What to Know in Washington: Policymakers Weigh Next Stimulus

The White House and congressional Democrats are preparing for a fourth round of economic stimulus to get the U.S. through its coronavirus outbreak, even while they’re still arguing over the $2 trillion measure President Donald Trump signed Friday.

White House officials have compiled lists of requests from government agencies totaling roughly $600 billion, according to people familiar with the matter. The proposals include more state aid as well as financial assistance for mortgage markets and the travel industries.

Speaker Nancy Pelosi (D-Calif.) told reporters yesterday that Democrats are “collecting information, taking inventory” on what might be needed in another round of stimulus. She also indicated states and local governments need more federal assistance, and said there could be further direct payments to everyday Americans.

And in an interview with the New York Times published yesterday, she indicated that another possible move was getting rid of the limit on state and local tax deductions, or SALT, that was part of the 2017 tax overhaul and affects California and New York.

But a spokesman for Sen. Chuck Grassley (R-Iowa), chairman of the Senate Finance Committee, dismissed the idea as “a nonstarter.”

“Millionaires don’t need a new tax break as the federal government spends trillions of dollars to fight a pandemic.” said the spokesman, Michael Zona.

The U.S. outbreak isn’t expected to peak for another two weeks, according to projections by the Institute for Health Metrics and Evaluation at the University of Washington, and the president has urged Americans to continue until May “social distancing” practices that have devastated the economy. Read more from Saleha Mohsin.

Industries Take Second Shot at Stimulus: Industries that missed out on the largest stimulus bill in U.S. history are already lobbying to ensure they get a piece of the next one. Restaurant owners are asking Congress for a new insurance program to cover pandemic-related losses. Hotel operators are pleading for larger loans. Renewable power developers want money to keep solar installers on the job. And the U.S. Chamber of Commerce is pitching its initiative to rebuild roads and bridges. Jennifer A. Dlouhy, Ari Natter and Naomi Nix look at some of the industries that will be in line when the legislation comes together.

What to Watch Today: Trump plans to hold a call today with network service providers, according to the White House daily schedule. The Coronavirus Task Force will hold a briefing at the White House at 5 p.m.

The House holds a pro forma session at 3 p.m.

Economy & Industry

U.S. Asks Airlines to Propose Financial Stake in Aid Bid: Airlines will be required to propose up-front how the federal government could retain financial stakes in their companies in exchange for a share of $61 billion in coronavirus aid designated for the industry, according to guidelines released by the Treasury Department. The assistance is aimed at helping U.S. carriers stay afloat and continue to pay workers, as companies struggle with a near 90% drop in passenger traffic because of the widening pandemic.

About $12 billion of a $50 billion government aid package for passenger airlines is allocated to American, CEO Doug Parker said in a message to employees yesterday. While officials are still finalizing the rules for the aid, accepting the help means agreeing to no job cuts or pay reductions through September, but the company plans to sweeten a voluntary leave offer for employees as it slashes flying because of the coronavirus pandemic. Read more from Mary Schlangenstein.
The global airline industry is operating with less than half the capacity it had in mid-January after slashing another 20 million seats from scheduled services last week, according to OAG Aviation Worldwide. The single biggest weekly percentage drop ever recorded by OAG on a global level came as the U.S. and India accelerated their cuts by 4.4 million seats and 3.5 million seats, respectively, equating to 21% and 70% reductions in capacity. Carriers worldwide are grounding jets as demand slumps because of the coronavirus. Read more from Harry Suhartono.

Retailers Furlough 500,000 Despite Stimulus: Kohl’s, Macy’s and Gap joined the growing number of retailers yesterday to halt pay for much of their workforce, while preserving some benefits. With these furloughs, that brings the total number of employees who are out a paycheck at major U.S. chains to more than 500,000, according to data compiled by Bloomberg.

The stimulus offers tax breaks to companies that keep paying workers who can no longer do their jobs because of the economic shutdown caused by the coronavirus pandemic. While these firms opted not to do that, many are continuing to provide health coverage and under the law may be able to deduct that cost. The package also boosted unemployment benefits $600 per week, which should be available to these workers. Read more from Kim Bhasin.

Mnuchin Pressed on Payment Timing: Rep. Josh Harder (D-Calif.) is asking Treasury Secretary Steven Mnuchin to provide details about how quickly individuals will receive direct payments passed into law last week. Harder also asked Mnuchin to provide details about how the Internal Revenue Service plans to communicate with Americans on the money distributions. “Typical bureaucratic speed will not work in this crisis,” Harder wrote in a letter to Mnuchin. Read more from Laura Davison.

Municipal Debt Purchases: Sen. Bob Menendez (D-N.J.) is pushing to have his legislation that would allow the Fed to buy municipal debt included in a potential fourth coronavirus rescue package, according to a congressional aide. Menendez, who sits on the Senate Banking Committee, introduced a bill earlier this month that would amend the Federal Reserve Act to permit the U.S. central bank to purchase municipal bonds under “unusual and exigent circumstances,” Daniel Flatley reports.

Prevention, Testing & Treatment

Trump Says Travel Ban May Be Extended: Trump said the U.S. might expand the travel ban affecting Europe and China as well as several other countries to include additional nations as the U.S. extends its effort to prevent the spread of coronavirus. “They’ll be staying and we may add a few more,” Trump said at a White House press conference yesterday. “But the guidelines will be very much as they are, maybe even toughened up a little bit. But they’re having a big impact, they’re having a tremendous impact.”

The White House has already moved to block entry of non-U.S. citizens traveling from China, Iran, the U.K., Ireland, and 26 European countries in the Schengen Area that allow unrestricted movement among them. Read more from Justin Sink.

Trump also said he considered a national stay-at-home order to combat the coronavirus, but that it’s “pretty unlikely.”

“We’ve talked about it,” he said at the news conference. Some parts of the country “are frankly not in trouble at all,” the president said. “If we do that, I will let you know, but it’s pretty unlikely, I would think, at this time,” Trump said, Sink and Josh Wingrove report.

Ford Aims to Start Making Ventilators With GE in Three Weeks: Ford is speeding up plans to produce ventilators in cooperation with General Electric by selecting a simpler design of the medical devices and will aim to churn out 50,000 units in the next 100 days. The automaker will convert an auto-parts plant in Michigan to make breathing machines designed by Airon Corp. and licensed by GE Healthcare starting the week of April 20, according to a statement. The new configuration they’ve chosen will allow the companies to start production before another type of ventilator they announced last week, which won’t be ready until June. Read more from Keith Naughton and Richard Clough.

Hospital, Telehealth Rules Relaxed by CMS: Hospitals will be able to care for Covid-19 patients in same-day surgery centers, hotels, dorms, and other locations, under changes announced yesterday by CMS. The agency said it is temporarily waiving regulations to give hospitals “maximum flexibility” to respond to the coronavirus pandemic. Hospitals will also be able to increase their staffing capacity under the waivers, which may be key if physicians begin falling ill, and will be able to use telehealth for additional services, Shira Stein and Alexis Kramer report.

Global Update: Spain had its deadliest day yet, while Italy is discussing an extension of lockdown measures into May. New York City, which is emerging as the new epicenter of the pandemic, reported a 16% increase in deaths in six hours. Bloomberg News follows the latest here.

Politics in the Pandemic

Courting Voters During Pandemic: Forced to abandon traditional campaigning events like rallies and fundraisers, political candidates are vying to remain in the public eye by hosting informational and charity events related to Covid-19. They have kept voters informed with live-streamed town halls on the illness, bringing in health experts to speak and answer questions. Many also posted information on their social media pages and campaign websites, sharing how Americans can stay safe and help out, and spotlighting local restaurants that offer takeout food and charities seeking donations.

Both incumbents and newcomers vying for office in November have also turned their campaigns into service operations. Kate Schroder, a Democratic candidate for Ohio’s 1st District, set a goal for her team to sew 1,000 masks for health-care providers in Cincinnati, while Rep. Denver Riggleman (R-Va.) is making hand sanitizer from his personal whiskey distillery. In Georgia’s 7th District, GOP candidate Lynne Homrich committed to hiring 20 workers for her campaign that were laid off by small businesses. Read more from Emily Wilkins.

Wall Street Donors Forgo Political Contributions: Big donors to U.S. presidential campaigns are feeling the economic pinch from the coronavirus pandemic and holding on to their money just when the candidates — especially Democratic front-runner Joe Biden — need it most. With stocks falling, businesses shrinking and unemployment soaring, donors of all sizes are feeling the effects. Billionaires counted on to fuel super PAC spending have seen their net worth plummet by anywhere from 10% to as much as 75%.

The crunch comes at a particularly bad time for Biden, who was looking to capitalize on his wins in the March primaries as a selling point to donors. Since entering the race almost a year ago, the former vice president has lagged in fundraising, trailing his top Democratic rivals as well as Trump. Read more from Bill Allison, Misyrlena Egkolfopoulou and Tom Maloney.

Two Big Pro-Biden Super PACs Join Forces: Two of the largest Super PAC’s supporting Biden’s candidacy announced yesterday they would coordinate on a general election partnership with the goal of raising $175 million to support Biden in defeating Trump. Unite the Country, a political action committee that was formed to support Biden’s bid in the primaries, and American Bridge, a nearly decade-old organization, said they would coordinate on polling, research, content creation and communications. Read more from Tyler Pager.

What Else to Know

Pandemic Puts Abortion in Crosshairs: The coronavirus is adding new ammunition to America’s abortion wars. A move by Republican-controlled Ohio this month to suspend abortions as a nonessential service during the Covid-19 pandemic set off a wave of similar measures in other conservative states. That prompted a flurry of lawsuits by abortion rights advocates and a call to arms by elected officials in liberal states. Now, attorneys general across the U.S. are sparring over whether the worldwide public health crisis justifies temporarily shutting abortion clinics in the same vein that elective surgeries and minor medical procedures have been put on hold to conserve medical resources. Read more from Patricia Hurtado, Cynthia Koons and Edvard Pettersson.

Trump Communications Aide Leaving: Jessica Ditto, an original Trump White House adviser, is leaving her job as deputy communications director to join the private sector. She’s expected to leave the White House in two weeks. Ditto has played a key role in major battles fought by the White House, including passage of USMCA and the 2018 midterms, as well as planning for Trump’s State of the Union speeches. Most recently, she led a team of a dozen communications aides—including the booking, cabinet and media affairs departments—and served as an adviser to Trump’s daughter and senior adviser Ivanka Trump. Read more from Jennifer Jacobs and Jordan Fabian.

Trump Eyeing to Fill Fifth Circuit: Mississippi state appeals court judge Cory Wilson is the president’s intended pick to fill a vacant seat on the New Orleans-based federal appeals court after Republican opposition derailed the previous nominee, the White House announced. A vacancy on the U.S. Court of Appeals for the Fifth Circuit is one of the last remaining vacancies left for Trump to fill at the appeals court level. Read more from Madison Alder.

U.S. Base Workers Set for Furlough: The U.S. military is set to put almost half of its 8,500 South Korean civilian staff on furlough, as the two countries bicker over the Trump administration’s demands for a massive increase in troop payments. About 4,000 workers have been told not to report to American military bases in South Korea as of tomorrow, if the two nations can’t find some way to extend a cost-sharing deal that expired on Dec. 31. A breakthrough seems unlikely, with Trump asking for up to a five-fold increase and South Korea showing little sign of paying anywhere close to that figure. John Herskovitz and Jihye Lee have more.

FDA Asks to Delay E-Cigarette Deadline: The FDA asked a federal judge to grant a 120-day delay for a deadline for e-cigarette manufacturers to submit applications to keep their products on the market. Citing “the exceptional circumstances presented by the global coronavirus outbreak,” the agency proposed moving the deadline to Sept. 9, from May 12. The existing deadline was the product of a legal agreement in federal court, after regulators, public-health groups and vaping companies fought over the timing for years. Read more from Angelica LaVito.

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