May Policy Issues Overview

May 4, 2020

QUICK FIX

— Half of Congress is back this week, even as local officials say coronavirus cases in Washington have yet to peak. The Senate resumes business today after an extended recess due to the coronavirus, and Majority Leader Mitch McConnell is looking to advance judicial and executive branch nominees. In-person hearings are also starting back up this month: President Donald Trump’s pick for director of national intelligence is set to appear before the Senate Intelligence Committee on Tuesday, while a 5G spectrum fight that’s divided the Trump Cabinet gets a hearing in front of the Senate Armed Services Committee on Wednesday. The House is not planning to come back until next week, but an Appropriations subcommittee will still hold an in-person hearing Wednesday on coronavirus response (though the Trump administration has blocked Dr. Anthony Fauci from testifying).

 

— Another coronavirus relief package is expected within weeks, as lawmakers continue to find ways to help struggling Americans despite a swelling federal deficit. House Speaker Nancy Pelosi has said states and local governments may need as much as $1 trillion in additional federal relief to keep economies afloat. But the administration seems to be taking a wait-and-see approach on more stimulus: “There may well be additional legislation. There’s kind of a pause period right now,” White House economic adviser Larry Kudlow said Sunday on CNN. “We'll wait and see. … We have to execute the last package.” Updated employment numbers coming soon could change the administration’s tune. More than 30.3 million unemployment claims have been filed in just six weeks as the coronavirus batters the economy. The continuing damage to the labor market will be clearer Friday, when the Department of Labor releases the jobs report for the month of April.

LOOKING AHEAD TO THE NEXT STIMULUS

Workplace health insurance the latest bailout target: An unusual coalition of big business and labor interests is rallying around a proposal to bail out employer health plans in the wake of staggering losses to the insurance industry amid the pandemic. With tens of millions of people rapidly losing their jobs, the idea of tying coverage to the workplace is facing its biggest test yet, and some worry that a surge in uninsured Americans could revive the push for “Medicare for All.” The powerful interests have strong economic motives to keep the current system of employer-based care, and are rallying behind a Democratic effort to subsidize temporary extensions of newly unemployed Americans’ workplace health plans in Congress’ next coronavirus rescue package. — Susannah Luthi

 

Loan reckoning: A massive small-business lending program designed to avert layoffs during the pandemic will run out of funding for a second time by early May. That will force Congress to consider whether to replenish the so-called Paycheck Protection Program, which quickly used up the $670 billion lawmakers allocated, or look for other ways to support workers. The small-business loans have proven to be hugely popular, but the system for doling them out has been saddled with technical problems, lender confusion and concerns of inequity after several large corporations secured tens of millions of dollars in aid. — Mark McQuillan

 

Billions more for the Pentagon? Ellen Lord, the department's top acquisition official, said months-long delays to major weapons programs could cost billions and that the Pentagon would ask Congress for more money to fill the gap. It's a move that's sure to raise eyebrows among skeptical lawmakers who've argued for years that the Pentagon's budget is already too large. The Defense Department already received an extra $10.5 billion to bolster its coronavirus response in March. The replenishment of more than $300 billion in small-business loans in the fourth round of aid last month will likely aid some smaller defense companies, but defense industry groups have said additional assistance is needed to keep contractors solvent through the pandemic. — Connor O'Brien

 

Bipartisan support for more checks for farmers: The Agriculture Department’s farm stimulus programs will start pumping out billions of dollars to producers this month while lawmakers consider a second, potentially even bigger infusion of funding for the struggling sector. There’s bipartisan support for adding another $50 billion to the USDA’s arsenal, but also a debate over whether Congress should impose stricter guidelines on how the money is spent. — Ryan McCrimmon

 

More tax breaks coming? With all eyes on whether Congress will enact a fourth economic stimulus package, K Street, Capitol Hill and the White House are mulling possible tax provisions. Trump is advocating for more payroll tax cuts, while Democrats and Republicans on Capitol Hill seem more interested in tax breaks targeted to health care workers and first responders. The hard-hit retail and restaurant industries may also seek to add to the tax breaks they got in the last rescue package, the CARES Act. Another round of direct payments to individuals is also a possibility. — Toby Eckert

 

Eyeing worker protections: Worker safety advocates want the next coronavirus aid package to include mandatory safety protections for workers, and Democrats have introduced legislation that would require the Occupational Safety and Health Administration to issue within seven days an emergency Covid-19 standard. But the business community is opposed to mandatory rules, and such a requirement will more than likely face opposition from Republicans. Democrats also will likely demand hazard pay for emergency and health workers. Pelosi said last week that House Education and Labor Chairman Bobby Scott (D-Va.) is working with Senate HELP ranking member Patty Murray (D-Wash.) “to see if [Republicans] will have a go on that.” — Rebecca Rainey

 

More money for broadband: Democrats say they want at least $2 billion to help close the so-called digital homework gap, with subsidy money going to fund Wi-Fi hotspots to help students stuck at home. Republicans are treading cautiously and say Congress may want to pair any funding with telecom industry regulatory relief. Meanwhile, FCC Chairman Ajit Pai says Congress needs to find money to implement recent laws requiring the agency to come up with more accurate broadband data and root out Chinese telecom gear from Huawei and ZTE, which U.S. national security officials deem a risk. Expect shared Republican and Democratic interest in funding these priorities and more. — John Hendel

CAN'T STOP, WON'T STOP

IRS starting to go back to work: The agency is trying to ramp back up after the prolonged closure of its offices nationwide due to the coronavirus. It recently asked for volunteers to return to 10 offices so they can, among other things, do work related to the tax-filing season, which has been extended to July 15. If enough workers don't step forward, the agency has said it will start mandatory callbacks.

 

On the regulatory front, the IRS and Treasury have been busy kicking out informal guidance for tax provisions included in the CARES Act and earlier rescue packages, including refunds for business losses and tax credits for retaining employees. — Toby Eckert

 

U.S.-U.K. trade talks kick off: The U.S. and United Kingdom will launch virtual trade negotiations Tuesday. The first round of talks is set to take two weeks, with further rounds roughly every six weeks. — Emilio Casalicchio and Doug Palmer

 

Spectrum feud splits the administration: Some policy spats are high-stakes enough to play out even amid a global pandemic. Exhibit A is a spectrum fight between the FCC and much of the Trump Cabinet, which is the focus of a hearing Wednesday in the Senate Armed Services Committee. The hearing concerns the FCC's decision to support a 5G wireless plan by the Virginia satellite company Ligado, even though the Pentagon and other agencies say it would cause severe interference with GPS signals. — John Hendel

 

Senate hearing for intelligence nominee: The Senate Intelligence Committee will hold a confirmation hearing Tuesday for Rep. John Ratcliffe (R-Texas), the president’s nominee to be director of national intelligence. — Martin Matishak

 

SCOTUS hears arguments in religious school cases: The Supreme Court will roll out oral arguments via teleconference on two major employment discrimination court cases involving religious schools. On May 11, arguments are scheduled for the lawsuits: Our Lady of Guadalupe School v. Morrissey-Berru, Agnes and St. James School v. Biel, Darryl. The two Catholic schools are challenging whether the First Amendment bars civil courts from ruling on employment discrimination cases at religious institutions. — Juan Perez Jr.

 

Don’t forget about spending bills: House and Senate appropriators sidelined by the pandemic say they’ve been working remotely on spending bills for next fiscal year, ready to hit the ground running with in-person markups in the coming months. Rep. Rosa DeLauro (D-Conn.), the chairwoman of the House Labor-HHS-Education spending panel, recently told us that it’s still possible to meet the original House goal of clearing all 12 appropriations bills by the end of June. Meanwhile, Senate spending leaders hope to finish markups by July 4. Federal funding runs out at the end of the fiscal year on Sept. 30. — Caitlin Emma

 

Eyeing cars of the future: DOT is still working on paving the way for driverless cars, coming out with its first tranche of suggestions for modifying vehicle safety requirements to accommodate cars without a human driver. — Tanya Snyder

 

Getting ready for USMCA: Work is underway to implement the U.S.-Mexico-Canada Agreement, which will officially enter into force on July 1. — Adam Behsudi

 

Canada’s new central bank leader: The Trudeau government announced Tiff Macklem will be the Bank of Canada’s next governor as the country deals with the dual economic crisis of Covid-19 and the oil-price shock. Macklem is set to take over June 3 and will immediately be installed among Canada’s top economic policymakers working to keep the economy from tanking. — Andy Blatchford

HOW TO STOP THE BLEEDING

There's an app for that: Apple and Google are slated to roll out smartphone apps in mid-May that people can use to confidentially designate themselves as infected with the virus. Bluetooth technology on the phones can then warn other app users who come in proximity long enough to be at risk of catching the disease. It will be the first test of how much Americans value medical privacy amid a pandemic, which has put a premium on tracking patients in a race to identify who's sick and how to direct resources needed to slow the virus’ spread. — Darius Tahir and Mohana Ravindranath

 

Pleading for tariff relief: The impact of pandemic shutdowns and stay-at-home orders will cause a more obvious drag on cross-border supply chains. In the U.S., a gradual reopening of manufacturing will likely see a mismatch with Mexico and Canada, which are at different stages of responding to the virus. U.S. companies big and small are likely to continue to press for broader relief from tariffs, beyond the limited exemptions granted by Trump, to head off the impact of an economic downturn. — Adam Behsudi

 

Looking for a way to save Big Oil: The Trump administration is considering offering bridge loans to oil companies that have been hit hard by the steep selloff in crude oil, but it wasn't clear where the money would come from, or what authority would be used. Oil futures prices, which briefly sank into negative territory last month, are trading at about a quarter of the price from the start of the year. That's expected to throw dozens of oil companies into bankruptcy. — Matt Daily

 

Fed to the rescue: The Federal Reserve is likely to open the doors to some or all of its vast emergency lending programs, which are designed to rescue large corporations, mid-size businesses and state and local governments facing catastrophic layoffs. Those programs, set to be a key piece of the government's efforts to keep the economy afloat during the coronavirus pandemic, will be under the microscope by various oversight bodies tapped by Congress amid concerns they could be used to bail out oil and gas companies. — Mark McQuillan

FOLLOW THE MONEY

Airlines, transit staying afloat for now: Billions of dollars in payroll aid for airlines have started to flow from the Treasury Department, and those carriers that take the money are prohibited from furloughing their workers through the end of September. But after that, layoffs may be unavoidable unless there’s a miraculous turnaround in demand. Some airlines are also applying for billions in loans, but it remains to be seen whether they’ll draw them down. It’s still unclear whether Congress will direct any more money toward the airline industry later this year.

 

Transit agencies got $25 billion from the stimulus bill, but many have indicated that won’t be enough. Amtrak, which was finally going to achieve profitability this year, got $1 billion to stay afloat. — Brianna Gurciullo and Tanya Snyder

 

Less than half of states have paid out benefits for self-employed: Congress has made available more than 39 weeks of unemployment benefits and extended temporary unemployment benefits to self-employed workers and others who normally aren’t eligible for this relief. But more than a month after Congress signed these emergency measures into law, only 21 states have started paying out benefits to self-employed workers, according to the Labor Department. — Rebecca Rainey

 

Public colleges, universities waiting for funds: Public colleges and universities are still waiting to receive the bulk of the $14 billion in stimulus funds for campuses and student assistance. Undocumented college students will not get money from the economic rescue law. Meanwhile, Trump is urging elite K-12 private schools to return federal funds received under an emergency small business loan program. Some universities with big endowments forfeited congressional stimulus dollars in April after public backlash. — Juan Perez Jr.

 

Marijuana misses out on money: Marijuana companies remain shut out of federal coronavirus assistance, as the federal government continues to classify it as an illegal substance. However, hemp companies are eligible to seek aid. — Paul Demko

HOLDING PATTERN

— Annual defense policy legislation is still in limbo — dashing lawmakers' hopes for quick and easy passage of the National Defense Authorization Act this year. The House Armed Services Committee postponed an April 30 markup of its defense bill and has yet to announce a new date. The Senate Armed Services Committee has tentatively planned to consider its version of the bill during the week of May 18.

 

— Some regulations related to the 2017 Tax Cuts and Jobs Act have stalled, notably one limiting business interest write-offs that was superseded by a provision in the CARES Act. Regulations for an excise tax on highly paid employees at tax-exempt organizations, another element of the TCJA, have been stuck at the White House budget office for review since March 24.

 

— Marijuana advocates’ efforts to put legalization referendums on the ballot in several states this month are almost certainly dead this year, given the extraordinary challenges of gathering signatures amid a pandemic.

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