Next federal virus aid package could easily swell past $1 trillion

The price tag for the next COVID-19 aid package could quickly swell above $1 trillion as White House negotiators negotiate with Congress over money to reopen schools, prop up small businesses, boost virus testing and keep cash flowing to Americans while the virus crisis deepens in the United States.

Senate Majority Leader Mitch McConnell on Tuesday promised a new round of direct payments to earners below a certain income level, similar to the $1,200 checks sent in the spring. President Donald Trump insists on a payroll tax holiday for workers. And Democrats want billions to outfit schools and shore up local governments.

Treasury Secretary Steven Mnuchin and acting chief of staff Mark Meadows conferred privately with GOP senators before preparing to meet with House Speaker Pelosi and Senate Democratic leader Chuck Schumer. Trump’s team is trying to broker a compromise between the GOP’s emerging $1 trillion proposal with the House’s more sweeping $3 trillion bill.

Meadows told reporters the president wants to ensure the funding package “meets the legitimate needs that are before the American people.”

With the pandemic showing no signs of easing, officials acknowledge the daunting challenge of trying to contain the coronavirus and prevent further economic distress. The U.S. has rising infections and a death toll of 140,800, more than anywhere else in the world. The health crisis is worsening just as emergency aid is about to expire.

McConnell said Washington must develop a strategy to safely reopen schools and businesses until a vaccine can be found.

“We need to carve out a new normal,” the Republican leader said.

McConnell is poised to roll out the $1 trillion GOP proposal, a counter-offer to Pelosi’s $3 trillion House-passed plan as they race to strike a deal by the end of the month. That’s when a $600 weekly unemployment benefits boost and other aid, including a federal rental moratorium on millions of apartment units, expires.

McConnell’s package would send a fresh round of direct cash payments to Americans below a certain income level, likely $75,000 for singles, extend small business loans under the Paycheck Protection Program and create a five-year liability shield against what he warns is a potential “epidemic” of coronavirus lawsuits.

It’s also expected to include at least $70 billion to help schools reopen and $25 billion in virus testing funds. Republicans want to replace the $600 weekly federal jobless benefit with a lower amount, to prevent the unemployed from receiving more aid than they would through a normal paycheck, Republicans said.

But the president’s priorities are splitting his GOP allies in Congress giving momentum to Democrats as talks are underway.

Trump wants a full repeal of the 15.3% payroll tax, which is split among employers and employees, and funds Social Security and Medicare. Experts say that alone would cost $600 billion. At a White House meeting on Monday, GOP leaders told Trump they preferred to include only a partial payroll tax cut.

Easing the payroll tax is dividing Trump’s party because it does little to help out-of-work Americans and adds to the debt load. The tax is already being deferred for employers under the previous virus relief package. Supporters say cutting it now for employees would put money in people’s pockets and stimulate the economy.

GOP Sen. John Cornyn of Texas was among several Republicans saying he’s “not a fan” of a payroll tax holiday.

The administration also panned the push for more virus testing money, saying earlier allotments remain unspent.

Sen. Lamar Alexander of Tennessee, the chairman of the Health committee, said, “All roads to opening school, going back to work, opening child care lead through testing.”

White House press secretary Kayleigh McEnany said Tuesday the administration wants “targeted” funds for the next round of aid, rather than adding more to the existing pot. She said no one is holding up the money.

Senate Democrats began investigating why the Trump administration has left almost half the testing money unspent.

Democrats broadly dismissed the emerging GOP plan as favoring corporate interests over America’s working families. Schumer warned of repeating mistakes of spring when Trump pushed for states to ease stay-home orders and reopen.

“That will not—will not—get the job done,” Schumer said.

House Democrats have approved $100 billion as an education stabilization fund and Senate Democrats are seeking even more, $430 billion for schools and universities to re-open—with money for spacing students apart, buying masks for daily use and alternating bus schedules.

The political stakes are high for both parties before the November election, and even more so for the nation, as the virus crisis and economic fallout hits cities large and small.

Joe Biden, the Democrats’ presumed presidential nominee, stated his own priorities. The new package should “deliver a lifeline to those who need it most: working families and small businesses,” he said.

After insisting in an interview Sunday that the virus would simply “ disappear,” Trump on Monday acknowledged a “big flareup” of COVID-19 cases. He announced plans to relaunch his daily televised briefings.

But Trump’s focus on therapeutics and a vaccine is falling flat on Capitol Hill as lawmakers understand any COVID-19 cures remain months, if not a year, from widespread distribution in the U.S. The federal government is still struggling to provide basic medical supplies and personal protective equipment to hospitals and health care providers.

Mnuchin vowed to stay on Capitol Hill for the next two weeks, determined to reach a deal by month’s end.

The proposed virus aid package would be the fifth, following the $2.2 trillion bill passed in March, the largest U.S. intervention of its kind. The jobless rate has remained in double digits, higher than in the last decade’s Great Recession, and a federal eviction moratorium on millions of rental units approved in the last bill is about to expire.