What’s in Pelosi’s Next Massive Aid Package?

Plus: Trump advisers' debt fears By Yuval Rosenberg and Michael Rainey What’s in Pelosi's Next Coronavirus Rescue Plan? Even as the Trump administration and congressional Republicans take a wait-and-see approach to the next phase of coronavirus relief, House Democrats led by Speaker Nancy Pelosi are racing this week to finalize their own proposals for a multitrillion-dollar rescue package. “We all agree that we must put more money in the pockets of the American people. This is not only necessary for their survival but also is a stimulus to the economy. Direct payments, unemployment insurance, rental and mortgage help and student loan assistance are essential to relieve the fear that many families are facing,” Pelosi wrote in a Mother’s Day [letter]( to colleagues, adding, “Not acting is the most expensive course.” GOP in ‘no rush’: President Trump said Friday he’s [“in no rush”]( to pass another bill. White House economic adviser Larry Kudlow said that, while informal talks are happening, formal negotiations are paused and likely will be until early next month. And Senate Majority leader Mitch McConnell said Monday that there’s no urgent need for additional legislation. "We're basically assessing what we've done already. I'm in constant communication with the White House and if we decide to go forward we'll go forward together," McConnell told reporters, according to [The Hill](. "I don’t think we have yet felt the urgency of acting immediately. That time could develop, but I don’t think it has yet." McConnell reportedly declined to specify a timeline for the any additional coronavirus package. What’s in the Democratic package: The Democratic package, dubbed CARES 2, hasn’t been unveiled yet, but a vote could happen as soon as Friday or slip into next week. If or when the bill passes, it likely won’t mean all that much: “Neither this bill nor anything resembling it will ever become law -- it’s a Democratic wish list filled up with all the party’s favored policies,” Politico [reports](. But it will serve as a political messaging tool — one that House Democrats will use both to show that they’re still working to address the pandemic and to set out their priorities for future negotiations. Here’s a look at eight key provisions expected in the bill, according to [The Hill]( - More aid for state and local governments: Democrats are reportedly looking to provide three separate pots of money for states, counties and municipalities at a total cost approaching $1 trillion. - More direct payments: Democrats are reportedly coming together behind a plan to give most Americans [$2,000 a month]( for as long as the pandemic lasts. - More help for workers and businesses: Democrats will call for further expansion of unemployment benefits as well as additional aid for small businesses, either under the Paycheck Protection Program, which provides grants and loans to keep small businesses afloat and employees on the payroll, or a revamped alternative. Democrats are “eyeing a strategy for replacing the PPP with a program that provides federal grants directly to employers, allowing workers to remain employed — and receiving health benefits — without navigating approval through the middleman banks,” The Hill says. - Rent and mortgage assistance: Reps. Denny Heck of Washington and Maxine Waters of California have proposed a $100 billion program to help people pay their rent and utilities. - Expanding broadband service to rural and low-income areas: This may be the main piece left from scrapped plans to propose a huge infrastructure spending package. - Money for coronavirus testing, treatment and contact tracing: “In this critical moment for our country, we must demonstrate a clear strategy of testing, tracing, and treatment,” Pelosi said in her letter. - The U.S. Postal Service: Democrats are reportedly aiming for at least $25 billion in aid. - Food programs: Democrats has wanted a 15% increase in the Supplemental Nutrition Assistance Program, commonly called food stamps, as part of the first CARES Act. That didn’t happen, but the party will look to ramp up nutritional assistance funding — for SNAP and other programs —in the next bill. Top Trump Advisers Want to Limit Debt From Stimulus. One Problem: Trump Wary of the cost of surging federal spending to combat the coronavirus crisis, senior Trump administration officials are looking at ways to reduce the additional debt created by any future stimulus, The Washington Post [reports]( adding that President Trump isn’t likely to go along: “The concerns about the deficit are coming from traditional conservatives at the White House, including new chief of staff Mark Meadows and acting budget director Russ Vought. But officials say they are likely to face much more skepticism from President Trump himself. Trump has shown little interest since becoming president in shrinking the deficit and has so far stood firm on his campaign pledge not to alter Social Security. … Meadows, who founded the conservative House ‘Freedom Caucus,’ has warned against an emergency relief package for the states, although he has told others in the White House Trump is unlikely to support deficit-limiting measures being considered and that the president is most focused on improving the economy.” The Post says that some White House officials have explored options such as automatic spending cuts once the economy recovers or letting workers receive Social Security benefits before they become eligible. Other ideas reportedly being explored by White House officials include two plans that would allow Americans to receive payments now in exchange for delayed or reduced Social Security benefits. A White House spokesperson told the Post that Trump would not support any proposal that cuts benefits. Why it matters: These ideas aren’t likely to go anywhere, officials tell the Post, but the discussions themselves are an indication of how troubled some administration officials are with the massive coronavirus spending. Jason Pye, vice president of legislative affairs at FreedomWorks, a conservative advocacy group, told the Post: “A lot of people in the administration are concerned Republicans have completely surrendered the argument on spending, and they want to address it. And it’s an entirely valid concern.” At the same time, the discussions may be a tacit acknowledgment that additional coronavirus relief is likely necessary, as many economists insist, even as Trump as top Republicans say they’re in no rush to pass the next stimulus package. Chart of the Day: Paths to Recovery Some politicians are promising a “v-shaped” recovery, in which the economy bounces back from its coronavirus-induced swoon and rapidly returns to its pre-crisis trajectory, but many experts are now focused on a “swoosh-shaped” rebound, according to [The Wall Street Journal]( Monday. With a swoosh, the economy bounces back but takes a much longer time to return to the trend line. Other possibilities being debated by economists include U, Z, W and L-shaped recoveries, each with its own peculiar dynamics. Although there is still enormous uncertainty about how a recovery will play out, it’s becoming increasingly likely that it will take a significant amount of time. “This is not going to be a quick recovery,” Mark Schneider, chief executive of Nestlé SA, told the Journal. “This is going to be a several-quarter, if not several-year kind of process.” Tweet of the Day Larry Levitt of the Kaiser Family Foundation [highlights]( the need for a more rigorous testing program in the U.S. Fiscal Flashes Small biz program stretches out its funding: Amid complaints that larger companies were claiming the lion’s share of funds allocated to the Paycheck Protection Program, the U.S. Treasury last week reduced the maximum loan amount from $2 million to $150,000. As a result, the volume of loan approvals has dropped to less than $2 billion a day, extending the life of the program and easing concerns that it would soon run out of money. The Small Business Administration says that $188 billion of the $311 billion Congress provided in a second round of funding in April has been claimed, with the average loan size dropping from $206,000 to $73,000. ([Axios]( Trump administration sees unemployment near 20%: White House economic adviser Kevin Hassett expects the unemployment rate to keep rising. “Right now, looking across the U.S., there are more than 30 million people that are getting initial claims from unemployment insurance, and that's the biggest negative shock to the jobs market that we've seen since World War II,” Hassett told “Face the Nation” on Sunday. “To get unemployment rates like the ones that we're about to see ... which I think will climb up towards 20% by next month, you have to really go back to the Great Depression to see that. I think you can expect to see jobs probably trough in May or June." ([CBS News]( School spending rises: Per capita spending in public schools rose in 2018, the U.S. Census Bureau announced Monday. “The amount spent per pupil for public elementary and secondary education (pre-K through 12th grade) for all 50 states and the District of Columbia increased by 3.4% to $12,612 per pupil during the 2018 fiscal year, compared to $12,201 per pupil in 2017,” the agency said in a press release. The increased spending was driven by higher revenues, which came to $720.9 billion in 2018. ([U.S. Census]( News - [White House Races to Contain Virus in Its Ranks: ‘It Is Scary to Go to Work’]( – New York Times - [Even Finding a Covid-19 Vaccine Won’t Be Enough to End the Pandemic]( – Washington Post - [Capital Gains Cuts Won’t Cure the Covid-19 Economy]( – Leonard E. Burman, Tax Policy Center - [Pent-Up Tax Demands Could Resurface in House Democrats’ Aid Bill]( – Roll Call - [GOP Rekindles Deficit Concerns, Adding Snag to Talks on Aid]( – Bloomberg - [Small Firms Join Rush to Return Loans After Rules Revisions]( – Bloomberg - [Trump Administration Cuts Funding for Coronavirus Researcher, Jeopardizing Possible Covid-19 Cure]( – 60 Minutes - [Democratic Lawmakers Criticize ‘Mismanaged’ SBA Loan Program in Letter to Administrator]( – Washington Post - [Lamar Alexander Warns 'Not Enough Money' to Help Everyone]( – Politico - [Fed Officials Push Back On Market View Rates May Go Negative]( – Bloomberg - [Why US Hospitals Are Going Bankrupt]( – CNBC - [Hospitals Struggle to Restart Lucrative Elective Care After Coronavirus Shutdowns]( – New York Times - [A Shadow Medical Safety Net, Stretched to the Limit]( – New York Times - [Trump Eyes Federal Retirement Plan Investments as Part of Showdown With China Over Coronavirus]( – Washington Post - [Election Risk Swells as Wall Street Warns on Tax Cut Reversal]( – Bloomberg - [Farmers’ Hopes for Respite From Trump-Era Struggles Fade Amid Pandemic]( – Washington Post Views and Analysis - [Why Economic Pain Could Persist Even After the Pandemic Is Contained]( – Neil Irwin, New York Times - [McDonald’s Workers in Denmark Pity Us]( – Nicholas Kristof, New York Times - [10-4: How to Reopen the Economy by Exploiting the Coronavirus’s Weak Spot]( – Uri Alon, Ron Milo and Eran Yashiv, New York Times - [How the White House Coronavirus Response Presents Us With a False Choice]( – Joe Biden, Washington Post - [The Next Pandemic-Response Bill Is Likely to Be the Hardest-Fought Politically]( – Washington Post Editorial Board - [The Senate and Partisanship Return to the Capitol]( – Shawn Zeller, Roll Call - [The Bailout Is Working — for the Rich]( – Jesse Eisinger, Pro Publica - [COVID Bailout Cash Goes to Big Players That Have Paid Millions to Settle Allegations of Wrongdoing]( – Kaiser Health News - [This Simple Action Will Fix the Paycheck Protection Program's Looming Forgiveness Nightmare]( – Gene Marks, Axios - [The Real Reason Boeing Didn’t Take Government Bailout Money]( – Allan Sloan, Washington Post - [Inflation Worriers Will Be Wrong for a Second Time]( – Barry Ritholtz, Bloomberg - [4 Reasons State Plans to Open Up May Backfire — and Soon]( – Brian Resnick, Vox - [Everyone Deserves a Federal Reserve Bailout]( – Ryan Cooper, The Week - [Don’t Let the Pentagon Dip Into Its Bag of Old Tricks]( – Sen. Chuck Grassley (R-IA) and Franklin Spinney, Defense News [Like Us on Facebook]( [Like Us on Facebook]( [Read Us On the Web]( [Read Us On the Web]( Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 399 Park AvenueNew York, NY 10022 [Add us to your address book]( Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](.