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Trump Abandons Coronavirus Relief Negotiations

Posted on Oct. 7, 2020

President Trump has instructed White House officials to stop negotiating with congressional Democrats over another COVID-19 relief package, ending hopes of injecting more money into the Paycheck Protection Program and expanding the employee retention tax credit.

In a series of tweets October 6, Trump blamed Democrats for refusing to take a $1.6 trillion offer made by the administration the week of September 28 and instead holding out for the more costly Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 925), which the House passed October 1.

That bill updated similar legislation that the House passed in May, reducing its cost by about $1 trillion and extending and expanding bipartisan proposals such as the PPP and the employee retention credit to help small businesses retain employees and cope with revenue losses.

Trump said the White House won’t negotiate until after the election, and he instructed Senate Majority Leader Mitch McConnell, R-Ky., to concentrate on approving the nomination of Amy Coney Barrett to be a Supreme Court justice.

Democrats were quick to attack Trump’s position, with House Speaker Nancy Pelosi, D-Calif., calling his decision to walk away from the negotiating table “irresponsible.” House Ways and Means Committee Chair Richard E. Neal, D-Mass., said it was dangerous to leave the American people in the lurch and urged the White House to go back to the negotiating table. 

But negotiations between the White House and Democrats had been slow-moving despite constant contact over the previous two weeks between Pelosi and Treasury Secretary Steven Mnuchin. Disagreements included the size of the relief package, as well as how much should be distributed in unemployment insurance and in aid to state and local governments.

There was also sparring over tax issues, such as the Democrats’ demand to reduce the ability to carry back net operating losses. The updated HEROES Act, as in the original version, would permit a company’s losses from 2019 and 2020 to be carried back only to January 1, 2018, instead of the five years allowed in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).

Democrats also persisted with their demand to roll back the $10,000 cap on the state and local tax deduction. While the updated HEROES Act would repeal the cap only for 2020, the provision was derided by Republicans as a giveaway to the wealthy.

Republicans also rejected a demand by Democrats to expand the earned income tax credit and make the child tax credit fully refundable.

Piecemeal Deals

Congress could still find a way to pass individual provisions to help specific industries.

Although Pelosi was initially adamant that relief measures shouldn’t pass piecemeal, her position changed October 2 when Democrats attempted to approve a stand-alone bill to help the airline industry avoid mass layoffs.

The party’s openness to help individual industries could spur a bipartisan effort to fund and expand the PPP. Republicans have been trying to coax Democrats to join them in passing a discharge petition — a parliamentary procedure that bypasses a committee vote — to extend the PPP and allow borrowers to qualify for a second round of loans.

The process, started by Rep. Jaime Herrera Beutler, R-Wash., incorporates a bill (H.R. 8265) introduced by Rep. Steve Chabot, R-Ohio, and another (H.R. 7664) by Ways and Means Committee member Jackie Walorski, R-Ind., to expand the use of PPP loans to some nonprofit organizations.

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