Senate Republicans have finally unveiled their opening bid in negotiations for the next coronavirus stimulus package, setting up a serious clash with Democrats in the coming days over funding for unemployment insurance and state governments.
The GOP bill arrives as Congress faces a pressing deadline: Enhanced unemployment insurance (UI) is set to expire this week, with millions receiving their final federal unemployment payments allotted by the Cares Act this past weekend. A federal eviction moratorium has also elapsed, and state and local governments increasingly feeling the strain of both dwindling tax revenues and rising coronavirus costs are looking to Congress for help.
Republicans have long chafed at spending more money on stimulus, and this reluctance is apparent in the new bill. Currently, UI recipients are receiving an extra $600 per week on top of their standard benefits, an amount Republicans would like to cut to $200 through September. Additionally, GOP lawmakers have prioritized the inclusion of liability protections for businesses, which would shield them from coronavirus-related lawsuits, while appearing to shy away from more funds for state and local governments.
Republicans introduced their stimulus bill, dubbed the Heals Act, 10 weeks after House Democrats passed their version, the Heroes Act, in the lower chamber. While the two proposals have some overlap — including support for another round of $1,200 stimulus checks — lawmakers have many other differences they still need to work out.
Speaker Nancy Pelosi acknowledged as much in a statement Monday, while criticizing Republicans for dragging their feet on their proposal amid an economic crisis. Republicans have argued that they waited on approving more aid, in part, because they were interested in seeing whether the economy could rebound on its own as states reopened.
“We have stood ready to negotiate for more than two months,” Pelosi said. “I call upon the Republican leadership of the House and Senate and representatives of the President to come to the Speaker’s Office and join Leader Schumer and me within a half an hour of releasing their plan today to negotiate and get the job done.”
Both parties will have to buy into a final stimulus plan to get any bill through the two chambers of Congress; Republicans have already indicated that several members of the Senate GOP conference won’t support the stimulus, potentially giving Democrats more leverage on a final proposal.
What’s in the Republicans’ bill
The Heals Act is notably narrower than the Heroes Act: It’s set to allocate roughly $1 trillion in new stimulus compared to the more than $3 trillion the Democrats’ proposal did. In addition to a difference in scope, it also focuses on its own set of priorities.
The two bills share some provisions — including funding for stimulus checks and additional money for coronavirus testing and schools — but the GOP legislation puts a much greater emphasis on legal protections for businesses.
Here are some of the tenets the GOP bill includes and how the bill differs from Democrats’ vision:
- A second stimulus check: Lawmakers on both sides of the aisle have announced support for another wave of direct payments to Americans, a provision that looks very similar to what was included in the Cares Act.
Through the Cares Act, which was signed into law in March, most adults who made less than an adjusted gross income (AGI) of $75,000 annually were eligible to receive a $1,200 check, along with an additional $500 payment per qualifying child. Payments were cut off for individuals who had an AGI of more than $99,000.
In the Heroes Act, Democrats proposed that individuals receive up to $1,200 per dependent, capped at three dependents. Republicans don’t support the larger dependent payments, though they do back the application of the $500 payments to adult dependents as well as children.
- Funding for coronavirus vaccine development, testing, contact tracing, and treatment: There’s bipartisan interest in additional funding for coronavirus testing and treatment, though Republicans are proposing less than Democrats have: $16 billion in their bill versus the $75 billion that was allocated in the Heroes Act. Republicans would also allocate $26 billion to vaccine development.
Reducing coronavirus cases is of the utmost importance not just for saving lives but also for a successful economic recovery as many businesses and industries have had to reduce operations (and lay off workers) as part of their efforts to limit the spread of the virus.
Increasing federally administered funds for testing, tracing, and treatment could go a long way toward getting case counts under control, MIT finance professor Jonathan Parker said: “The haphazard national response to the virus means that even when places that have seen major outbreaks contain them, other places in the country are not containing the virus and will have outbreaks that then spill over and reinfect other places all over again.”
- Funding for schools: Both Republicans and Democrats have placed a major emphasis on providing schools with the funding they need to reopen safely, though each party has proposed different amounts.
Republicans are interested in allocating $105 billion for schools and higher education institutions while Senate Democrats have introduced a $430 billion package that would provide funds for day cares, schools, and higher education institutions. Previously, House Democrats had included $100 billion in the Heroes Act, a detail Republicans have pointed to as evidence of potential common ground.
- More money for small businesses: Republicans and Democrats are both interested in more support for small businesses, many of which have already seen the funds they previously obtained via the Paycheck Protection Program (PPP) run out.
Republicans say they’d like to do another wave of PPP that better targets the businesses that are struggling the most to stay afloat. These additional funds would enable smaller businesses — those with 300 or fewer employees that have experienced major financial difficulties — to procure a PPP loan even if they’ve already received one.
Democrats, too, have argued for targeted funding that reaches underrepresented business owners, particularly people of color and women.
- A “fix” for unemployment insurance: The UI expansion in the Cares Act added another $600 in federal funds to the weekly unemployment payments that recipients get from states. Republicans have long been interested in either eliminating or reducing the extra money because they see it as deterring people from returning to work.
Their critique overlooks the current reality of the pandemic: Right now, the UI is helping people stay home in order to protect themselves and others from the coronavirus. Additionally, the Republicans’ view doesn’t acknowledge the fact that many jobs that have been lost aren’t coming back in the near term.
“‘We are just furloughing people until we can reopen.’ That was what a lot of those early [layoffs] looked like,” said Heidi Shierholz, senior economist and policy director at the Economic Policy Institute, who noted that many of these temporary job losses have now become permanent.
In the new bill, Republicans are pushing for a reduction in the expanded UI amount from $600 to $200 through September. Starting in October, their bill would change the sum of workers’ boosted and existing benefits to match 70 percent of their preexisting wages (up to a specific limit), a calculation that’s expected to prove challenging for states to do.
Experts warn that any alterations in expanded UI will be tough for states already overwhelmed by the surge in UI applications to execute.
“There will be states that can’t adjust in time and are unable to make pandemic unemployment payments for a couple of weeks while they reprogram their systems,” UC Berkeley economics professor Jesse Rothstein tells Vox.
- Liability protections for businesses: Republicans have repeatedly said that one of their chief goals is ensuring that businesses and other entities are protected from coronavirus-related lawsuits that emerge from customers and employees.
“One helpful policy would be strong legal protection for schools, colleges, nonprofits, and employers who are putting their necks on the line to reopen,” McConnell said in a June floor speech. “So long as institutions follow the best available guidelines, they should not have to live in fear of a second epidemic of frivolous lawsuits.”
Liability protections would shield schools, companies and health care providers from lawsuits related to coronavirus exposure and treatment between December 2019 and October 2024.
Lawmakers now have a narrow timeframe for negotiations
In addition to a pending deadline on unemployment insurance on July 31, Congress is planning to leave for recess on August 7, giving lawmakers a tight time window in which to approve the new stimulus package.
Due to current party dynamics in Congress, Democrats could have more sway on what a final bill looks like.
At the moment, many Republicans are opposed to the idea of any more spending for stimulus. Many worry about the government having to take on more debt — even though current interest rates make borrowing less burdensome for the US government. “Half the Republicans are going to vote ‘no’ to any more aid,” Sen. Lindsey Graham (R-SC) said during a Fox News appearance this weekend. “That’s just a fact.”
Even if all 53 Senate Republicans were to stick together, they’d need at least seven Democrats to back a stimulus bill to get it through the chamber. With some Republicans likely to defect, the GOP — though in the majority — would need even more Democrats to support the Senate version of any final legislation. Additionally, no bill will be able to make it through the Democrat-controlled House of Representatives without the votes of most Democrats in that chamber.
As a result, expect heavy Democratic pushback on this Republican proposal, including its attempts to curb expanded UI as well as its treatment of state aid.
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