Nancy Pelosi and Mitch McConnell are set to butt heads on the next coronavirus stimulus bill. Don’t … [+]
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There may be a delay in the passage of the next coronavirus stimulus bill, which increasingly looks like it could include a second stimulus check and an extension, probably at a lower rate, of federal unemployment checks. You may instinctively think a delay is bad, but paradoxically, a hold up may turn out to be in the best interest of many Americans.
McConnell’s Strategic Approach To Coronavirus Relief Bill
Couched As “Wait-And-See” Approach
Senate Majority Leader Mitch McConnell (R-Kentucky) has adopted a wait-and-see approach to the next coronavirus stimulus bill. McConnell is planning on using the three weeks when the Senate is back in session between July 20 and August 7 to negotiate and pass an aid bill. His stated reason has been to use the time to assess how the economy is performing and the efficacy of previous stimulus measures before passing another trillion-dollar plus aid package. “As you’ve heard suggested, I said back in March we would take another look at this… probably in July… take a snapshot of where we are, both on the healthy front and the economic recovery front, and decide at that point what needs to be done further,” McConnell said in late June.
Other Republicans have echoed McConnell’s rationale. A spokeperson for Senator Chuck Grassley (R-Iowa) commented after the latest jobs data was released that the report “underscores why Congress should take a thoughtful approach and not rush to pass expensive legislation … before gaining a better understanding of the economic condition of the country.” Senator Lamar Alexander (R-Tennessee) made comments along similar lines. “I think we’ve spent a massive amount of money, not all of it has even been spent yet … and I think we need to evaluate what we’ve done before we do anything else,” he stated.
McConnell Tries To Run Out The Clock On Democrats
While McConnell’s wait-and-see approach is valid, there is also a second, more strategic reason why he has been pushing off negotiations until July 20. Shortening the time window to negotiate ratchets up pressure on Democrats and provides Republicans with additional leverage. For example, extending the $600 federal unemployment bonus that is set to expire at the end of July, has been one of the biggest points of contention between the two sides. While the enhanced benefit has been a critical lifeline for millions of Americans, Republicans argue it has created a disincentive to return to work.
The enhanced unemployment benefits will stop on July 25 or July 26, which doesn’t leave much time to pass a bill that avoids payment disruption. This plays directly into McConnell’s hands. He is essentially predicting that Democrats will acquiesce to a much lower benefit to ensure continuity and avoid financial calamity for millions of Americans who are reliant on them.
The GOP has been signaling recently that it is open to “unemployment reform,” as Larry Kudlow put it, but not at the current level of $600 in benefits per week. Multiple outlets report that the GOP is aiming for $200 or $300 a week in benefits. The crucial questions for Democrats will be: What lower rate of weekly benefits are they willing to accept and how will they resist Republican demands with a looming deadline?
Similarly, McConnell has signaled that a second stimulus check “could well be” part of the next stimulus bill. However, Republicans are also looking at either lowering the amount of the check or capping income eligibility at $40,000. House Speaker Nancy Pelosi has recently voiced skepticism of the income cap, saying that she thinks “families making over $40,000 probably need assistance, again, depending on their family situation.” This could complicate negotiations and delay passage of a bill. McConnell may try to run out the clock on Pelosi to solidify lower income limits, knowing that if a bill isn’t passed before the long summer Congressional recess commences, Americans wouldn’t see relief until September when Congress returns.
Upshot of McConnell’s Negotiating Strategy
There are myriad issues to tease out in the upcoming stimulus bill, including state/city aid, liability protection for businesses, direct stimulus payments, unemployment benefit extensions, and money for schools as well as potential funding for testing, contact tracing, and vaccine distribution. That is a monumental list to tackle in less than three weeks, which is partly a negotiating tactic on McConnell’s part.
If unemployment benefits expire without agreement on an extension, millions of Americans will suffer. McConnell is essentially betting that Democrats will be blamed if the Senate proposes legislation and the House doesn’t jump on board to pass it quickly. He will use the short calendar before Congress recesses to increase pressure on Democrats to accept the Republican proposals on reduced unemployment benefits and more tightly scoped second stimulus checks.
Pelosi Pulls An Audible
House Speaker Nancy Pelosi (D-California) has been pretty quiet since the House passed the HEROES Act in mid-May. However, she recently came out swinging to blunt McConnell’s strategy by announcing that she is open to delaying the scheduled August House recess if additional time is needed to reach an agreement on enhanced unemployment benefits and other provisions. “We absolutely have to. We also have to come to an agreement. The timetable is the timetable of the American people,” Pelosi said during an interview with CNN.
Pelosi is essentially trying to shift public perception about who is responsible if a deal fails to materialize in the next few weeks. Her willingness to keep the House in session is meant to signal that Democrats will not rest until a deal is reached and an attempt to deflect the blame back to McConnell and Republicans. It is also a signal that she won’t simply cave to demands to decrease unemployment benefits significantly or put in strict income eligibility requirements on second stimulus checks (remember, House Democrats proposed extending federal unemployment benefits at the $600 level and expanding the scope of second stimulus payments in the HEROES Act). Given the efficacy and popularity of the unemployment bonus and second stimulus check, such a stance may pay off politically for Pelosi and financially for million of Americans; however, it could result not only in a slugfest, but also in a delay to pass the next bill.
Stronger Negotiating Position May Delay Passage, But Result In Increased Benefits
There is no doubt that even a slight disruption or delay in receiving benefits will adversely impact millions of Americans; however, it may ultimately be worth a small sacrifice if, hypothetically, it results in a $400 weekly unemployment benefit instead of a $200 one. Similarly, if a short hold up means that Democrats are able to successfully negotiate a higher income eligibility of second stimulus checks – for example, from $40,000 to $70,000 – that might make millions of Americans better off.
Pelosi’s recent statements about keeping the House in session signal a strong Democratic negotiating strategy on core provisions like enhanced unemployment benefits and second stimulus checks, which should be a net benefit for millions of Americans. With entrenched positions on both sides, don’t be surprised if protracted negotiations lead to a delay in reaching a deal and result in a bill not passing until later in August. However, if that happens, it could mean that Americans will see higher federal unemployment benefits and income eligibility criteria for second stimulus checks than what Republicans may try to ram through because of a tight deadline. In other words, not all delays are bad.