12.15.20 Washington Update

Congress continues to work on a major year-end spending bill, either an omnibus or cromnibus, along with a COVID-19 relief package and other legislative member priorities. Leaders hoped to finish work today, but a universal agreement appears elusive. Also of note: early voting in the two Georgia Senate runoff elections begins today.

On COVID-19, the fundamental question is whether to advance a package without liability protections and state and local funding, the approach favored by Senate Majority Leader Mitch McConnell (R-KY). A final agreement will be forged by the White House and the “Big Four” — McConnell, Senate Minority Leader Chuck Schumer (D-NY), Speaker Nancy Pelosi (D-CA), and House Minority Leader Kevin McCarthy (R-CA). In addition, Treasury Secretary Steve Mnuchin is opposed to the inclusion of “expense deductibility” for Paycheck Protection Program (PPP) loans, which has strong support in Congress, including from Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR).

Negotiators are close to finishing an omnibus appropriations bill. The House and Senate tax-writing committees are pushing tax and healthcare extenders into the year-end spending package, but they are proving to be contentious, with some of the most significant debate centering around potential “payfors.”

Other extraneous items could ride on the omnibus. Last Friday, House and Senate healthcare committee leaders agreed on legislation to address surprise medical billing. (Notably, some members would like to use the potential $16 billion in savings from the agreement for other health care priorities.) Also in the mix: pipeline safety reauthorization; various bipartisan energy provisions taken from House and Senate energy legislation; and the Water Resources Development Act.

The path to the exits remains littered with complications. First, it’s not clear whether President Trump will support COVID-19 relief without his priorities included. Democrats and the media were quick to dismiss the administration’s $918 billion proposal, offered last week by Treasury Secretary Steve Mnuchin.

On top of this, a new “gang” has emerged—one might even call it a “populist gang,” joining the left and right.  Two unlikely allies, Senators Bernie Sanders (D-VT) and Josh Hawley (R-MO), are insisting on $1,200 stimulus checks in the final COVID package (adding significant cost to the bill), with Sanders threatening a filibuster if their demand is unmet.  (Observers should note the potential of these polar- opposites to unite the bases of both parties, which have the numbers to drive some unexpected changes in the next Congress, and even pull support from the middle.)

Lawmakers are staring down the December 18 government funding deadline, with “Pandemic Emergency Unemployment Compensation,” a program under the CARES Act, set to expire on December 26. Another short-term continuing resolution may be needed if negotiators run out of time, which cannot be ruled out.  Looming over this end-of-year frenzy is the Georgia special election, on January 5.  Early voting started today, and it cannot be denied that the outcome of these races is a factor in this week’s Hill negotiations.

This week, no votes are expected in the House until an agreement is reached on appropriations and Covid-19 relief, while the Senate will continue to process nominations.

President Trump stated on Sunday that he still intends to veto the National Defense Authorization Act conference report, which Congress approved overwhelmingly: The House passed the measure 335-78, the Senate 84-13. While Congress isn’t taking the threat lightly, it’s clear that Trump’s veto could be easily overridden before the 116th Congress adjourns.