Congress is under the gun to pass yet another massive round of coronavirus relief, as small-business funds dry up, state budgets are ravaged and unemployment claims soar to record highs.
Speaker Nancy Pelosi (D-Calif.) and House Democrats are planning to unveil an enormous CARES 2 package in the coming days, with a possible floor vote as early as next week — a blistering pace for a proposal expected to rival the size of the initial CARES Act, which topped $2.2 trillion and was signed into law March 27.
House passage would set up another heated clash with Republicans in the Senate, where Majority Leader Mitch McConnell (R-Ky.) is calling for a “pause” in emergency aid, to allow the trillions of dollars already allocated to get out the door.
The brewing partisan battle promises to be the fiercest yet, following four earlier rounds of emergency relief, and will come as the federal government’s response to the coronavirus crisis grows increasingly polarized on Capitol Hill and around the country.
Highlighting the divide, the White House on Tuesday announced it will start phasing out its coronavirus task force — the public face of the crisis response for more than two months — even as the number of cases and deaths continue to rise. The move could act to diminish the urgency surrounding a disease that’s killed more than 70,000 in the U.S.
The burden facing Democrats is to convince the public otherwise. And with that in mind, Pelosi has said the focus of CARES 2 will be a new infusion of emergency cash to states, cities, counties and towns that have seen their tax-revenue spigots turned off by the coronavirus-driven economic shutdown.
Democrats are hoping the pleas from embattled state officials in both parties will exert pressure on reluctant Senate Republicans to act swiftly on additional aid.
“The hallmark of this, of course, will be the request of governors,” House Majority Leader Steny Hoyer (D-Md.) told reporters Tuesday in the Capitol. “We don’t want to see police and fire and hospital workers laid off, we think that makes no sense.”
The issue driving the greatest urgency might be the Paycheck Protection Program (PPP), an initiative designed to rescue hard-hit small businesses with easy-access loans to cover payroll, rent and other expenses through the crisis.
The Small Business Administration, which is overseeing the program, has already burned through more than half of the $310 billion it was allotted in the most recent phase of emergency aid, enacted less than two weeks ago. That was after $349 billion from the CARES Act was claimed in less than two weeks.
Analysts expect the remaining funds will be fully exhausted as early as this week.
Pelosi, on a conference call Tuesday with the Small Business Roundtable, heard a laundry list of problems dogging the program, not least the difficulty facing the smallest firms — many of them owned by women and minorities — in accessing loans.
Pelosi vowed that Democrats will not only provide more funding for PPP in CARES 2, but will also alter the program both to extend the pay-back period and to ensure the funds go to the most vulnerable small businesses. She suggested some funding would be earmarked for businesses with 25 employees or fewer, down from the current 500-employee threshold.
“We will prolong the period, we’re going to reduce the number of employees,” Pelosi said. “We cannot allow the hundreds of billions that are being spent by the federal government … to harden the disparity of access to capital, but instead to loosen it.”
“This has not been a partisan issue at all,” she added.
The aid to states may be a tougher sell across the aisle. Many Republicans have been wary that the help for local governments would simply bail out poor state budget decisions that predate the pandemic. McConnell indicated Tuesday that he’s in no rush for the next phase.
“I think I can speak for our conference by saying we’re not ruling that out, but we think we ought to take a pause here, do a good job of evaluating what we’ve already done,” McConnell said.
Congress provided $150 billion to state and local governments in the CARES Act, but cities and counties with fewer than 500,000 people were left out, and Republicans rejected additional funding in an interim bill last month.
That’s led Democrats to seek as much as $1 trillion more, by Pelosi’s estimate, in CARES 2.
Democrats and a handful of Republicans have argued the economic collapse has put the jobs of the very people on the front lines of the pandemic — police officers, firefighters and other first responders — on the chopping block as governments look to balance their budgets.
“We serve as ground zero for this pandemic,” Guy Cormier, executive director of the Police Jury Association of Louisiana, said on a Zoom meeting with lawmakers. “Counties and parishes nationwide are involved in every aspect of COVID-19,” from the 911 call dispatchers to social workers helping home-bound seniors to the county coroner.
Freshman Rep. Joseph Neguse (D-Colo.) said two counties in his district northwest of Denver have been devastated by the coronavirus. Eagle County, home to Vail and other top ski resorts, has seen one of the highest COVID-19 infection rates in the nation; Gilpin County could suffer the worst economic hit in the country because of its reliance on the gaming, hospitality and leisure industries, according to Moody’s Analytics.
“Behind these statistics are real people, real communities, critical public services like police and firefighters and others, EMT first responders,” said Neguse, a member of Pelosi’s leadership team that’s authored a bill to provide $250 billion to local governments. “It is crucial that the Congress step up to the plate as we work through negotiations on a potential fifth stimulus package, that local governments not be left behind.”
In addition to acknowledging the need for more small businesses funding, Democrats are pressing for an expansion of unemployment benefits, more funding for coronavirus testing and another round of stimulus checks. Those provisions could drive the price tag of CARES 2 to roughly $2 trillion, a senior Democratic aide said.
When exactly Congress could sends the relief package to President Trump is unclear. McConnell, House Minority Leader Kevin McCarthy (Calif.) and other GOP leaders are pumping the brakes on CARES 2, saying lawmakers should monitor the impact of the $3 trillion in coronavirus relief that’s already been approved.
“There will be another one. … I just don’t think we need to act quite as urgently as we did last time,” Sen. John Cornyn (R-Texas) told reporters in the Capitol. “It doesn’t mean we don’t need to act; it just means we have time to think.”
Other Republicans, however, are growing anxious as the calls from state and local officials back home grow louder. A letter led by Reps. Lee Zeldin (R-N.Y.) and Tom Suozzi (D-N.Y.) — signed by the entire 25-member New York delegation — took a veiled shot at McConnell’s recent remarks that cash-strapped states should declare bankruptcy.
“Bankruptcy is not the answer,” the New York delegation wrote to congressional leaders.
And GOP Reps. Rodney Davis (Ill.) and Anthony Gonzalez (Ohio) both joined Democrats on the Zoom video conference this week, urging Congress to quickly send aid to cities and counties.
“We’ve done a good job providing liquidity to small businesses, to Main Street America, and individual families through stimulus checks,” Gonzalez said. “What has been a serious gap since day one is the funding for local governments.”
“Look, we’re well-run, we’re a fiscally sound part of the country,” he said. “But the reality is our tax bases have been devastated by this crisis.”