Negotiators resolve last-minute issues as COVID-relief bill moves toward finish line

Senate Republican and Democratic leaders said Sunday afternoon that they had resolved some of the last outstanding issues holding up a coronavirus relief deal and a year-end omnibus spending package, including a fight over deducting small-business loans and providing scholarship money for private schools.

“At long last, we have the bipartisan breakthrough that the country has needed. Now we need to probably finalize text and avoid any last-minute obstacles and cooperate to move this legislation through both chambers,” Senate Majority Leader Mitch McConnell (R-Ky.) said on the Senate floor.

McConnell noted that the legislation would provide another round of $600 stimulus checks, money to distribute the coronavirus vaccine, and “billions and billions of dollars to help kids [get] back in school and do so safely.”

He said the legislation will repurpose more than $560 billion in money set aside by the CARES Act in March but not spent.

Senate Minority Leader Charles Schumer (D-N.Y.) confirmed Sunday shortly before 6 p.m. that the deal had been finalized and that the agreement would have enough votes to pass both chambers.

“The agreement on this package can be summed up by the expression ‘better late than never,’” he said. “After a long and arduous year, after a year full of bad news, finally we have some good news to deliver to the American people.”

“It will deliver emergency relief to a nation in the throes of a genuine emergency. It should have the votes to pass the Senate and the House and reach the president’s desk to become law,” he said.

Government funding runs out at midnight, and House Majority Leader Steny Hoyer (D-Md.) told Democratic colleagues on a conference call that the House will pass a one-day funding stopgap.

Hoyer said the House will only vote on the short-term extension of government funding Sunday.

Democratic leaders had expressed hope earlier in the day for passing the combined coronavirus relief deal and a $1.4 trillion omnibus spending package Sunday evening.

But with rank-and-file lawmakers still waiting for text of the deal late Sunday afternoon, leaders decided to delay the vote.

Senate Majority Whip John Thune (R-S.D.) said negotiators reached agreement on a dispute over allowing federal education relief money to be used for scholarships to private schools.

Thune said businesses that have received Paycheck Protection Program (PPP) small-business loans will be able to deduct them as negotiators anticipated when Congress drafted the CARES Act in March.

He clarified that deductibility of PPP small-business loans will be allowed.

Democrats won some key victories in the deal, which Speaker Nancy Pelosi (D-Calif.) and Schumer touted Sunday.

The package includes legislation to end surprise medical billing for emergency and scheduled care, $25 billion in critically needed rental assistance for families facing eviction, a strengthened earned income tax credit and a child tax credit for families facing unemployment or reduced wages.

It also provides a $13 billion increase to the Supplemental Nutrition Assistance Program and an expansion of Pell Grants for students who need help paying for college.

Key lawmakers on both sides of the aisle, such as Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.), have said that it was their intention in the CARES Act for the expenses to be tax deductible. 

But the Treasury Department issued guidance earlier this year saying that the expenses are not deductible because PPP loan forgiveness is not considered taxable income. Treasury Secretary Steven Mnuchin had defended the department’s position, saying that allowing deductibility would amount to double dipping. Some progressive groups also opposed making the expenses deductible, saying that doing so would largely help wealthy individuals.

Thune said that the “deductibility issue will be allowed as was, I think, understood to be the law when we passed the PPP program in the first place.” 

Thune said that lawmakers are sympathetic to Mnuchin’s argument about tax policy but that “most people when they got those PPP loans had an expectation that they were going to be able to continue to deduct their businesses expenses and have operated accordingly.”

“I think there’s broad support on both sides for including that,” he added.

Mike Lillis contributed.