Democrats are eyeing another ambitious stimulus bill with more direct payments and state funding. They still need to negotiate with Republicans.
House Democrats have released a more than $3 trillion opening bid for the next coronavirus stimulus package, a bill designed to bolster state governments, increase widespread testing, extend unemployment insurance, and expand vote-by-mail ahead of the November election.
The latest tranche of funding that House Democrats want, which they’re calling the HEROES Act, is targeted at states and municipalities whose budgets are depleted due to their coronavirus response. Many states have been hit hard with sudden spending needed to curb the virus, followed by a drain on sources of revenue from lost sales and income taxes.
The House is scheduled to return to Washington DC and vote on the bill on Friday, House Majority Leader Steny Hoyer said Tuesday.
House Speaker Nancy Pelosi hasn’t minced words that she thinks the US needs far more coronavirus testing and contact tracing capacity than it currently has, and the bill more funding for that. Democrats have also put in money for more direct payments to Americans, and funding to extend expanded unemployment insurance through January 2021. Expanded unemployment benefits are currently scheduled to run out at the end of July.
Pelosi has been fielding ideas from her Democratic caucus for the last few weeks. In a recent letter to her caucus, Pelosi specifically cited Federal Reserve Chairman Jerome Powell’s mantra to “think big” — a not-so-subtle message to obstinate Republicans that they shouldn’t be concerned with the national debt in a time of extraordinary financial crises and low interest rates.
But while this bill is Democrats’ opening salvo, it’s nowhere near a final, bipartisan product negotiated with Republicans. Some congressional Republicans have said they don’t want to spend more money and add to the national deficit without making spending cuts elsewhere.
In a letter to Democratic members of Congress over the weekend, Pelosi echoed the “think big” message for the next bill. In other words, get a big list of Democratic priorities passed in the House first; negotiate later.
“We have to start someplace, and rather than starting in a way that does not meet the needs of the American people, we want to set a standard,” Pelosi said May 7 at her weekly press briefing. “And, again, we need a presidential signature, so at some point we’ll have to come to agreement.”
Congress has already passed close to $3 trillion in the last couple of months as part of its coronavirus relief efforts. This latest House package will weigh in at over $3 trillion, a Democratic aide told Vox.
While far from a final bipartisan bill negotiated with the Senate, it’s a recognition that there’s no immediate end in sight for Covid-19, or the havoc it’s wreaking on the American economy. Here’s what we know about the big pieces in the House bill so far:
Per their state constitutions, most states have to balance their budgets and don’t have the ability to borrow unlimited sums of money like the federal government. With small businesses closing and millions of people getting laid off, once-dependable income streams like sales and income taxes will take a hit, and public workers like police, emergency workers and teachers stand to lose their jobs.
On a Tuesday call with reporters, House Majority Leader Steny Hoyer said additional stimulus checks — along with state and local money — would be Democrats’ “red lines” that they won’t consider cutting from the next package, even if Republicans push for changes.
The Republican-controlled Senate could prove to be a major roadblock on this bill, though the legislation helps serve as an important marker of where the Democratic-controlled House stands. By putting out their opening bid now, House lawmakers are going on the offensive in a way they didn’t with the most recent “interim” spending legislation, when Republicans sought to take the lead on small-business funding.
Thus far, Senate Majority Leader Mitch McConnell has begrudgingly conceded that the stimulus will likely include additional funding for states and cities, though he’s repeatedly raised concerns about how more ambitious legislation could increase the national debt. “We’ve added $2.8 trillion to the national debt over the last six weeks. We can’t keep throwing endless amounts of borrowed money at the problem in hope to fix it,” McConnell said during a May 7 appearance on The Daily Briefing with Dana Perino.
Many economic experts, meanwhile, note that the stimulus that’s needed will have to match the singular magnitude — and nature — of the crisis. Additionally, they emphasize that current interest rates, which are lower than they were when congressional Republicans imposed their tax cuts in 2018, reduce the cost of borrowing.
“We want massive, debt-financed disaster relief while the economy is in its medically induced coma,” economist Paul Krugman said on Twitter in March.
Instead, McConnell has focused on prioritizing liability protections for businesses, which may face an influx of lawsuits from workers and customers in the wake of the pandemic.
The White House, too, has its own slate of priorities. Since the start of the outbreak, President Donald Trump has expressed interest in implementing a payroll tax cut, a measure that was used after the 2008 economic downturn and one that’s prompted pushback from Democrats and Republicans alike this time around.
At this point, the competing priorities suggest that a final proposal could look quite different from what Democrats are raising this week. Given the scale of the economic fallout six months ahead of the 2020 election, however, Republicans may well be pressured to reconsider their opposition toward additional stimulus.
Support Vox’s explanatory journalism
Every day at Vox, we aim to answer your most important questions and provide you, and our audience around the world, with information that has the power to save lives. Our mission has never been more vital than it is in this moment: to empower you through understanding. Vox’s work is reaching more people than ever, but our distinctive brand of explanatory journalism takes resources — particularly during a pandemic and an economic downturn. Your financial contribution will not constitute a donation, but it will enable our staff to continue to offer free articles, videos, and podcasts at the quality and volume that this moment requires. Please consider making a contribution to Vox today.
Author: Ella Nilsen
Read More
Getty Images Here’s how to understand the difference between everyday anxiety and an anxiety disorder.…
Getty Images Derek Thompson on what the end of monoculture could mean for American democracy.…
Jared Bartman for Vox Dangerous, polluting SUVs and pickups took over America. Lawmakers are partly…
The US approved a Texas power emergency as a blackout threat loomed due to a…
George Washington University students camp out on campus to demand that their university divest from…
The (bad) options for Americans facing an emergency expense. A 2023 Federal Reserve survey found…