Pelosi Makes Her Opening Bid

Speaker floats $3 trillion proposal for next round of coronavirus stimulus

Speaker of the House Nancy Pelosi
Speaker of the House Nancy Pelosi / Getty Images
May 12, 2020

Speaker of the House Nancy Pelosi (D., Calif.) opened the next round of coronavirus negotiations on Tuesday with a bill bursting with Democratic pet proposals, including stimulus checks for illegal immigrants and tax relief for the ultra-wealthy in blue states.

The $3 trillion, 1,800-page HEROES Act proposes billions in funding for states, cities, every branch of the federal government, and Democratic favorites from the Post Office to Howard University. Pelosi spent the last week designing the bill alongside fellow congressional Democrats—who have refused to return to Washington, D.C., until a plan is set in stone—without the input of the White House or Republican colleagues.

Pelosi's proposal marks the beginning of the fourth full round of stimulus spending since the coronavirus shut most of the United States down in early March. It comes amid record-breaking unemployment and a country still facing a rising death toll, but also as many Republicans have increasingly signaled their unease with a budget deficit predicted to hit $4 trillion by the end of the year.

In practice, that means Pelosi's bill is like the 1,400-page counterproposal the speaker floated during the last full round: more a bargaining stance against the opposition, and a sop to her party, than a serious legislative agenda. The bill itself is likely to be dead on arrival in Mitch McConnell's (R., Ky.) Senate, but its terms may be the starting point for a drawn out, brutal fourth round of negotiations.

The HEROES Act contains hundreds of provisions—the summary alone is 90 pages long—but the bill is unified by big spending. States, which have been hemorrhaging funds, are earmarked $540 billion for relief of fiscal losses incurred due to COVID-19, while cities get another $375 billion—both likely to ruffle the feathers of Republicans, who have agitated against condition-free bailouts for fiscally irresponsible states. $175 billion is set aside for testing, treatment, and other health-related expenses.

The bill also revisits fiscal stimulus measures from its predecessor, the CARES Act. It includes another round of $1,200 checks, although it replaces the provision of $500 per child with $1,200 per child for the first three children. It also extends the $600 in added federal funding for unemployment insurance, which Republicans have argued exacerbates unemployment.

Favored Democratic patronage recipients also get their share of cash. The U.S. Postal Service—which President Donald Trump has said he might let fail—gets $25 billion. The National Endowments for the Arts and Humanities get $10 million each, while colleges and universities are earmarked $10 billion—including $20 million for Howard University.

This broad diffusion of cash is in line with a bill that several House Democrats told Politico "feels like little more than an effort to appease the most liberal members of the caucus." It includes language, for example, extending coronavirus relief payment eligibility to those without a Social Security Number, i.e., illegal immigrants—a priority of Rep. Alexandria Ocasio-Cortez (D., N.Y.) and others in her progressive "squad."

The bill includes concessions for more moderate Democrats as well. It contains a temporary repeal of the cap on the State and Local Tax Deduction, a change Pelosi was blasted for floating months ago. The so-called SALT deduction allows individuals to deduct the value of their state and local taxes on their federal taxes—a benefit that accrues overwhelmingly to wealthy residents of high-tax blue states. The 2017 Republican tax bill capped the SALT deduction at $10,000, but Pelosi would undo it, a major boon to her party's most deep-pocketed constituents.

Such provisions are almost certainly about Pelosi winning the support of her caucus and appearing tough in negotiations with Republicans. House Minority leader Kevin McCarthy (R., Calif.) has already decried the proposal as a "Pelosi-led pipedream written in private"; other Republicans will doubtless issue similar denunciations in the coming hours and days.

What remains to be seen is what Republican leadership—both McConnell and the White House's negotiating team, led by Secretary of the Treasury Steven Mnuchin—will offer as a counterproposal. Congressional Republicans have grown increasingly wary of adding more government spending before all of the appropriations under the CARES Act have gone out the door; Trump has been more open to added stimulus spending, but the White House has floated ideas orthogonal to the Democrats' preferred approach.

Democrats expect a vote on the HEROES Act late this week or early next. The resultant negotiation, however, may drag on much longer—a back-and-forth that could cost many millions more American jobs, and many thousands more American lives.

Published under: Coronavirus , Nancy Pelosi