GOP Unveils Proposed Next Round of Corona Stimulus

Senate Majority Leader Mitch McConnell
Senate Majority Leader Mitch McConnell / Getty Images
July 27, 2020

Senate Republicans on Monday officially unveiled details of their proposal for the latest round of coronavirus stimulus, officially igniting last-minute negotiations overshadowed by a still-turbulent economy.

The GOP plan includes roughly $1 trillion in new spending meant primarily to shore up the flagging market, as unemployment persists over 10 percent. At the same time, it sets a far less expansive spending agenda than the House Democrats' plan that was introduced in May and contains over $3 trillion in spending proposals.

That sets up what is likely to be a chaotic week of inter-party and inter-branch negotiations. Congress will face additional pressure thanks to the pending expiration of the earlier-passed federal expansion of unemployment insurance, which will elapse at the end of the month. Yet that same expansion, as well as other proposed measures, may run afoul of opposition even within the Senate GOP, particularly among fiscal hawks wary of an exploding deficit.

The proposal's most contentious portion is likely to be its changes to federal supplementation of unemployment insurance. In August and September, the GOP plan will guarantee payment of $200 per month to those on unemployment over and above their state payments; in October that would transition to guaranteeing wage replacement of 70 percent to those without a job, up to $500 a month.

That's a major cut to the status quo under the CARES Act, passed in March, which paid out an additional $600 per month—essentially guaranteeing a $15 per hour replacement wage. Democrats want to preserve that arrangement, while some Republicans worry that it is discouraging workers from returning to the workforce, contributing to a slowed economic recovery. The $200 approach is also a stop-gap, as many states work to adapt outdated unemployment systems to cope with making a fixed percentage payout.

The GOP proposal would also include another round of $1,200 stimulus checks to Americans making less than $75,000 a year, including another $500 for all dependents. And it would push billions to local schools in the process of reopening, further fund the popular Paycheck Protection Program, and create a five-year legal liability shield for employers who fear being sued over coronavirus safety.

Conspicuously absent from the proposal is more money for state and local governments, an ongoing source of tension with Democrats who fear the downstream fiscal impact of impending state financial insolvency. But it would increase flexibility for how states spend the $150 billion already allocated to them under the CARES act.

All of these proposals represent Senate Majority Leader Mitch McConnell's (R., Ky.) counterproposal to Speaker of the House Nancy Pelosi's (D., Calif.) $3.5 trillion proposal from May. A final bill will likely meet somewhere in between, and will also seek the approval of White House negotiators.

But the coming week's negotiations may pit not only party against party, but party members against each other. The GOP package was originally expected on Thursday, but delayed as final details were hashed out, following a heated Senate GOP lunch last week where Sen. Ted Cruz (R., Texas) raised fears about the ballooning deficit, while Sen. Tom Cotton (R., Ark.) argued that bringing a halt to spending could spell electoral doom.

Some House Democrats, meanwhile, were unhappy with Pelosi's original package. Several more moderate members described the bill as "little more than an effort to appease the most liberal members of the caucus" back in May.

All of that adds up to what is likely to be a contentious week of negotiations on Capitol Hill, especially as a second wave of coronavirus infections likely slows the surprisingly swift economic rebound in June. With unemployment payments lapsing and rent coming due, legislators will likely face pressure to act swiftly to forestall economic and social catastrophe.