Speaker Nancy Pelosi said an agreement on unemployment insurance will be intertwined with a decision on more coronavirus relief checks.
Photo: Michael Reynolds/ShutterstockWASHINGTON—Congress returns to work Monday with just weeks to craft new agreements on aid to households and protections for businesses, urged on by signs of a faltering economic recovery, a resurgent coronavirus pandemic and a looming deadline for enhanced unemployment payments.
Some early areas of potential compromise have emerged on pulling together what would be the fifth coronavirus package since the beginning of the year. Both parties appear eager to pass another bill, a step to which Republicans had long been hesitant to commit, as new doubts about when work, school and family life will return to normal shattered hopes of a quick rebound.
What to do about the expiring $600 in weekly aid the federal government has added to state unemployment benefits is probably the most urgent question facing lawmakers. Roughly 25 million Americans currently access the funds, helping to mitigate some of the worst economic consequences of the downturn, but the enhanced payments end this month.
The unemployment rate fell to 11.1% in June, but some economic indicators show hiring slowing again.
Democrats want to continue the jobless benefit at the current rate through January. Republicans and Trump administration officials have criticized providing that much aid, which runs $15 billion a week, arguing that it discourages people from returning to work by paying them more to stay home.
One approach discussed by Republicans is to continue the federal benefit but at a lower level. House Speaker Nancy Pelosi (D., Calif.) said an agreement on unemployment insurance will be intertwined with the decision on sending another $1,200 coronavirus relief check to many Americans.
“And so we’ll see how it goes with the conversation about that, but some of it depends on what they’re willing to do on the direct payments as well,” she said.
President Trump and administration officials have backed a new round of payments for Americans, but they haven’t provided specifics on what level Mr. Trump would support. Mr. Trump has also said that a payroll tax cut must be included in the legislation, according to a senior administration official, putting him at odds with Democratic and some Republican lawmakers.
A priority for Senate Majority Leader Mitch McConnell is to offer a legal shield from lawsuits arising from the coronavirus pandemic.
Photo: Rod Lamkey/Zuma Press“I don’t think you’re going to see payroll tax cut, infrastructure or any of the other extraneous small-ticket items,” said Ron Bonjean, a former spokesman for House and Senate Republican leadership who is close to the White House.
Senate Majority Leader Mitch McConnell (R., Ky.) has said he plans to roll out a Senate Republican proposal for the next bill this week. Uniting Senate Republicans may prove challenging, though, as some conservatives remain opposed to any additional spending.
“I can see a scenario in which some Republicans say we don’t need another bill, or we don’t like what’s in another bill,” Sen. John Kennedy (R., La.) said. “That will present the majority leader with a decision to make, whether he wants to split the Republican caucus and pass something with Democratic votes.”
Congress passed several major bills this spring, including a $2.2 trillion package known as the Cares Act. After that bill passed, Mr. McConnell stopped progress on any further legislation, saying the Senate wouldn’t move ahead on a major new round of aid until the summer.
White House officials said they have disagreements with Republican lawmakers over how much funding is needed in the next round.
“Republican appropriators want to spend more than the White House,” an administration official said.
A second administration official said some areas of disagreement involved the Centers for Disease Control and Prevention, the Pentagon and the State Department. The official declined to share specifics but said it came down to a question of how much funding is currently available and where new funding could be best used.
“Nobody wants a massive blowout like the Cares Act,” the official said. “Everybody has said we want this to be a little more targeted.”
A priority for Mr. McConnell in this round of negotiations is to offer a legal shield to businesses, schools, health-care providers and nonprofits from lawsuits arising from the coronavirus pandemic. Mr. McConnell and Sen. John Cornyn (R., Texas) are proposing to make it more difficult to find organizations liable in cases in which someone was allegedly exposed to the coronavirus.
A group of six House Democrats joined six Republicans in a letter to congressional leadership last week asking that the next bill include a shield from coronavirus-related lawsuits. Other Democrats acknowledge that they will likely compromise on the issue in the bill.
‘State and local is at the very, very top of the list because it is so vital,’ Senate Minority Leader Chuck Schumer said.
Photo: Stefani Reynolds/Getty Images“I understand why for a lot of businesses this is uncharted territory,” Rep. Stephanie Murphy (D., Fla.) said of liability protections. “So I’m not opposed to having a discussion that addresses some of those concerns, but that can’t be the main relief mechanism in the next bill.”
Many lawmakers are pushing for the next bill to include major funding for schools and universities to use to cover the cost of reopening during a pandemic. House Democrats approved roughly $100 billion for schools in a $3.5 trillion bill that passed the House in May but was rejected by the Senate GOP.
Senate Republicans also support providing funding to public schools to help them to reopen safely, though the two parties could still face hurdles before a bipartisan agreement. Complicating matters, Mr. Trump has insisted that schools reopen fully, though such calls are up to local officials, and many plan hybrid in-person and remote schedules.
Some Trump administration officials have said that coronavirus-aid funding should also go to private schools and that funding for schools should be conditioned on plans to reopen. Democrats oppose both measures.
“I’m not in favor of spending taxpayer dollars on private schools,” Rep. Andy Levin (D., Mich.), the vice chairman of the House Education and Labor Committee, said. “The first thing we need is an overall public health approach, and the second thing is instead of shouting schools that you must reopen, we must give them the resources they need to do so.”
Another funding fight will be over aid to state and cities. Local government leaders, whose budgets have been decimated by falling tax revenue and rising costs, have pleaded for more federal support.
Congress has previously approved roughly $150 billion for state and local governments, and some Republicans have opposed sending them more aid. Democrats have pushed for roughly $1 trillion more in aid for state and local governments.
“State and local is at the very, very top of the list because it is so vital,” Senate Minority Leader Chuck Schumer (D., N.Y.) said Friday. He said Democrats would hold out for a large infusion of new aid.
Sen. Bill Cassidy (R., La.) has called for Congress to send $500 billion in aid to state and local governments. He said he has continued to lobby his colleagues on the idea and has seen some initial resistance soften as the virus has spread across the country and more states face bleak fiscal futures.
“I’ve heard some colleagues say it wasn’t necessary and some of those colleagues change their tune and say they recognize the necessity,” he said.
Sen. Cassidy, a physician, said he is confident that there will ultimately be more aid for state and local governments.
“It’s gestating and coming to parturition if you want to follow my analogy,” he said.
Write to Andrew Duehren at andrew.duehren@wsj.com
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