The chances for a badly needed stimulus bill getting passed as early as next week have improved for the first time since the election.
On Tuesday, Treasury Secretary Steven Mnuchin unveiled a $916 billion stimulus plan that would reauthorize the Paycheck Protection Program, the crisis-era small-business refundable-loan program, and issue $600 stimulus payments to individuals. It also offers increased liability protections for businesses and funding for state and local governments--yet it fails to offer any support for supplemental unemployment benefits.
Mnuchin announced the plan, which was approved by both the White House and Senate Majority Leader Mitch McConnell (R-Ky.) in a telephone call with House Speaker Nancy Pelosi (D-Calif.). She quickly decried the plan for its absence of unemployment funding but cheered the offer as a cause for optimism.
"While it is progress that Leader McConnell has signed off on a $916 billion offer that is based off of the bipartisan framework, the President's proposal must not be allowed to obstruct the bipartisan congressional talks that are under way," Pelosi said in a statement on December 8. "The President's proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan members of the House and Senate from $180 billion to $40 billion. That is unacceptable."
As the cases of Covid-19 soar, states and local governments are reinstating restrictions, curbing in-person businesses of all stripes. Some are now unable to open at all--as is the case in vast swaths of California. Many other states have imposed curfews or they're rolling back reopening schedules. The continued economic toll is forcing some employers to once-again furlough staffers or lay them off--and without additional unemployment insurance assistance, these folks are sure to face extreme hardship, as they can now only rely on sparsely funded state programs.
Beyond the fact that people might simply need aid, supplying additional unemployment funding is potentially a more effective stimulus tool than what the White House is proposing--that is, giving $600 to individuals who may not need the money. That's according to Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, a nonpartisan think tank in Washington. "Stimulus payments go to (most) everyone--even those who have kept their jobs and haven't seen any drop in income--whereas [unemployment insurance], by definition, goes to people who have lost work and their paycheck." That means, she says, that the money the government sends unemployed people is more likely to be spent rather than saved. "[These] recipients have no choice but to spend immediately on necessities."
The White House proposal marks the latest plan to come forward since a group of bipartisan lawmakers, dubbed the "problem-solvers caucus," offered a framework for a $908 billion emergency-relief funding bill early last week.
That proposal includes $300 a week in federal unemployment benefits for 18 weeks, retroactive to December 1. It also supplies $288 billion in small-business aid programs, including the PPP and the Economic Injury Disaster Loan (EIDL) program, which is due to sunset on December 31. Businesses would also see some accommodation for increased liability protections--one of the sticking points in earlier negotiations, and favored by Republicans. It failed to provide funding for state and local governments, which is a must for Democrats.
McConnell noted several times that a possible way forward might be to sever these two areas of contention from negotiations even as Democrats panned the loss of state and local aid. "I've proposed we set aside remaining sticking points and pass everything we agree on. They say 'no,'" McConnell tweeted on Wednesday.
While McConnell has expressed a willingness to jettison additional liability protections, the business lobby would likely chafe at the omission. "The U.S. Chamber strongly urges lawmakers to support bipartisan efforts to enact pandemic relief, and we call on them to work with the business community to ensure that relief reaches small businesses as soon as possible and that liability reforms provide meaningful protections," said Neil Bradley, the Chamber's executive vice president and chief policy officer, in a statement released on December 4. The Chamber declined to say whether it viewed the absence of liability protections as a deal breaker in future negotiations. Bradley tells Inc.: "While some difficult issues remain, we are confident that there are common-sense compromises that can be found that will enjoy the support necessary to become law. We encourage senators and representatives to keep working in a bipartisan fashion and reach an agreement."
The one thing everyone agrees on is funding for small businesses. "The No. 1 priority right now is getting small businesses the capital they need to survive through the next quarter or so," says Karen Kerrigan, president of the Small Business & Entrepreneurship Council, a nonpartisan advocacy group in Vienna, Virginia. "We've supported a PPP-only bill in the past, and we will continue to support legislation that gets the capital flowing back to Main Street."
The problem solvers are continuing to hash out their own $908 billion proposal; they're reportedly working up actual legislative language. The emergency aid package is expected to get voted on as an attachment to the omnibus-spending bill needed to avoid a government shutdown on December 11. On that note, lawmakers are reportedly readying a measure that would fund the government for another week, pushing off the stimulus negotiations until later.