats to choose a woman of color. Read more from Tyler Pager and Bill Allison.

Chamber Backs AOC’s Primary Challenger: The U.S. Chamber of Commerce, the powerful lobbying group usually allied with Republicans, is planning to back a Democratic primary challenger to progressive freshman Alexandria Ocasio-Cortez (D-N.Y.), according to the group’s senior political strategist. The strategist, Scott Reed, said the group is looking to support former CNBC anchor Michelle Caruso-Cabrera, who is challenging Ocasio-Cortez for the Democratic nomination in the New York City district. Read more from Ben Brody.

BGOV Video: Covid-19 and the Ballot Box: Voting During a Pandemic

What Else to Know Today

Meadows Rattles White House: Trump’s newest chief of staff, Mark Meadows, has escalated tensions in the White House with a swift series of staff changes that have stirred up complaints from some in the West Wing about his management style, people familiar with the matter say. Trump changed his top aide last month just as the U.S. coronavirus outbreak began to accelerate. After a slow start, Meadows kicked off his tenure by ousting a legislative liaison, then on Monday, abruptly replaced press secretary Stephanie Grisham. Other aides may depart in the near future, such as domestic policy chief Joe Grogan, people familiar with the matter said. Jennifer Jacobs, Jordan Fabian, and Josh Wingrove have more.

Bipartisan Senators Push Trump to Explain IG Firing: Eight senators, including Sens. Chuck Grassley (R-Iowa), Susan Collins (R-Maine), Gary Peters (D-Mich.) and Mitt Romney (R-Utah.), in a letter yesterday asked Trump for “a detailed written explanation” on the president’s decision last week to fire Intelligence Community Inspector General Michael Atkinson. The senators said a 2008 law on inspector generals requires the president to provide Congress with a written explanation at least 30 days prior to removing an IG to ensure “there is clear evidence of wrongdoing or failure to perform the duties of the office, and not for reasons unrelated to their performance, to help preserve IG independence,” the senators wrote. Read the letter here.

Loeffler to Liquidate Stocks: Sen. Kelly Loeffler (R-Ga.) said that she and her husband will liquidate their investment portfolio, following criticism of their sales and purchases of millions of dollars worth of stocks before the virus outbreak became widespread. Loeffler, who is running to keep her Senate seat in a Nov. 3 nonpartisan primary, announced in a Wall Street Journal article that the couple’s holdings will be converted into mutual funds and exchange-traded funds to be controlled by third-party advisers. Her husband, Jeffrey Sprecher, is the CEO of the parent company of the New York Stock Exchange. They’re worth more than $500 million. Read more from Billy House.

States Ask Court to Reconsider Abortion ‘Gag Rule’ Decision: States suing the federal government over restrictions on taxpayer-funded family planning services want an appeals court to reconsider its decision upholding the policy. The lawsuit was filed by multiple states, cities, and private organizations seeking to roll back a HHS rule that forbids family planning clinics from performing abortions or referring patients elsewhere for the procedure. Providers that want to offer abortion services must do so in facilities that are physically and financially separate from the tax-funded clinic, which they say is tantamount to being gagged. Read more from Lydia Wheeler.

Jack Fitzpatrick in Washington and Jeannie Baumann in Washington also contributed to this story.

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