As Congress works to pass a coronavirus relief bill authored by Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin, Senate Republicans are approaching the next round of response to the outbreak—a possibly trillion-dollar-plus stimulus bill—with a blunt message to Democrats: This one’s ours.
Both privately and publicly, Senate Republicans have groused in recent days about having been sidelined during negotiations over what has become known as the Phase 2 deal to address the coronavirus pandemic. That bill, which passed by an overwhelming bipartisan margin last week in the House, focused on expanding paid sick leave, unemployment insurance, and food security for those affected by the outbreak, plus increasing testing capability for the virus.
Republican leadership told members on Tuesday to swallow their gripes and pass the bill, citing the harsh demands of addressing a national crisis. Those members have found solace in the possibility of turning the tables on Pelosi and House Democrats when the next phase of coronavirus response is soon considered. That bill, known as Phase 3, is set to be a sweeping response to a cratering economy. And with the House of Representatives on recess and Senate Majority Leader Mitch McConnell (R-KY) vowing to keep the Senate in session until a stimulus is approved, the GOP will almost certainly have the first shot.
As a Senate GOP aide put it: “The Senate Republican conference is going to write Phase 3... This is gonna be a far bigger item, dollar-wise,” and there are “a lot of people with what they think are chits owed them.”
Some lawmakers appear to be cashing those chits early. This week has seen a boomlet of proposals regarding what the stimulus bill should look like. In an ironic twist, an idea that didn’t seem to have overwhelming buy-in among House Democrats a week ago—giving cash directly to Americans affected by the COVID-19 outbreak—is being pushed by several prominent GOP senators, most notably Sen. Mitt Romney (R-UT).
A party that used to recoil from sticker shock in past times of crisis is now running with abandon toward a bill that could have a price tag of up to $1.3 trillion.
“I’m about as conservative fiscally as you can be,” said Sen. John Kennedy (R-LA). “This is not a time to be cheap.” He did admit, however, “we will have to do some clean-up later.”
But while Senate Republicans seem poised to craft a big, bold stimulus plan that reflects their priorities, they still face two obstacles in doing so. The first is congressional Democrats who don’t appear to be spooked by McConnell’s threat to pass a bill and demand that they take it or leave it. One senior House Democratic aide said that if the Senate sent them a stimulus proposal put together squarely by Republicans they’d simply make changes to the legislation.
“What’s McConnell going to do? Dare us to add more things to his bill and send it back to him? How hard is that?” the aide asked, sarcastically.
But Democrats aren’t the only hurdle Trump and McConnell will have to clear. Fiscal hawks close to the president could present issues as well. Already, some high-profile Trump allies and conservative economists are actively lobbying the president and his administration to ditch large-scale economic stimulus in the face of the coronavirus economic slowdown.
On Tuesday, Stephen Moore, Art Laffer, and Steve Forbes—all luminaries in conservative economics—blasted out a joint statement urging the White House not to “expand welfare and other income redistribution benefits like paid leave and unemployment benefits that will inhibit growth and discourage work.”
One senior Trump administration official told The Daily Beast that this statement had been printed out and flagged for the president to read in his daily batches of press clips and reading materials. As of Tuesday evening, it is unclear if he’d read it. However, Moore, a Heritage Foundation economist who continues to informally advise Trump and administration officials, said in an interview Tuesday afternoon that “key people in the White House” were given an advance copy of the statement and that “I know they liked it. It was something that people [in the administration] paid attention to, I was told.”
Though Moore is close to Trump, it is not clear how open the president is to being swayed from his current instinct of endorsing a “big” stimulus, especially when the U.S. economy and his re-election are on the line. In the past two weeks, Trump has complained to confidants that if it were truly up to him, he would want billions more dollars for a dramatic economic stabilization package, but that he felt constrained by conservative spending hawks and lawmakers who he has to appeal to, according to two sources who’ve independently discussed this matter with Trump.
Over the past few days, Republican lawmakers have moved toward Trump’s thinking, with members of the party embracing proposals that would get cash directly in the hands of people affected by the coronavirus outbreak. In his lunch meeting with senators Tuesday, Mnuchin floated the idea of a one-time, means-tested payment to Americans via the Internal Revenue Service. It’s more targeted than Romney’s approach but appeared to have a broad degree of buy-in within the GOP conference.
But the sentiment is not universally shared in the party. “I want to give a loan to the companies to float their payroll on generous terms,” said Sen. Lindsey Graham (R-SC), a close Trump ally. “I’m not going to give a check on top of a check—if I gave everybody here a thousand dollars, what would you do with it right now?”
With the possibility of fissures inside the GOP ranks, Senate Democrats and their leader, Sen. Chuck Schumer (D-NY), do have real leverage over the scope and direction of the Phase 3 bill, since it will require 60 votes to pass.
Though some Democratic lawmakers are already outbidding the GOP’s cash-infusion ideas, a senior Senate Democratic aide told The Daily Beast they will demand increased unemployment insurance and real structural changes. “The real next crisis is capacity issues, hospital beds, and supplies at the hospitals,” said the aide.
Additionally, Democratic lawmakers mentioned another area of pressure: industry-specific bailouts. They plan to push for tight strings on any relief money that is targeted at the sectors most hard-hit by the coronavirus downturn—particularly the airline industry, which most on both sides agree is going to need some kind of help. On Tuesday, Sen. Elizabeth Warren (D-MA), who herself reviewed the implementation of the 2008 bailout, released proposed conditions for industry bailouts—including guaranteeing workers a $15 minimum wage, banning corporate stock buybacks, and prohibiting federal funds from going to executive bonuses.
“Why would we bail out any company that’s been making record profits without a clear guarantee that they will protect workers’ rights around pensions, collective-bargaining provision of sick leave, and pay?” asked Sen. Chris Coons (D-DE). “If companies want to come forward and say, we’ve been hit hard—so, hospitality, travel, others—and we need even more tax relief… I’d want to see that what we were doing was achieving some real protection.”
While McConnell has talked about going it alone on Phase 3, Schumer has pushed for the top Democrat and Republican of each chamber to work directly with the White House to craft some sort of large-scale compromise. The aforementioned senior House aide conceded that there would be “utility to a four-corners negotiation” so long as it did not involve Trump himself.
The president never once spoke to Pelosi during the crafting of the Phase 2 deal, her office confirmed.