July Issues Update

QUICK FIX

— Additional weekly unemployment payments secured under the CARES Act, H.R. 748 (116), are set to expire at the end of this month. While Republicans and the Trump administration have said extending the benefits is a nonstarter, the historic number of Americans still losing their jobs could tip the political calculus as lawmakers begin debating the next round of coronavirus aid later in July.

— Meanwhile, that coronavirus relief bill could also be the last chance for this Congress to tackle a pair of bipartisan health care issues that faced political headwinds even before the pandemic: surprise health bills and drug pricing legislation. But given the narrow window of time to pull together a sweeping rescue package before the August recess, those high-profile issues could be pushed off until the fall.

— The government's $670 billion emergency loan program for small businesses closed to new applications at the end of June, and lawmakers are debating how to craft a new lifeline for ailing employers. It's unlikely that Congress will just restart the so-called Paycheck Protection Program. Instead, there’s bipartisan support for letting businesses apply for second loans if they can prove they're still suffering.

HEALTH CARE

Racing toward a vaccine: The Trump administration’s coronavirus efforts are focused on bringing a vaccine to market in record time through Operation Warp Speed, a joint HHS-Pentagon project that the government has already poured $10 billion into. At least a couple of vaccine candidates could enter late-stage trials this month, with hopes that hundreds of millions of doses could be ready by the winter. However, vaccine development is notoriously tricky, and a setback could delay broader reopening efforts.

THE CONTINUING ECONOMIC UNCERTAINTY

Jobless benefits expiring: Once the $600 weekly additional unemployment payments end, out-of-work Americans could see their benefits drop by an average of more than two-thirds. The size of an unemployment check varies depending on the recipient's income and on rules that vary from state to state, but the average weekly payment over the past year was $342, according to DOL.

That could put Republicans in a corner in a tight election year. They argue that the enhanced unemployment benefits could discourage people from returning to work because, in many cases, they are taking home more than they did when they were employed. The House-passed HEROES Act, H.R. 6800 (116), would extend those benefits through the end of January, but the Senate hasn’t taken it up. And Majority Leader Mitch McConnell is aiming to pass another round of aid toward the end of the month, creating a potential buzzer beater debate over the benefits just before the clock runs out. — Rebecca Rainey

TECHNOLOGY

The hot seat gets hotter: The summer before the election finds Silicon Valley’s most powerful companies facing a major imperative in Washington: making the case to policymakers that the tech industry’s biggest players are a boon, not a threat, to American society.

Congress is taking up legislation to whittle away the legal liability protections that online companies enjoy under Section 230 of the Communications Decency Act, a 1996 law that has become a financial lifeline for the industry. Both Trump and presumptive Democratic nominee Joe Biden have urged lawmakers to revoke the statute altogether.

Late July will bring a literal hot seat for four top CEOs — Facebook's Mark Zuckerberg, Amazon's Jeff Bezos, Google's Sundar Pichai and Apple's Tim Cook — who are set to testify in a first-of-its-kind blockbuster hearing in front of the House Judiciary antitrust subcommittee. The session will give lawmakers of both parties an opportunity to air their accusations that the companies are abusing their power to the detriment of their users, the broader economy and even U.S. democracy. Likely topics include Google’s and Facebook’s dominance of the digital advertising market and Amazon’s and Apple’s control of platforms where they serve as both host and competitor.

DOJ antitrust prosecutors also expect to sue Google in the coming months and are taking a serious look at opening a full-blown investigation of Apple, as POLITICO reported last month. — Bob King

BILLS, BILLS, BILLS

Four weeks of appropriations work: With less than three months until federal funding expires, House Democrats have compressed the brunt of appropriations season into a four-week blitz this month.

Action begins with subcommittee markups of all 12 of the fiscal 2021 spending bills over just three days, followed by mid-month approval by the full Appropriations panel. House leaders have already prepared lawmakers for floor action to pass the majority of those bills during the weeks of July 20 and 27.

In the Senate, things are moving more slowly, with no plans yet to kick off appropriations markups.

While each of the dozen spending bills funds agencies and programs affected by the coronavirus pandemic, major increases to respond to the crisis will continue to be handled through separate emergency spending measures.

Even if appropriators wanted to substantially boost budgets under the 12 annual funding bills, they couldn't, since the two-year budget deal, H.R. 3877 (116), signed into law last year provides a less than 1 percent increase for both defense and non-defense programs for the fiscal year that starts on Oct. 1. — Jennifer Scholtes

Congress grinds through defense bills: The House and Senate are in for a marathon month as lawmakers consider legislation to lay out military policy and funding for the coming fiscal year.

Leaders of the House and Senate Armed Services committees are aiming to pass their versions of the annual NDAA and kick off negotiations on a compromise bill before lawmakers leave for an August recess.

The House Armed Services Committee last week approved its version of the NDAA. The measure is expected to head to the House floor in the coming weeks.

The Senate will return from a recess this month to continue debate on its version of the NDAA. Though Senate Armed Services Chair Jim Inhofe (R-Okla.) sought to pass the bill before the July Fourth holiday, Democrats and Republicans have been deadlocked over what amendments to consider and the bill has lingered on the Senate floor.

The House Defense Appropriations Subcommittee, meanwhile, is slated to roll out its version of annual defense spending legislation soon. Its Senate counterpart, however, has yet to begin work on its defense appropriations measure with Democrats and Republicans at odds over whether to incorporate issues such as coronavirus assistance and police reform into the dozen annual spending bills. — Connor O'Brien

CORONAVIRUS EFFECTS

Help for tenants: Democrats are pushing to include $100 billion in rental assistance and a year-long eviction moratorium in the next coronavirus relief bill. The current moratorium on evictions from federally backed rental units expires on July 24.

Federal Reserve policymakers will meet on July 28-29 to consider whether to take more steps to reassure markets that they will boost the economy, even as interest rates are already near zero. The meeting comes at a particularly critical time as the economy faces threats from expiring government benefits as well as an apparent resurgence in the pandemic. — Mark McQuillan

Schools wait for more coronavirus aid: Democrats are looking to gain traction with their coronavirus relief packages that include billions of dollars of aid for education. School leaders, teachers unions and education advocacy groups have been pressing Congress for more federal dollars, which they say are critical to reopening their classrooms safely this fall during the pandemic. The HEROES Act, which the House passed in May, would provide more than $100 billion to schools and colleges. In June, Senate Democrats introduced a coronavirus relief package that includes $430 billion for child care, K-12 schools and higher education . Senate HELP Chair Lamar Alexander (R-Tenn.) has said he is on board with giving schools “the money they need to reopen safely in the fall.” — Bianca Quilantan

Coronavirus aid and the nutrition safety net: Expect expanding food stamp benefits to be a point of conflict in the next stimulus package.

Democrats are renewing their push to get Republicans on board with a 15 percent increase to Supplemental Nutrition Assistance Program benefits until unemployment levels come down. So far, there's been deep resistance from Republicans on the concept, which they see as a way to expand the safety net program more permanently.

Congress will also have to figure out how to support school meals programs. It will be an enormous logistical challenge to feed 30 million students each day with some schools open, some partially open and some fully online. — Helena Bottemiller Evich

Airline bailout takes flight: The end of September also marks another watershed date for the airline industry — that's when the strings attached to airline bailout money that prohibit carriers from involuntarily laying off its workforce will expire. Absent another infusion of cash, most are bracing for large-scale layoffs across the industry. Until then, airlines will continue to limp along. — Kathryn A. Wolfe

What’s next for the U.S.-Canada border: It’s been almost four months since the land border closed to all but essential travelers. For a refresher on who’s not welcome north of the border, the government of Canada issued a friendly memo at the start of summer with a partial list — sightseers, seasonal homeowners, fishers, boaters, individuals hoping to visit loved ones and road trippers seeking to reach their destination via a shortcut through Canada. The arrangement is in place until July 21.

A recent Nanos research poll conducted for the Globe and Mail suggests most Canadians are content with the restrictions, with 81 percent of respondents saying the border should stay closed. Pollster Nik Nanos said he found the results surprising given Canada’s status as a border country. “It suggests Canadians have a high level of anxiety about what’s happening in the pandemic in the United States.” — Sue Allan

FOLLOW THE MONEY

More tax breaks on the way? Talk of more coronavirus-related tax breaks is expected to heat up this month, after McConnell said the chamber would turn its focus to another economic boost when it gets back from its two-week recess . Much of the conversation so far has centered on expanding current tax breaks in place to help the U.S. economy emerge from recession or adding to the arsenal. Both Democrats and Republicans have expressed interest in boosting a tax credit businesses can claim for keeping workers on their payrolls, and some — including Trump — have pushed for additional stimulus payments to individuals and households. Another idea that’s gained some traction is increasing the list of tax credits companies can claim now instead of spreading them over many years. And Trump continues to push hard for a payroll tax cut.

The tax season is coming to a belated end on July 15, after the Treasury Department and IRS rejected calls from some quarters for another extension. That means a surge in work for agency employees who began returning to their offices in earnest last month after the coronavirus pandemic pretty much shut down onsite operations at the end of March. IRS workers have millions of pieces of mail to sift through, and the National Taxpayer Advocate’s office estimated that included 4.7 million returns as of mid-May.

More money: Debate on funding the IRS for fiscal 2021 is getting under way, with a blitz of House Appropriations subcommittee markups beginning this week. The bill that includes IRS funding, Financial Services and General Government, is scheduled for action July 8. The White House earlier this year proposed a higher spending level of $12 billion for the agency, from its current $11.5 billion. — Aaron Lorenzo and Toby Eckert

Busy months ahead, for digital tax and WTO: A dispute over Europe’s push to impose digital services taxes on U.S. internet giants could flare up in July or August as a result of an investigation launched by the Office of the U.S. Trade Representative that targets the EU, as well as several countries in Europe and around the world, for potential trade retaliation.

China will continue to be in the headlines heading up to the election, as both Trump and Biden attack each other as too weak to take on Beijing.

Markets will watch for any sign that either Trump will pull out of his phase one trade deal with China because of its failure to meet purchase commitments, or that Chinese President Xi Jinping will pull out because of U.S. actions taken in response to the deteriorating situation in Hong Kong, the origin of the coronavirus and the treatment of Uyghurs.

The recent entry-into-force of the U.S.-Mexico-Canada Agreement could lead to the U.S. filing labor cases that target individual Mexican firms, while U.S. dairy producers will be closely watching Canada to make sure it implements its dairy commitments. — Doug Palmer

CANNABIS

Cannabis and the next stimulus: The Senate is expected to begin work on another coronavirus aid bill after the July Fourth break — roughly two months after the House passed its latest coronavirus package — but it’s unclear whether the Senate's version will include House provisions making it easier for banks to offer services like bank accounts and loans to cannabis businesses. There’s bipartisan support for the bill in the Senate, and Republicans earlier this year alluded to the idea that cannabis banking could be tacked onto a must-pass bill out of the Senate. But the GOP may not see a coronavirus bill as the right carrier. When the House passed its last coronavirus bill, Republican Sen. Kevin Cramer of North Dakota — a cosponsor of the bill in the Senate — called the inclusion of cannabis banking "a positive page" and "good policy," but that "this COVID-19 relief package is not the place for it." — Natalie Fertig

Cannabis at the ballot box: It may not be the banner year for legalization advocates were hoping for, but voters will get a chance to weigh in on marijuana ballot questions in several states this November. Some campaigns called it quits due to the pandemic, including an effort in Arkansas, but marijuana questions made the ballot in New Jersey, Mississippi and South Dakota before the public health crisis.

In a handful of other states, advocates worked to overcome the challenges posed by stay-at-home orders. Recreational legalization will likely make the ballot in Montana and Arizona. And a medical marijuana question could still make the ballot in Nebraska. — Mona Zhang

ENERGY AND ENVIRONMENT

Next steps for the recovery package: With McConnell now signaling action on another coronavirus relief package later in July, look for Democrats to make a concerted push again for climate change and clean energy initiatives. More than 620,000 jobs in the clean energy sector have been lost due to the pandemic and blocs of Democrats have urged their leaders to prioritize it in future recovery packages.

There’s also talk of reviving the Civilian Conservation Corps, an FDR-era program that backers say could generate millions of jobs in areas ranging from forest management and public lands maintenance to coastal restoration and cleaning up abandoned mines. Democrats also included tens of billions for initiatives like modernizing the electric grid, boosting the clean energy sector and replacing the nation’s drinking water pipes in their infrastructure package, H.R. 2 (116). — Anthony Adragna

Pipeline wars ratcheting up: The legal cases surrounding several big-name pipelines have been progressing over the summer, including one project ordered to close and another called off this weekend. And on Monday, the Supreme Court said federal regulators can resume permitting new oil and gas pipelines across the country — except for Keystone XL. The high court’s injunction means the Army Corps of Engineers can resume using its nationwide water-crossing permit for most new oil and gas pipelines . As for the Keystone XL project, it’s up to the U.S. Court of Appeals for the 9th Circuit to decide whether the Corps violated the Endangered Species Act when it issued the nationwide permit, and construction is on hold until then. The 9th Circuit has put the appeal on a fast track, with oral arguments likely in the fall or early winter.

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