Democrats have a proposal on the table. Republicans have a proposal on the table. The two sides are roughly $2.5 trillion apart on the topline, facing gulfs epic in scale on the granular policy level and have all of four days to reach a deal before federal unemployment benefits expire.
Bottom line: Congressional leaders and the White House are now at the stage they expected to enter early last week, which isn’t helpful given the deadline pressure. But the bigger issue is the current negotiating dynamics. Senate Republicans remain split on whether any proposal is necessary at all, and on top of that, they have grown extremely frustrated with the White House, multiple senators told CNN. Democrats see no impetus to come off their topline positions as they see the opening GOP offer as belated and unserious. Headway needs to be made quickly, because at the moment there is zero pathway to an agreement.
The timeline
Nobody is talking about finishing something up by the July 31 unemployment benefit expiration at this point. Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer, following a meeting with Treasury Steven Mnuchin and White House chief of staff Mark Meadows on Monday night, said they plan to keep talking to reach an agreement, but acknowledged the two sides are very far apart.
Rough expectations are if something is to come together, it will take a few weeks. But in terms of exact timing, as one veteran congressional reporter likes to remind colleagues during talks of this scale: “Always take the over.”
The process
Senate Majority Leader Mitch McConnell underscored the somewhat lengthy path ahead: “Every bill has to start somewhere. Republicans are in the majority in the Senate. This is a starting place. You’ll have plenty of stories to cover along the way as we have these discussions back and forth across party lines and with the administration.”
The ‘skinny’ proposal: When the big deal feels out of reach, there is plenty of precedent for a fall back to a more narrow option. That’s what White House negotiators have already floated, but Pelosi shot down that idea in visceral fashion on Monday night.
“It’s good that they’ve called it skinny because that’s what you get when you don’t have any food to eat,” Pelosi told reporters when asked about the idea. The point: Democrats see this as a significant package with pieces that all go together. Scaling back, particularly when Democratic lawmakers clearly think they have the upper hand in talks, is not on the table.
GOP frustration
The negotiations over the past week between Senate Republicans and the White House didn’t exactly endear Meadows and Mnuchin to Senate Republicans, according to multiple sources. They were viewed as far more drawn out than they needed to be, with repeated decisions to open up issues that had been closed and the inclusion of extraneous items that only served to give fodder to Democrats.
This is, to some degree, part of the process. Each side always thinks they know best and the other side is somewhat weak or dragging down the process, but the point here is that the White House and Senate Republicans are supposed to be on the same side.
Whether they can come together now that the talks have shifted into red team vs. blue team is really the operative question. History would say yes. But the splits and frustration here are very real.
McConnell’s challenge
This is one of the greater negotiating challenges the Kentucky Republican has faced in recent history. The White House has served as an unreliable and, at times, seemingly unstable negotiating partner. A good portion of his conference doesn’t want any more spending, period. A chunk of his conference is now fighting for their political lives in tough reelection campaigns and can’t afford to watch the economy take a dive – but also don’t want to get crosswise with conservatives on spending.
Taken together, this is, as one senator told me last night: “not exactly our strongest hand.”
How McConnell navigates this, especially given his number one priority of protecting his majority, is going to be fascinating to watch in the days and weeks ahead. As for his views on the next package itself, while he’s made clear it will be the last, he hasn’t hedged on its necessity.
“We have one foot in the pandemic and one foot in the recovery. The American people need more help,” McConnell said Monday. “They need it to be comprehensive. And they need it to be carefully tailored to this crossroads.”
Department of … wait what?
It is often the case that large spending proposals include plenty of add-ons and extraneous pet provisions, though it’s somewhat rare that those provisions find their way into the initial drafts of bills (the preferred route is jamming them in late when everyone is exhausted and not paying attention.)
But there are two pieces of the GOP proposal that stand out in particular for being a stretch for a package aimed at staying germane to coronavirus relief:
The FBI building: The bill includes $1.75 billion to fund the design and construction of a new FBI headquarters and the fact this made it into the bill underscores just how important White House negotiators viewed this provision. For more than a week the idea has infuriated Senate GOP negotiators, who thought at one point they’d gotten it off the table, only to see it come back again this past weekend, according to sources involved in the discussions. They thought again they had dispatched with it on Monday, only to have it come back again in administration proposals. It made it into the final proposal, much to the confusion of rank-and-file Republicans, and has now become a key talking point for Democrats.
Even how the provision was drafted underscores the stretch here to tie it into coronavirus:
For an additional amount for ”Federal Bureau of Investigation, Construction”, $1,750,000,000, to remain available until expended, to prevent, prepare for, and respond to coronavirus, domestically or internationally: Provided, That amounts made available under this heading in this Act shall be for the design and construction of a Washington, DC headquarters facility for the Federal Bureau of Investigation
“This is not helpful. It’s not. It makes us look like we’re not serious,” one Republican senator told CNN last night.
The defense spending: Senate Appropriations Committee Chairman Richard Shelby, an Alabama Republican, made clear that bolstering the defense industrial base is always a priority, and that’s the reason more than $8 billion was included for fighter jets, helicopters armored vehicles and more. It’s important to note that among the priorities included for funding in this portion of the bill are several projects that saw their funding delayed or taken away entirely in order for President Donald Trump to transfer funds to finance the border wall.
The major differences
There are … a lot, and this won’t cover all of them. But here are some of the biggest that need to be resolved for any agreement to be reached.
Federal unemployment enhancement: Democrats extended the current $600 federal unemployment enhancement through the end of the year. Republicans proposed dropping it to a flat rate of $200 for two months, then transitioning to a roughly 70% of prior earnings model when combined with state assistance.
To make this completely clear: the GOP proposal is a nonstarter for Democrats. It’s also a nonstarter for many states who have made clear to lawmakers they don’t have the technology or capacity to implement a percentage based system. The most likely end game seems to be a graduated reduction of the flat rate over time – Democrats aren’t wedded to the $600 flat rate and acknowledge some are making more than 100% of past wages. Politically endangered Republicans want no part of a headline that their party cut unemployment benefits at a time of economic crisis. Right now, however, both sides are dug in on their positions.
State and local funding: Democrats include $1 trillion in funds for states and localities in their proposal. It is a central focus of Democrats in both chambers, and there is a coalition with major juice behind the push, from governors and mayors, to major business groups and unions.
Republicans did not include any new funds in their proposal, but did include more flexibility for the use of funds already disbursed in the first aid package. Republicans acknowledge there will be money included in any final deal.
Rental and food assistance: Democrats have made clear that these are priorities for the talks and there is no corresponding provision or provisions in the GOP proposal.
Liability protections: This is the reddest of red lines for McConnell – he has made clear no bill will come to the Senate floor without a liability protections for businesses, schools, health care providers and non-profits. Democrats did not include liability protections in their proposal and have pushed for OSHA regulations to protect workers.
A source tells CNN there have been initial back channel conversations between Republicans and Democrats on this piece.
Education: Republicans included $105 billion for schools in their proposal, including $70 billion for K-12, $30 billion for colleges and universities. The K-12 funding would be split with one-third of the funds being deployed immediately to schools on a per capita basis and the other two-thirds being disbursed immediately if half of the students are back in school on an in-person basis at least 50 percent of the time.
Democrats have pushed for more than $400 billion for schools, and object to tying any funds to schools bringing students back for in-person classes. There’s a sweet spot in here, however, as schools that go in person do, in fact, need more funds to finance retrofitting of buildings and transportation, meals, PPE etc.
Areas of general structural agreement
Direct payments: Republicans repeat the exact same direct payment structure as the first round of checks, but with more assistance for families with adult dependents. Democrats did the same, but with more assistance for child dependents. This appears to be fairly reconcilable.
Paycheck Protection Program: The GOP proposal includes $190 billion for new Paycheck Protection Program loans and another $60 billion for long-term, low interest loans. Much of this piece was drafted through bipartisan Senate talks and the lawmakers who spearhead the small business portion of these talks are by far the most bipartisan and collaborative in the Senate. Expect this to generally reflect where things up.
