House Democrats are racing to wrap up another round of coronavirus emergency relief funding with a proposal expected to top $1.5 trillion, the largest portion of which would be directed to financially hemorrhaging state and local governments. The proposal is unlikely to contain any major infrastructure investment.
While Democrats are pressing ahead, congressional Republicans and the White House are trying to press the brakes. They are expressing concern about federal deficit spending. So far this fiscal year, the federal budget deficit stands at $744 billion, but is expected to rise as high as $3.4 trillion as emergency spending goes up and recession-like conditions crimp tax revenues. GOP leaders say more time is needed to assess the impact of previous congressionally approved financial assistance measures.
Senate Majority Leader Mitch McConnell says any additional financial assistance to state and local governments needs to be married to give liability immunity to businesses that may be sued by employees or consumers for inadequate COVID-19 protection. President Trump said additional financial relief should be tied to elimination of sanctuary state and city designations that impede his immigration policies.
The emerging proposal won’t contain liability or sanctuary city provisions, so may not attract many GOP House votes. Despite that, Democratic leaders believe the proposal will jumpstart stalled negotiations with the Republican-controlled Senate and the administration.
As contemplated, the proposal, referred to as CARES Act 2, could provide up to $1 trillion in emergency funding for state and local government, with funds set aside for smaller municipalities that were left out of the original CARES Act. In response to concerns expressed by state and local officials, the proposal will allow for retroactive flexibility for CARES Act funding to cover tax revenue losses. The Treasury Department issued updated guidance this week that permits cities and counties to use CARES Act funds they received to backfill expenditures for police and firefighter salaries.
Speaker Nancy Pelosi says the proposal will provide funds for expanded COVID-19 testing and contact tracing, as well as enhanced protection and pay for frontline workers. Other possible and more controversial provisions being considered include:
- Additional small business financial relief;
- College student loan forgiveness;
- Rent relief;
- Expanded food benefits;
- More Medicaid funding;
- Increased payments for unemployed workers; and
- Money for states to implement vote-by-mail in the November election.
The American Association of State Highway and Transportation Officials had requested $50 billion to cover emergency assistance for highway and bridge repairs. It’s unclear how much will be allocated to infrastructure funding in the CARES 2 proposal, though it’s clear the size of this proposal virtually extinguishes the likelihood of large-scale infrastructure investment in any subsequent coronavirus funding package.
Relevant House committees have been directed to finish their portion of the proposal this weekend, which could open the door to a House floor vote as early as next week. That could be delayed by complications of getting House members back to Washington, DC. The Senate has already been called back to the Capitol.