Even though there is no longer a chance for congressional action on another coronavirus economic relief bill ahead of the upcoming presidential and congressional elections, House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Steven Mnuchin this week continued to negotiate on the contours of a potential agreement. But as an exchange of comments between Pelosi and Mnuchin made clear, many of the issues that have been dogging talks since May remain unsettled.

Familiar stumbling blocks

Two issues in particular continue to stand in the way of a bipartisan agreement: Democrats insist that state and local governments need significant funding to prevent cuts in critical services during the economic downturn; and Republicans maintain that liability protections are necessary to shield businesses, schools, and health care facilities from virus-related lawsuits. The parties have each characterized their respective demands as must-haves for a new package. 

After weeks of talks and more recently trading specific language with the Trump administration, Pelosi indicated in an October 29 letter to Mnuchin that she is awaiting promised responses on numerous issues. These include state and local funding and liability protections, but also a national tracking, testing, and tracing program; funding for schools and child care; expansions of the earned income tax credit and the child tax credit; and an extension of the federal supplement to state-level unemployment benefits. Such a list makes clear that negotiations are still far from finished.

“There’s very little that we have a commitment from them on,” Pelosi told the Wall Street Journal October 28. “We have, shall we say, narrowed our differences.”

Mnuchin, for his part, expressed his own concerns about the state of his negotiations with Pelosi in an October 29 statement posted on Twitter in response to her letter.

“Her ALL OR NONE approach is hurting hard-working Americans who need help NOW!,” he said. 

Mnuchin’s Twitter post included a letter he sent to Pelosi in which he disputed her description of their talks and contended that she had been unresponsive to his efforts to reach a compromise on several of the issues she had identified.

A reluctant Senate

A further challenge to the talks between Democrats and the White House is a reluctance on the part of the Senate Republican majority to support another expansive – and expensive – recovery package. Democrats have lowered their top-line request from $3.4 trillion (the estimated cost of the original Heroes Act, which the House approved on May 15) to $2.4 trillion (the estimated cost of the “skinny” Heroes Act the chamber approved on October 1); meanwhile, the Trump administration has been increasing its offers in recent weeks and reportedly is willing to strike a deal on a roughly $1.9 trillion package. (For details on the two House-passed bills, see Tax News & Views, Vol. 21, No. 44, Oct. 2, 2020, and Tax News & Views, Vol. 21, No. 27, May 15, 2020.)

It appears unlikely, though, that the Senate could approve deal in the price range that Pelosi and the administration have been considering. For a bill to clear the Senate, at least 13 Republicans would have to join the chamber’s 45 Democrats and 2 Independents in voting in favor of a procedural motion to bring the measure to the floor. After quickly passing multiple bipartisan bills totaling more than $3 trillion in the spring, however, a number of Republicans in the chamber have either said they would only support a very targeted relief measure or indicated that they do not believe any additional spending is necessary.

Speaker Pelosi brought up the issue in her comments to the Wall Street Journal.

“What [Secretary Mnuchin] and I have agreed upon – on how we would go forward – is not necessarily what the Republican Senate will vote on,” she said. “That is up to the president to convince them that the agreement we have with him is one that will be honored by them. 

President Trump has insisted in recent weeks that if his administration and congressional Democrats reach a deal, the GOP will fall in line.

“If we agree to something, the Republicans will agree to it,” Trump said during an October 15 NBC town hall.

Republican senators and staff have pushed back on that assumption, though, forecasting that the votes are just not there.

“The dimensions of what they’re talking about today, I don’t think there are 13 Republicans for it,” Senate Republican Whip John Thune of South Dakota recently told reporters. “That’s my assessment based on the math.”

A deal during lame duck?

The House recessed October 2 for its final campaign sprint, and the Senate adjourned October 26 after voting to confirm President Trump’s nomination of Judge Amy Coney Barrett to the Supreme Court. With the election now just days away, the next test for a potential agreement on a relief package could come during the post-election “lame duck” legislative session – although what will be possible then will depend on the results of the elections and how the parties perceive their relative power before and after the 117th Congress is scheduled to be seated on January 3, 2021.