Congress Continues to Negotiate COVID Relief, Spending Bill

This will be one of the most consequential weeks of the year for Congress. Government funding expires on December 18 following a one-week extension, so lawmakers are working toward a deal to fund the government for either the rest of the fiscal year (which ends in September) or until sometime in the first quarter of 2021.
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Congress Continues to Negotiate COVID Relief, Spending Bill
 

This will be one of the most consequential weeks of the year for Congress. Government funding expires on December 18 following a one-week extension, so lawmakers are working toward a deal to fund the government for either the rest of the fiscal year (which ends in September) or until sometime in the first quarter of 2021.  

Congressional negotiators also continue to hammer out a Covid relief bill to pass in conjunction with the spending bill.

A bipartisan group known as the “908 coalition” has decided to split their proposal into two parts: a $748 billion proposal with less controversial items and a $160 billion piece that includes the toughest issues of state and local aid and liability reform. 
 
COVID negotiations can be divided into two buckets: The non-controversial items and the controversial items. The two open questions are (1) Will Congress reach a compromise agreement on the controversial items? And (2) If there is no compromise, will Congress nonetheless pass the non-controversial items and leave the controversial items for another day?

Among the non-controversial Items are:
  • Extended unemployment insurance eligibility;
  • A second round of Paycheck Protection Program (PPP) funding;
  • Money for vaccine distribution and testing; and 
  • Funding for schools. 
Controversial items include:
  • Liability limitations for COVID-related claims. Congress is now considering short-term liability relief (i.e., a 12-month moratorium on any litigation regarding COVID-19 exposure claims absent gross negligence);
  • Additional money for state and local governments that would likely be tied to population up to a cap;
  • Direct stimulus payments to Americans (~$600/person up to a cap);
  • Federal unemployment supplement (~$300/week); Some companies, including Walmart and Home Depot, have reinstated "hero incentives" to employees working during the pandemic. Many companies did this temporarily early on in the pandemic;
  • Making PPP loans tax deductible;
  • Direct relief for the restaurant industry;
  • Additional money for airlines and transportation.
When Congress passes big-ticket legislation, controversial items generally must be paired with non-controversial items in order to become law; passing the non-controversial items alone, therefore, could make it less likely that items such as COVID liability protection is ultimately enacted.   

Beyond the near-term policy implications, how this all plays out will be a real indication for how the legislative process could work next year. If it passes, it would be a template for how other legislation can clear Congress (i.e., a bipartisan working group comprised of moderate senators). If it goes nowhere, it will serve as a stark warning that a divided Washington will not be able to effectively govern. 

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