Senate Majority Leader Mitch McConnell at the Capitol on March 16, 2020. Lawmakers have started to work on a third stimulus package in response to the coronavirus. | Drew Angerer/Getty Images

Congress is eyeing direct payments to workers as well as aid for affected industries.

Before the US Senate has even passed the second coronavirus relief bill, it’s already starting work on a massive third stimulus package the Trump administration estimates could cost $1 trillion.

It would be a massive injection of cash — surpassing the bank bailout in the midst of the 2008 recession — into an economy that’s seen cratering stocks, spikes in unemployment claims, and reduced consumer spending, as the pandemic sweeps across the US. And, perhaps surprisingly, there’s relatively bipartisan support — at least for the idea of a huge stimulus, if not yet for specific proposals.

Lawmakers are referring to this as “Phase 3” of Congress’s coronavirus response. Phase 1 was an $8.3 billion bill spurring coronavirus vaccine research and development, and Phase 2, once it’s passed, will be an approximately $104 billion package largely focused on paid sick leave and unemployment benefits for workers and families. Phase 3 will be many times larger than both of the previous bills combined.

“We know an additional bill of much larger proportion is necessary to meet this crisis,” Senate Majority Leader Mitch McConnell told reporters Tuesday. “If we bend the health care curve, that will determine how long this emergency lasts. And that has required extraordinary measures that basically have us in the unusual position of the American government in effect shutting down the American economy to meet these health concerns.”

To get the economy going again, Democrats and Republicans agree they need to get money into the hands of American workers as quickly as possible. This response will likely take the form of sending checks to Americans “immediately,” Treasury Secretary Steven Mnuchin announced Tuesday. If this policy takes the approach of unrestricted payments to all Americans, it would be an unprecedented move in modern US history, as Vox’s Dylan Matthews explained.

“We are looking at sending checks to Americans immediately,” Mnuchin said. “Americans need to get cash now and the president wants to get cash now, and I mean now — in the next two weeks.”

But sending checks to workers is just a piece of the overall plan. The Republican-controlled Senate and President Trump’s White House are also focused on relief for businesses impacted by the coronavirus crisis, including small businesses as well as larger ones like the hard-hit airline industry. McConnell has tasked his Republican members to start drafting a bill but admits bipartisan compromise with Senate Democrats will have to happen at some point since the bill needs 60 votes to pass.

“We’re going to move here in warp speed for the Senate, which almost never does anything quickly,” McConnell said. “I think everyone on both sides of the aisle is seized with the urgency of moving yet another bill, and we intend to do that.”

There aren’t a lot of details on what Senate Republicans’ “Phase 3” might look like — yet

Whereas the second coronavirus response bill was crafted in the House, the third package will originate in the Senate (the House is currently out on recess).

The third coronavirus package is in very initial phases; McConnell is designating three task forces in his Republican conference to start working with the White House on their opening bid before they negotiate with Senate Democrats. We don’t yet know when a finalized draft will be released.

In addition to getting money into the hands of individual American workers, Republicans are also looking for other ways to stimulate the economy. The White House wants $50 billion for the airline industry; the travel, cruise, and casino industries are also eager for federal money, the Washington Post reported.

Some Senate Republicans are concerned about the impacts of coronavirus on America’s small businesses, including bars and restaurants that are now shuttered after orders from state and local governments.

“The area I’ve been focused on is on the small business component,” Sen. Marco Rubio (R-FL) told reporters Tuesday afternoon. “There’s a strong conviction and belief we’re going to have to step up using the local banks … to provide immediate cash availability to businesses in order to be able to maintain workers on payroll. So now it’s a question of drafting it and crafting it in a way that can pass and will work.”

While McConnell was hesitant to set a number, a senior Senate Republican said Congress may well be staring down a hefty price tag to keep workers employed and businesses afloat.

“It could be a fairly substantial number,” Sen. John Thune (R-SD) said. “But I think a lot of our members believe we need to be bold and big, and make sure we’re making a clear statement about the importance of making sure our economy is stabilized and gets back on its feet.”

While the House is on recess, House Speaker Nancy Pelosi is also being kept apprised of the White House’s plans. She spoke to Mnuchin over the phone Tuesday morning about America’s aviation and transportation sectors, and spoke to Federal Reserve Chair Jerome Powell in a separate call Tuesday afternoon.

“The speaker was encouraged by the chairman’s perspective that with interest rates at nearly zero, Congress is enabled to fiscally think big as we craft a robust response,” a senior Democratic aide said.

First things first: The Senate needs to approve the House bill

McConnell committed to a vote on the House legislation as soon as the upper chamber is able to this week, an update that had previously been uncertain given Republican pushback on the bill. Specifically, Republican senators were concerned that the paid sick leave requirements in the legislation would put an excessive financial burden on small businesses. McConnell, however, urged his conference to consider the bill regardless of their objections.

“We’re going to go on and vote as soon as the Senate can get permission to vote on the bill that came over from the House and send it to the president for signature,” McConnell told reporters during a briefing on Tuesday. “Some of my members have considerable problem with the House bill; my counsel is to gag and vote for it anyway.”

Already, the House bill has been stripped significantly as part of compromises that lawmakers have made with Republicans.

As Vox’s Anna North reports, the latest version of the legislation, which the Senate will consider, excludes millions of workers from paid sick days and paid leave provisions. In the most updated take on the bill, companies with 500 employees or more and companies with 50 employees or fewer can be exempted from requirements to offer workers paid sick days. Hospitals and nursing homes can also be exempted under the bill.

As a result, as many as 19 million workers could be left out of paid sick leave protections, according to the Washington Post.

Despite its shortcomings, the bill provides a significant influx of funding on a couple of fronts. It will boost funding to states, so they can expand their unemployment insurance benefits, and it guarantees free coronavirus testing for all Americans.

The idea of universal basic income is picking up momentum

Former presidential candidate Andrew Yang’s push for a universal basic income seems to be gaining steam in Congress — and it could well influence a major component of the stimulus lawmakers are envisioning. Across both parties, a growing list of lawmakers have supported sending out financial support to every American.

As Vox’s Dylan Matthews has reported, Sens. Mitt Romney and Tom Cotton are among the Republican lawmakers who’ve signaled support for this idea. Romney on Monday called for every American to get a $1,000 check as part of relief efforts.

“While expansions of paid leave, unemployment insurance, and SNAP benefits are crucial, the check will help fill the gaps for Americans that may not quickly navigate different government options,” Romney said in a statement.

And on Tuesday, a trio of Democrats expressed their support for an even more expansive proposal that would include $2,000 payments for every adult and child under a particular income threshold.

The plan, which was put forth by Sens. Michael Bennet, Cory Booker, and Sherrod Brown and first reported by the New York Times’s Jim Tankersley, would include that first payment that’s sent out between March and June, and potentially a second payment sent out later in the year, depending on how long the coronavirus response takes.

Sen. Thune, a top Republican, said there was likely more support in his conference for directly providing funds to people than for implementing a payroll tax cut (which President Trump has pushed for). “We have a high level of interest in that idea,” he told reporters Tuesday. “That idea has a lot more resonance among our members than, say, a payroll tax cut.”

If one of these ideas does make it into the final Phase 3 legislation, and if the cash payments are truly unrestricted, “it would be a historic move,” Matthews points out:

While Americans received checks as part of the response to recessions in 2001 and 2008, those were sent out as rebates or refunds to taxpayers. Never before have all Americans, regardless of income, and including the poorest citizens who do not earn enough money to have positive income tax burdens, gotten checks.

Senate Democrats have their own ideas

Sooner or later, McConnell will need to negotiate with Senate Minority Leader Chuck Schumer, as the Senate needs 60 votes to pass a stimulus bill. And Schumer has already laid out much of what he wants to see a bill contain.

The big picture on Schumer’s demands is a stimulus package that invests massively in health preparedness, as well as one that protects workers over businesses. He is asking for bailed-out businesses to provide mandatory paid sick leave and a $15 minimum wage to their direct employees, and for businesses to comply with new requirements on whatever federal aid they receive, including prioritizing keeping workers in their jobs — rather than money going to CEOs.

“We are looking first at the medical needs,” Schumer said. “You can put all the money you want out into the economy; unless you actually solve the problem and reduce the number of cases, the number of deaths, none of that will matter. So first and foremost, we need much more bolstering on the medical side.”

Here’s a list of Schumer’s priorities, reviewed by Senate Democrats during a conference call Tuesday and obtained by Vox.

  • $400 billion for emergency appropriations including a surge in hospital beds, ventilators, masks, and other equipment; increased money for senior citizens; public housing for those struggling to pay rent; protections for students impacted by school closures; public transportation relief; and investments in broadband internet
  • $350 billion to increase the social safety net, including expanded unemployment insurance with waived work requirements; automatic extensions to Medicaid if America falls into a recession; a 15 percent benefit increase to SNAP; and pausing monthly student debt payments

Schumer is also proposing a number of other reforms, including:

  • 6 months of forbearance on all federally back mortgages, and a moratorium on evictions and foreclosures
  • Expanding unemployment insurance to cover the gap on paid sick days
  • Targeted funding for Indian country and tribes
  • Protecting prisons from the spread of Covid-19

“If you’re a worker and you lose your job or can’t work, you would qualify for nearly $10,000 over six months in unemployment benefits,” Schumer said on the Senate floor Tuesday. “If you can’t work because you get sick and your employer doesn’t provide paid sick leave, we would allow you apply for unemployment insurance and get reimbursed.”

There’s some agreement between both parties about the need for a major economic stimulus during this unprecedented public health crisis. What the specifics of that package look like, though, include some critical differences that will need to be worked out in the coming days.

Author: Ella Nilsen

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