Hill leaders negotiating last-ditch relief plan as Democrats may be forced to abandon state and local aid

Congressional leaders are engaged in last-ditch negotiations to secure a long-awaited Covid-19 relief deal with expectations growing that Democrats will have to accept a more narrow agreement than they originally pushed for in order to get the package done.

With Capitol Hill leaders racing to finalize a massive spending bill to keep the government open past Friday, there were clear signs on Monday that Democrats would be forced to abandon a push for at least $160 billion in aid to cash-strapped states and cities in order to get a bipartisan agreement where some relief provisions could be added to the measure.

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer both refused to say that the aid was a red line for them in the talks. During a 22-minute phone call Monday evening, the speaker told Treasury Secretary Steven Mnuchin that the GOP insistence to include lawsuit protections for businesses and other entities “remain an obstacle” to getting an agreement on state and local aid — since Republicans have demanded the two be tied together.

And two senior Democratic sources briefed on the talks told CNN that it appears unlikely that state and local aid will make it into a pandemic relief package.

Republicans will only accept state and local aid if it is paired with liability protections, which Democrats have not wanted to support.

Even Senate Minority Whip Dick Durbin, an Illinois Democrat who has negotiated for weeks with a bipartisan group of lawmakers who unveiled their own plan on Monday, acknowledged that dropping state and local aid might be the only way to get a deal. “I can tell you after spending two weeks on it, it’s a challenge.”

If the aid is ultimately dropped from the plan, it would amount to a major concession from Democrats, who had advanced roughly $1 trillion for aid to states and cities as part of a $3 trillion-plus plan that passed the House in May and that the Senate never considered. Democrats had argued the money was paramount to ensure that workers performing vital services — ranging from first responders to health care workers — could continue to say on the job.

Before the elections, Pelosi and Mnuchin were unable to reach an agreement on a large-scale package, even as the White House upped its offer north of $1.5 trillion. A final deal could be less than $800 billion, though the provisions continue to be a subject of negotiation.

To get a deal this week, Republicans would likely have to concede by dropping liabilty protections for businesses and others faced with potential lawsuits during the pandemic, but GOP leaders have already signaled a willingness to abandon that issue in this round of talks.

Indeed, Senate Majority Leader Mitch McConnell has argued that Democrats should drop their state and local government aid demand, which many Republicans oppose, while Republicans drop their demand for liability protections, which Democrats have opposed, in an effort to move forward and pass a more targeted bill focused on consensus provisions.

Top Democrats have not publicly embraced that call, but Pelosi would not say that state and local aid amounts to a deal-breaker for Democrats as part of relief talks when asked by CNN, saying Monday: “We are in negotiations.”

A spokesperson for Pelosi tweeted Monday evening that Pelosi spoke with Mnuchin about pandemic relief and the status of a sweeping government funding bill and, “with regard to COVID, the Speaker reiterated Democrats’ concerns about the liability provisions, which remain an obstacle to securing state and local funding.”

House and Senate appropriators are planning to unveil a $1.4 trillion spending bill on Tuesday to fund federal agencies until the end of September 2021, giving Congress little margin for error to avert a shutdown by Friday at midnight when funding expires. If a deal can be reached on Covid relief, it will be attached to the funding bill and passed at the same time.

A bipartisan group of lawmakers unveiled the legislative text of a $908 billion compromise Covid relief plan on Monday, splitting it into two bills with one dealing with the thorny issues of state and local aid and liability protections, and the other focused on provisions expected to win widespread bipartisan support. The bipartisan bill that deals with the thorny issues of state and local aid and liability protections, the plan would provide a total of $160 billion for state, local and tribal assistance.

Of that, there would be $152 billion for state and local governments as part of the Coronavirus Relief Fund. A third of that $152 billion would be doled out on the basis of state population size, while two-thirds would be given out on the basis of an individual state’s revenue losses.

With regard to liability protections, the plan would “a nationwide gross negligence standard for COVID-19 exposure, medical malpractice, and workplace testing claims.”

A framework summary of the bipartisan package released last week indicates that it would extend all pandemic unemployment programs for an additional 16 weeks and increase federal supplemental unemployment insurance benefits by $300 a week during that period of time.

It would also allow for small businesses devastated by the pandemic the opportunity to receive another forgivable loan through the Paycheck Protection Program.

Now, congressional leaders will have to weigh the bipartisan plan and make a decision soon as to whether they can cobble together a pandemic relief deal or risk the collapse of efforts to negotiate much-needed Covid-19 relief as the pandemic surges.

Senate Majority Whip John Thune signaled optimism about the bipartisan package on Monday, saying, “I think in the end, it’s trending in the right direction.”

GOP Sen. John Cornyn of Texas said he expects to have “something pretty concrete” on the government spending bill by mid-week so that Congress can leave by the end of the week, and suggested that he expects the bill to include modified pieces of the bipartisan Covid-19 relief bill, though likely leaving out provisions for state and local aid and liability protections.

“What additional matters are included (in the spending bill), out of the bipartisan Covid-19 relief bill, I don’t know for sure. But I would think everything except the truly controversial pieces, which are state and (local) aid and liability reforms,” he said.

The bipartisan group of lawmakers made clear at a news conference on Monday that congressional leadership must now come to an agreement over what happens next.

“Now it’s up to the leadership (to) make this happen on a timely basis,” Democratic Sen. Joe Manchin of West Virginia said.