Both the House and Senate were out of session
The Senate will return to Washington on May 4, while the House will remain out of session.
Senate Returns to Washington.
The Senate will return to Washington next week to approve various nominations and start initial discussions on a potential "stimulus 4" bill. The House also had been scheduled to return to session next week but decided to stay away from Washington until the COVID-19 health threat more substantially subsides. House and Senate leaders have tried to gauge and consider voter sentiment in making the decision on when to return to the nation's capital. Do voters want lawmakers in Washington debating and voting on issues, much like front-line doctors, nurses and first responders are engaged in battling the crisis around the country? Or do they want lawmakers to stay away and better practice the social distancing rules encouraged by the health experts and exercised by most other workers? Depending on how voters clearly declare their views, either the House will come back to Washington sooner than expected or the Senate will leave town earlier than expected.
Stimulus 4 on Deck.
We expect there will be a new "stimulus 4" bill even though congressional Republicans have thrown some cold water on its prospects by raising concerns about the federal debt. The damaged economy and financial markets seem to demand it, and those dynamics will trump (no pun intended) other considerations. Republicans, particularly Senate Majority Leader Mitch McConnell (R-KY), are instead jockeying to ensure that the next bill is targeted and not open ended. Requests from the White House, lawmakers from both parties and other advocates will be numerous and costly, and most will not be accommodated. We will keep a running list of requests for stimulus 4 that we are aware of – our current list is attached here . This debate over the contents of a stimulus 4 bill is just beginning and won't be resolved for weeks.
Red Line on Liability Protections.
Senate Majority Leader McConnell this week was emphatic that any stimulus 4 bill contain strong liability protections. Senator McConnell did not offer specifics, but we believe he is referring to the legal exposure of health care first responders and other professionals on the front lines of COVID-19 treatment though his remarks also may cover a much wider array of businesses. This demand injects another hot-button political issue into the negotiations over a stimulus 4 package. Legal liability protection for the broader business community is unlikely to be included in a stimulus 4 bill, but targeted liability for stressed health care workers to limit medical malpractice suits seems possible. Congressional Democrats will have to compromise on this issue in the same way Republicans will have to compromise on funding for state and local governments. That was the quiet message behind Senator McConnell's comments on liability this week.
SALT in the Wound.
A number of tax proposals will be under consideration in stimulus 4. Perhaps most notable is Democrats' interest in retroactively removing the state and local tax (SALT) deduction cap for two years. This would provide some stimulus by allowing some taxpayers from higher-taxed states to get a refund on previous tax filings. Senator Chuck Grassley (R-IA), chairman of the Senate Finance Committee, has already rejected this idea as have other Republican leaders. We continue to be bearish on the prospects of relief from the SALT cap, but it can't be entirely ruled out given that negotiations on the stimulus bill will be fluid and will cover a wide range of issues. Another bill that caught our attention is a proposed temporary income tax holiday for doctors, nurses and first responders to recognize their extraordinary efforts. Other tax proposals will soon enter the fray, but the two mentioned above – which we do not believe will be enacted -- will generate significant attention.
Beyond the over $2 trillion of relief funds for individuals, businesses, local government and others, the stimulus 3 bill that was signed into law last month also included several important consumer protection provisions. These included forbearance on federally-backed mortgages and student loans, a temporary ban on evictions and foreclosures (for properties and mortgages receiving federal support) and a suspension of negative credit reporting on loans in forbearance. With the stimulus 4 legislation poised to be drafted initially in the Democrat-controlled House, Financial Services Committee Chairwoman Maxine Waters (D-CA) will lead efforts to expand the application of some of this relief and provide support through new initiatives. Key priorities include a $100 billion fund to assist renters and some forgiveness on student loans. Democrats also will push for a provision banning servicers from requiring borrowers to pay balloon payments at the end of the forbearance period. Other proposals include a temporary prohibition on debt collection and waivers on overdraft fees by large banks. While these priorities will be reflected in an initial House bill, many of these provisions will be eliminated or scaled back as part of negotiations to reach agreement on a stimulus package that can pass muster in a Republican-controlled Senate.
Trump Virus Response Oversight Hearing.
Although the House is out of session next week, a House Appropriations subcommittee will hold an in-person hearing on the President's response to the virus crisis. As the first hearing on this issue, the hearing likely will generate significant interest. The subcommittee holding the hearing consists of nine Democrats and six Republicans and is led by Congresswoman Rosa DeLauro (D-CT). The hearing is likely to focus on the adequacy of the health and education policy responses to the crisis to date. No witnesses have been announced yet, but there will be greater focus on the hearing to the extent that it features a major administration official close to the President.
Trump Judges Adding Up.
With the Senate back in session and the contours of a stimulus 4 in the very early stages, the upper chamber will certainly spend time confirming life-time judicial appointments. Over the past three years, the Senate's approval of judicial appointments has had a very significant cumulative effect on the federal courts even beyond the shift of the Supreme Court to a conservative-leaning body through the approval of two Trump nominees. Earlier this year, the Senate approved its 51st circuit (appellate) court nominee. In President Obama’s eight years in office, he nominated and secured Senate approval for 55 appellate court nominees. Circuit judges nominated by Republican presidents now outnumber those nominated by Democratic presidents by a 99-80 margin. Next up for the Senate is to approve a backlog of 73 nominees for district court vacancies, where Democratic judges have a majority of 319-287. President Trump has gotten approval for 138 district judges over the past three years and will likely push past the 319 mark by the end of this year. When history summarizes President Trump’s time in the White House, besides his response to the coronavirus crisis, his reshaping of a more conservative federal judiciary will be a prominent accomplishment.
The Final Word
Mailing in November.
With the COVID-19 crisis forcing most congressional and presidential primary elections to be delayed or switched to a vote entirely by mail, many are wondering what voting in November will look like, especially if there is a second wave of COVID-19 cases in the fall as many fear. November won't feature an election with voting done entirely through mail, as some have requested. However, it will be the election with the most votes cast by mail in history (likely more than half of votes will come through mail). Additionally, the states that are likely to decide the election (AZ, FL, MI, NC, PA, WI) all presently have "no excuse" absentee mail voting systems, which allow residents to request a mail ballot without an explanation. Most other states require a voter to offer a compelling reason why he/she cannot vote in person though a handful have elections that are already conducted entirely by voting by mail. The massive increase in vote by mail participation in all states will slow down the vote counting and the speed in which election results are reported before even considering the possibility of technical or legal issues that could arise from such a shift in how people vote. If the election is close, it is possible that we will not know the winner for several days.