Washington Weekly: COVID-19 Stimulus Bill

U.S. Office of Public Policy, 09 October 2020

This Week

Both the House and Senate were out of session.

Next Week

No votes are scheduled in either chamber at this time.

The Lead

COVID-19 Stimulus Bill. 

Negotiations in Washington to craft the next comprehensive stimulus bill are dead, at least for the moment. President Trump ended the negotiations this week but intends to re-start negotiations after the elections. House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steve Mnuchin, the two lead negotiators, have made some headway on a compromise bill over the past two weeks, but they are still $500 billion apart on a final price tag. The level of funding for state and local governments (and what the funding can be used for), the scope of liability protections for businesses and schools, and non-COVID-19 related spending remain the key areas of disagreement. As we said last week, we don’t expect a final bill to be crafted before the elections, but dynamics could change if the markets react badly to the lack of further stimulus or if Trump or Pelosi feel greater political pressure to cut a deal. As of today, there is insufficient urgency on both sides to come to an agreement.

Stimulus Light Bills. 

House and Senate members and various interest groups will continue to advocate for passing key parts of the proposed stimulus legislation individually. In particular, there is interest in advancing additional small business loans, direct assistance to the airline industry and its employees, and a second round of tax rebate checks for eligible individuals as standalone measures. All three funding requests have broad, bipartisan support. While separating these individual provisions from the larger stimulus bill might seem reasonable, it makes little political sense to some political leaders who fear that will sap support for the broader effort. There has been a lot of discussion this week about providing $25 billion-$29 billion to support airline industry employees. Congress is not scheduled to be in session to act on it over the next week or two, though votes could be called if an agreement is reached. Both Pelosi and Mnuchin have responded favorably to a standalone bill for airline employees, but they need to finalize this today or tomorrow if a vote can occur next week. Immediate action is required to avert over 30,000 employees being furloughed by the largest airline carriers.

Other Issues

Supreme Court Vacancy. 

The timetable and process for the consideration of Supreme Court nominee Amy Coney Barrett is still intact despite multiple Senators contracting COVID-19. Hearings will begin in the Senate Judiciary Committee on Monday and last most of the week. The political rancor that will characterize the hearings will be evident from the outset. Monday will give members of the committee a chance to voice their own views through their opening statements, while Tuesday will feature Judge Barrett’s testimony and questions from committee members. While Judge Barrett will participate in the hearing live, many of the committee’s 22 members will participate virtually, which will affect the ambiance of the sessions. A committee vote is expected on October 22, and a full Senate vote would follow the next week.

COVID-19’s Impact on the Vote. 

Two Republican members of the Senate Judiciary Committee have tested positive for COVID-19, while another three are self-quarantining this and next week. Therefore, nearly half of the Republican members of the committee will not be present live during the hearings next week. Those members, however, are expected to be well enough (and past a period of quarantining) to appear in person the following week when the committee votes on the nomination (members can’t vote virtually on the nomination). If their conditions worsen or if other committee Republicans test positive with COVID-19, the committee vote could be at risk. Notwithstanding this risk or a poor performance by Judge Barrett, the Senate is poised to approve the nomination before the election.

US-China and 2022 Olympics. 

Senator Rick Scott (R-FL), whom we hosted this week at a virtual event with our colleagues, has urged a Senate committee to pass his bipartisan resolution urging the International Olympic Committee (IOC) to reverse its decision to have China host the 2022 Winter Olympics. While we expect this resolution to be approved, it clearly doesn’t have any force of law since the US doesn’t have jurisdiction over IOC decisions. Nevertheless, it puts the IOC in an uncomfortable position. We don’t expect the IOC to reverse its decision, but the pressure from the US, other countries and international human rights organizations (160 groups sent a letter in opposition to the IOC last month) puts a more intense spotlight on human rights issues in China. We expect this issue to generate additional media coverage in the US in the months ahead and serve as yet another irritant in the US-China relationship.

More Infrastructure? 

We continue to receive questions on whether funding for infrastructure could be a part of the next stimulus package if one materializes this year. The short answer is no even though there may be some infrastructure components (like funding for broadband) in a future stimulus bill. The government funding bill that was signed into law last week contains a one-year reauthorization of federal highway programs that will keep dollars for highway and road improvements continuing without interruption while Congress works on a longer-term bill. Next year will offer a better opportunity for a more comprehensive infrastructure bill, but we are mindful that this is a statement we and others have made many times before.

The House’s Potential Election Importance. 

Not surprisingly, the predominant focus this election cycle has been on the presidential race followed by a tightly controlled Senate that could change from Republican to Democratic control. Far less attention has been paid to the House, which conventional wisdom has the Democrats retaining, but the House could end up picking the President under an unlikely, yet plausible, election scenario. If Trump and Biden tie for 269 electoral votes (or delays or difficulties in counting results in key states prevents either candidate from reaching the needed 270 electoral vote threshold), the presidential election would be determined by the newly-elected House next year, with each state delegation getting one vote. While Democrats control the House, Republicans actually currently have a majority of state delegations (26 to 23, with Pennsylvania evenly split between Democrats and Republicans). Democrats are hoping to win majorities in Pennsylvania and Florida, though they also are defending narrow majorities in Michigan, Minnesota and Iowa. A tie of 25-25 is possible, in which case the vice president (who could be determined by a majority in the Senate) would become acting president until a deal is brokered to break the deadlock in the House. This is a far-fetched scenario, but is nevertheless a possibility following a chaotic year of never ending surprises.

The Final Word

Third Party Spoilers? 

In 2016, over five million Americans cast their ballot for a third party candidate, the most received by any third party candidates since Ross Perot received eight million votes in 1996. The third parties had an impact even if there still is disagreement about whether Secretary Clinton or President Trump was more impacted. Three states that were decisive in Trump’s win -- Michigan, Pennsylvania and Wisconsin -- were decided by less than a combined 80,000 votes but had over 450,000 votes cast for third party candidates. While it would seem logical to predict that third parties would again play a prominent role this year, history has shown us otherwise. Typically after a third party overperformance in a presidential election, the following election features a much more diminished role for third parties as they are often perceived as having too much impact on the prior election. This in turn typically makes voters less likely to cast their ballot for a candidate who is unlikely to have a chance of winning (the major exception being Ross Perot who received 19% of the vote in 1992 and then received 8% of the vote in 1996). This year’s third party candidates seem to lack any meaningful name identification or cause, and polls indicate a much smaller group of voters are supporting them this year. While third party candidates will once again be on the ballot in November, we expect their impact to be minimal.