Inside Mitch McConnell’s phase four coronavirus relief proposal

Inside Mitch McConnell’s phase four coronavirus relief proposal
Senate Majority Leader Mitch McConnell plans to release his phase four legislation this week — more than two months after House Democrats unveiled their $3 trillion plan. McConnell’s will be far more narrow in scope and include a roughly $1 trillion price tag, sources familiar with the bill tell Axios.

Why it matters: Several states, including some key to President Trump’s re-election strategy, say more help is needed as new coronavirus cases are forcing them to shutter their economies again or at least slow their reopenings.

  • The Senate GOP bill’s release will officially kick off bipartisan negotiations between Congress and the White House on the next round of coronavirus funding.
  • But time is running short. The House is scheduled to break on July 31, and the Senate is scheduled to break on Aug. 7.

Sources familiar with McConnell’s forthcoming measure tell us the proposal will include:

  • A heavy emphasis on education, giving schools increased funds to help prepare for fall reopenings.
  • Widespread liability protection, including for restaurants, hotels, hospitals, universities and school districts. (Many Democrats are strongly opposed to this, but McConnell has said this is a red line).
  • Increased funding for COVID-19 testing and vaccine research and development. The bill is also likely to include a tax credit for vaccine R&D.
  • Extension of the Paycheck Protection Program. Republicans will propose that the $134 billion left in the previous program’s coffers be reappropriated for phase four. Small business’ revenue loss will be a key parameter for eligibility, one source said.
  • A payroll tax cut “is having a renaissance moment,” another source said, who says to expect something on that given Trump’s insistence it be included.

There will not be additional money for state and local governments. But Republicans want to ease previous guidelines for how states can spend the leftover money appropriated in the CARES Act to ensure money gets to smaller localities.

  • House Minority Leader Kevin McCarthy sees that as “an absolute must-have,” one of the sources said.

Worth noting: The final bill still hasn’t been written, and the details and dollar amounts are still being debated.

What’s next: McConnell will brief the Republican conference on Tuesday then roll it out publicly later this week.

  • The House and Senate would then have a short window to hash out a compromise bill before they break for the August recess.
  • COVID-19 legislation will also compete with other big priorities, including the National Defense Authorization Act and a series of appropriations bills.
  • House Majority Leader Steny Hoyer tells Axios: “I’ve told members not to schedule anything for the first week in August, even though we’re not scheduled to be in. We’re going to be in as long as it takes us to get something done.”

Between the lines: Republicans have been asserting for months that the government must evaluate the economic impact of reopening the country before passing another large stimulus bill, and many had privately hoped that a phase four bill would be more of a longer-term stimulus than emergency relief.

  • But as one Senate Republican aide put it: “We still need to do surgery to stop the bleeding.”
  • Says Hoyer: “The crisis is still with us. Almost every economist tells us if you don’t respond, it’s going to cost you more in the long run.”

The big picture: Unlike in the early months of the COVID-19 outbreak, the latest economic bill comes as rural, red states — like Texas, Arizona and Florida, are being hit the hardest.

  • These states are seen as battlegrounds for Trump in November.

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