8.7.20 Washington Update

Negotiations over the next COVID-19 aid package are foundering, as the politics surrounding it are reverting to type.   Election Day looms in less than three months.  As such, we thought it best to take a step back and view the broader landscape, particularly from the GOP perspective.

We noted in previous updates that this package would be the most difficult and complex of federal relief efforts to date.  Events of the last several days seem to have confirmed that hunch.  The chaos, panic, and uncertainty accompanying the initial COVID-19 outbreak in March conspired to forge relatively swift and amicable bipartisan agreements among House and Senate leaders and the White House.  Those days are long gone.

After trillions of dollars committed for a whole host of COVID-related (and indeed, unrelated) items and the federal budget drowning in red, to say the GOP rank-and-file are unenthused over the prospect of another trillion-plus package vastly understates Republican sentiment.  And for this and many other reasons, Senate Majority Leader Mitch McConnell (R-KY) and Republican leaders never have had much negotiating leverage.  House Speaker Nancy Pelosi (D-CA) has the leverage or thinks she does.  And as such, she has refused to budge from her position.  The White House position has never been firm or fully spelled out.  Simply put, they are not in unison, which plays to the Speaker’s hand.

Of course, as yet, that hasn’t mattered much, because negotiations between Speaker Pelosi (D-CA), Senate Minority Leader Chuck Schumer (D-NY), and the White House haven’t yielded even a preliminary framework of ideas and policies to work from—just a few terse exchanges over the amount, and duration of, extending unemployment insurance.  In our view, one could plausibly argue, from the narrow political perspective of Senate GOP politics, that this bodes well for McConnell.  He has not stepped into the void between the White House and Democrats.  He has said the White House should be leading negotiations, because the President signs the bill into law.  This ironically leaves him in a good place with a lot of his conference, but the lack of an outcome could hurt his members who are up for reelection.

Consider his conference dynamics.  As has been (accurately) reported, about half of Senate Republicans are uninterested or adamantly against passing another COVID-package, owing to hostility from their bases to more government spending, especially for Blue states; frustration that hundreds of billions of authorized dollars haven’t been spent; and a sense that the economy, albeit slowly and haltingly, is recovering (the jobs number tomorrow will be crucial).  Sen. Rick Scott (R-FL) has slammed the new relief package saying, “Why would the Florida taxpayer now have to subsidize Illinois’ pension plan?  Florida taxpayers are going to pay for Cuomo’s excesses.”

Yet all the same, there are several Senate Republicans (e.g., Gardner, Ernst, Collins, Tillis) facing tough re-elections for whom additional COVID-19 stimulus would provide some degree of inoculation against their opponents, whose strong poll numbers reflect in part the COVID-wracked economy.  As is evident, the balancing act appears next to impossible, though it has been said, and quite rightly, that if anyone could pull it off, McConnell can.

But with a fractious conference and conservative base (and we haven’t even touched on the House Republican conference yet), and Pelosi and Schumer who seem politically confident in the face of aimless negotiations, the path to a deal for McConnell and the White House—well, one might reasonably argue, there’s really no path at all.

A comment from Sen. John Cornyn (R-TX) recently caught our eye.  Cornyn, who’s up for re-election in November, said that “if [a bill] is going to be passed with mainly Democratic votes, it is going to be mainly a Democratic bill.”  In the same vein, White House Chief of Staff Mark Meadows said yesterday that, to the extent there have been concessions thus far, they have come from him and his sparring partner, Treasury Secretary Steve Mnuchin.  It’s not hard to see Republicans in the “no” camp digging in their heels upon hearing this news.

And what of the red line on liability protection?  From what we’ve heard, and contrary to some reports, President Trump is insistent that it must be part of a final package.  But Pelosi continues to say, as she did a few days ago, that she wants nothing to do with it; Schumer savaged it as a “radical change of all liability law.”  Certainly, a Republican conference disinclined to support a bill will be even less so if liability isn’t part of a final package.  Can McConnell and President Trump?  Would McConnell even schedule a vote on the Senate floor for a deal that not one Republican Senator negotiated?

Make no mistake: we’re not coldly predicting complete collapse, just trying to sketch the significant political obstacles to a deal.  There is enough imagination on all sides, we suppose, to pull rabbits from many different hats.  Could some type of relief ride on the continuing resolution in September?  Possibly, though one can easily understand how dicey that prospect becomes after a moment’s reflection.  Do Republicans want uncertainty over a CR and possible shutdown over COVID-19 relief?  We suspect that even if there is a deal in the next two weeks, additional COVID-19 issues could inevitably factor into CR discussions.

What about President Trump?  He certainly is viewed as the proverbial wildcard in these negotiations, a president who is fighting for his political life.  Could he decide at any point to break with congressional Republicans and cut his own deal, in the hope of forcing them to support a package he deems necessary for his political survival, and theirs?  Congressional Republicans could tell Meadows and Mnuchin no deal, but standing up to Trump is another story.  Anything’s possible in this environment, but we doubt it.  Factoring into this assessment is the singular leverage that Trump has: the full weight of the federal government at his beck and call.  This is precisely why, sensing that no deal is at hand, the Administration is crafting unilateral actions that Trump can take to address evictions, unemployment insurance, and whatever else he thinks worthy.

In the end, this may be the best outcome for Republicans.  They can blame Pelosi and Schumer for “playing politics” with people’s lives, pin the failure to pass legislation on them, and then praise Trump for saving the day with an executive order—one that, we should note, relies on unspent funds authorized in previous COVID-19 packages.  Trump voters stay happy, McConnell is out of a jam, and rank-and-file members can avoid the wrath of their bases.

This is a plausible outcome.  Though again, we don’t want to go on record saying no deal can emerge.  As the roiling waters of 2020 have taught us, don’t make hard-and-fast predictions about the world—especially during a pandemic.

In a time of genuine crisis for the country, it’s no surprise that, in this highly polarized era, the parties are retreating to default positions.  Both parties have radically different visions for governing the country—there’s very little, if any, room for compromise.  They view control of the White House and Senate as decisively determining the future course of the country’s culture, economy, and sense of itself.  With so much at stake, expect a rough ride in the months to come.