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Coronavirus May 13 Update: Democrats’ $3 Trillion Relief Bill Unveiled, Partisan Fight Brewing Over Aid for State and Local Governments, and Relief Aid Watchdog Advances to Senate Floor Vote

Wednesday, May 13, 2020

House Democrats’ $3 trillion relief bill unveiled 

House Democrats upped the ante on coronavirus relief, unveiling a more than $3 trillion package Tuesday that would be the biggest federal response so far to the health and economic emergency. 

The sweeping legislation would provide another round of cash payments to most families, more loans to businesses, housing assistance, medical research funding, an extension of expanded unemployment insurance benefits, tax breaks and more. Aid to cash-strapped states and local governments alone would amount to about $1 trillion. 

The bill (HR 6800), set for a floor vote Friday, is likely to serve as the opening bid from Democrats in what could be protracted negotiations on a compromise measure. Republicans have sought to pump the brakes on additional aid, while expressing concern over rising red ink. 

But Democrats said they felt compelled to push forward with a new aid package as quickly as possible. "There are millions and millions and millions in America that see the urgency of the crisis that confronts them and are expecting us to act to continue to help them," House Majority Leader Steny H. Hoyer, D-Md., told reporters Tuesday. 

With a price tag exceeding $3 trillion, the package would easily dwarf the roughly $2 trillion measure signed into law (PL 116-136) in March. You can view more details on the package here

But the bill is likely getting nowhere in the Republican-controlled Senate, at least for the time being. Senate Majority Leader Mitch McConnell attacked the bill as a nonstarter even before it was introduced. 

"This is exactly the wrong approach," the Kentucky Republican said on the floor Tuesday. "The American people don't need a far-left transformation. " 

The House appeared poised to pass the measure on a mostly party-line vote, since top GOP leaders lined up to denigrate the Democrats' handiwork. House Minority Leader Kevin McCarthy, R-Calif., said the bill amounted to a "liberal wish list" that included items unrelated to the pandemic, such as employer pension rescues and a lifting of the limit on deductions for state and local taxes. 

And Democrats may need to shore up support for the bill from within their own party. Congressional Progressive Caucus co-chairs Pramila Jayapal, D-Wash., and Mark Pocan, D-Wis., declined to endorse the measure Tuesday. Instead, they sought to delay the vote and hold a full Democratic caucus meeting to discuss "any amendments that might be needed to ensure that it truly reflects the priorities and the work of the entire caucus." 

But House leaders decided late Tuesday night to proceed with the vote on Friday. "All of us have heard from families in our districts, who cannot afford to wait for this relief," House committee leaders said in a letter to colleagues. And Speaker Nancy Pelosi, D-Calif., told CNN the cost of the package would be "endless" if all of her party's various demands were included in the bill. 

The bottom line: Democrats have set the stage for contentious negotiations on the next round of coronavirus relief. 

New bill includes an array of tax breaks 

House Democrats included an array of tax cuts for households and businesses as well as long-sought pension relief for union retirees and others. 

The centerpiece of the proposals is another round of direct payments to individuals and families worth up to $1,200 per person, an amount that phases out for single filers earning more than $75,000 in adjusted gross income and joint filers earning above $150,000. 

But in one generous tweak for families, dependent children would now qualify for the full credit amount, up from $500 in the March round. The catch is each household's tax payments would be capped at $6,000, so only the first three children would qualify; but that's still more than a nine-person household would receive under the March aid package. 

The measure would also nearly triple the maximum earned income tax credit benefit for childless adults in 2020 from $538 to $1,487, according to House Democrats' summary of the bill. The EITC provision would primarily benefit lower-income workers. 

Democrats would also take care of their upper middle-income to wealthier constituents through a two-year elimination of the 2017 GOP tax law's $10,000 cap on state and local tax deductions. 

And the employee retention tax credit would go from having a maximum benefit of $5,000 per employee retained under the March law to as much as $36,000 per employee. Doug Sword has all the details on tax provisions here

Trillion-dollar fight forming over aid for state and local governments 

Get ready for a partisan clash over aid to state and local governments. 

House Democrats would provide almost $1 trillion in pandemic-related relief for states, cities and counties, at least a six-fold increase over what Congress spread around in a previous aid package. 

But some Republican lawmakers have resisted the move, saying they didn't want to bail out "blue" states like Illinois and California from pension shortfalls or other fiscal problems that predate the pandemic. 

The proposed assistance includes $500 billion for states, $375 billion split equally between municipalities and counties, $20 billion for territories and $20 billion for tribes, which adds up to $915 billion. Democrats also tacked on $755 million for the District of Columbia, which backers say got shortchanged in the March aid package. 

In a key difference from the March relief law (PL116-136), funds could be used to replace state and local revenue that has plunged since the pandemic hit, in addition to the costs of fighting the pandemic. The previous package provided $150 billion for states and local government. That money can be used for health care, first responder and other pandemic-related costs but not to replace lost revenue. 

Since then, a growing number of GOP senators have come out in favor of providing more flexibility for the funds that have already been allocated. Sen. John Kennedy, R-La., who offered a bill (S 3608) to do just that, said Tuesday he and several other Republican senators met with President Donald Trump to discuss the idea. 

But Republican conservatives remain philosophically opposed to more aid to states and localities. They say it will mask poor state fiscal policy decisions in past years, prior to the pandemic. 

"Another trillion-dollar boondoggle will only dig us deeper into this economic crisis and further erode our chances of a quick economic recovery," said Brent Gardner, chief government affairs officer at Americans for Prosperity, a conservative advocacy group backed by billionaire brothers David and Charles Koch. Paul M. Krawzak has the full story here

Relief aid watchdog to advance to Senate vote on Tuesday 

Trump's controversial pick to oversee $500 billion in coronavirus response spending advanced to the Senate floor Tuesday. 

The Senate Banking Committee voted 14-11 to advance Brian Miller, a member of the White House counsel's office, to be the special inspector general for pandemic recovery. Democrats and some government watchdogs have openly doubted whether Miller would be willing to embarrass Trump, his most recent legal client. 

"As an IG nominee with personal ties to the White House Counsel's Office and an administration outwardly hostile to anyone who tries to hold the president accountable, Mr. Miller failed in committee to explain, or in the letters afterwards, how he will establish his independence from his current boss," said Sen. Sherrod Brown of Ohio, the committee's ranking Democrat. 

Congress established the position to oversee the Treasury Department's handling of the bailout funds included in March's massive coronavirus response bill (PL 116-136). Treasury got $454 billion to back trillions of dollars in lending through Federal Reserve credit facilities for financial markets, large corporations and mid-sized companies, as well as state and local government bonds. The Treasury also oversees $29 billion in airline industry bailouts and another $17 billion for companies considered "critical to maintaining national security." 

Miller's fast-tracked committee vote came just a week after the panel held his nomination hearing and a floor vote could come in a similarly speedy fashion. 

Miller spent nine years as inspector general at the General Services Administration during the Clinton and Bush administrations. He most famously exposed an extravagant GSA conference in Las Vegas and was part of a long feud with GSA Administrator Lurita Doan over his oversight efforts that eventually led President George W. Bush to fire her. Jim Saksa has the full story here.