Federal Negotiations: Update

August 7, 2020

This morning Roll Call is reporting that negotiations for a 5th emergency federal aid bill are in serious jeopardy.  Given this situation The White House is looking at issuing a group of executive orders to address some of the issues at hand.  House Leader Nancy Pelosi and Senate Majority Leader Chuck Schumer are opposed to and will attempt to block any moves by the White House or Senate Republicans to address the problems at hand in a piecemeal fashion.  Meanwhile the White House continues to say it will not do a deal that bails out states and localities that have historically ‘mismanaged’ state budgets.  The White House seems willing to appropriate emergency funds for states to address the needs of first responders, hospitals, police, fireman and school teachers but this will not satisfy blue state Governors across the country who are looking for far more flexibility in terms of how they spend any additional state and local resources.  As we reported earlier this week, Governor Cuomo is now the head of the National Governor’s Association.  This scenario sets up the possibility for more head to head verbal jousting between the Administration and Governor Cuomo on behalf of the NGA, and New York State.

At the end of the day, there appears to be a wide gap on a potential deal for state and local aid.   And while there was some good news yesterday with the announcement from OASAS that LGU reductions have been adjusted to now reflect a withhold of 20% in the third quarter rather than 31% as was first announced (counties must adjust provider withholds accordingly), a 20% withhold/cut for mental health and substance use disorder / addiction providers can not stand and the NYS Council will continue to do everything within our power to persuade the Governor’s Office and state lawmakers that investment rather than withholds are what is needed at this moment in time.  More to follow.

Virus aid talks teeter on brink of collapse

Unclear if negotiations will continue; officials from both parties say they’re still “very far apart” on the scope, size of aid package

Roll Call, 8/6

Negotiations between Democratic leaders and top Trump administration officials began to fall apart Thursday night following a three-hour meeting, putting another coronavirus relief package in serious jeopardy.

After nearly two weeks of discussions, it’s unclear if Treasury Secretary Steven Mnuchin, White House Chief of Staff Mark Meadows, Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer will meet again Friday. That’s the deadline administration officials had set for a breakthrough in talks before President Donald Trump attempts unilateral action to provide some temporary aid.

“We’re very disappointed in the meeting but we urge our Republican colleagues to come back and continue to negotiate,” Schumer said after the meeting broke up around 8:30 p.m.

Mnuchin said negotiators plan to speak by phone again Friday and would decide then whether another in-person meeting was worth it.

“I think there is a lot of issues we are close to a compromise position on, but I think there’s handful of very big issues that we are still very far apart on,” Mnuchin said.

Mnuchin said the administration offered to provide some rental assistance funding on top of an extended eviction moratorium, as well as additional money for state and local governments to address coronavirus-related expenses.

Mnuchin said there remains a wide gap on state and local aid. House Democrats proposed $916 billion in direct funding as part of their sweeping $3.4 trillion package that chamber approved in May. But Trump and many Republican senators have been forceful in rejecting that approach, which would let states and localities use the money to close general revenue shortfalls.

 “On things like state and local this is obviously a big issue, we’re still very far apart on that. The president is not going to do a deal that has a massive amount of money to bail out state and local,” Mnuchin said. “The president is prepared to do something for state and local that deals with the issue of additional coronavirus expenses, that deals with the first responders, the hospitals, the police and fireman all have proper funding, and the school teachers.”

Pelosi concurred with Mnuchin’s assessment of the stalemate: “We are very far apart. It’s most unfortunate.”

If the outlines of a broader deal don’t emerge by Friday, Trump has told his two negotiators to try to work out a so-called “skinny deal,” which Democrats have repeatedly rejected. Barring that, Trump said Thursday he’s prepared to issue an “executive order” likely to involve a payroll tax cut, an extended eviction moratorium, student debt relief and some way of keeping unemployment benefits flowing.

When compared to legislative action by Congress, Trump’s negotiators admitted during the closed-door talks that executive orders would not help as many people, according to Schumer.

“They said the president may go ahead and do a few executive orders, but even they admitted that would leave out millions and millions of people,” he said.

Trump, frustrated with the pace of talks, told reporters at Joint Base Andrews before leaving for Ohio earlier in the day that although a deal was still possible, he’s prepared to announce executive actions “probably tomorrow afternoon” or on Saturday morning.The White House has already unilaterally acted in the case of the eviction moratorium from the March aid package. Those protections for renters in federally backed housing technically lapsed late last month but were extended through Aug. 31. Also in March, Education Secretary Betsy DeVos temporarily set interest rates on federal student loans at 0 percent and gave student borrowers the option to suspend payments.

The legal authority for potential moves to cut payroll taxes and renew emergency unemployment benefits is less clear. Tax experts say the White House couldn’t unilaterally declare a payroll tax holiday, let alone backfill the lost Social Security trust fund revenue without an act of Congress. And repurposing unspent funds for unemployment insurance could run afoul of appropriations law provisions preventing funds transfers without congressional approval, though the administration’s diversion of military funds for the border wall hinges on specific legal authorities that are still being litigated.

White House Deputy Press Secretary Judd Deere wouldn’t go into detail about what kinds of legal means the administration might use to extend relief. “A legislative solution is the priority, but negotiations are a two-way street and Democrats are unfortunately playing politics, which is why President Trump is fully prepared to use his executive authority to help those who continue to be impacted by this virus from China,” Deere said.

Senate Finance Chairman Charles E. Grassley, R-Iowa, earlier said he didn’t believe Trump will actually go through with unilateral actions.

“I assume he’s contemplating it to send a signal that he’s sick and tired that Democrats aren’t negotiating. I doubt if he’s serious about doing it,” Grassley said. He declined to say whether Trump has the legal authority to move money from other accounts to programs such as unemployment insurance.

Later, however, Grassley seemingly endorsed Trump’s potential executive action in a tweet, saying “I can imagine he’s just fed up” with Democrats for not “negotiating in good faith” on the relief bill.

‘Freight train’

The White House may be using the threat of executive action as a negotiating tactic. But Pelosi and Schumer didn’t seem fazed, using a joint news conference earlier Thursday to try to put pressure on their GOP counterparts.

“We have to move more quickly because the light at the end of the tunnel might be the freight train of the virus coming at us,” Pelosi said while declining to put a timeline on an agreement.

Pelosi and Schumer challenged how much Trump could do with an executive order.

“I don’t think they know what they’re talking about,” Pelosi said. “The one thing the president can do is to extend the moratorium [on evictions], and that would be a good thing if there’s money to go with it. And that’s what we keep telling them.”Senators left Washington earlier Thursday amid the ongoing impasse over a pricey aid bill thatneither party wants to leave hanging until after Labor Day.

Senate Majority Leader Mitch McConnell said he’s staying in town, but anyone choosing to head home would have 24 hours’ notice before floor votes.

Many of the senators preparing to leave for their home states on Thursday were optimistic for an agreement in the coming days.

“If I had to guess, I think I’d guess we have an agreement by the end of this week and something to vote on by the middle of next week. But I’d sure hate to bet anything I couldn’t afford to lose on that,” said Sen. Roy Blunt, R-Mo.

Republican senators are supposed to get updates on the talks every weekday around 5 p.m., according to Utah Sen. Mitt Romney.

Florida GOP Sen. Marco Rubio, one of the architects of the Paycheck Protection Program that provides forgivable small-business loans, was concerned that if an agreement on extending that program isn’t reached soon, there could be another spike in layoffs.

“As they run out of their eight weeks of payroll cash, they may not have enough to keep their folks around, and you may start to see layoffs and unemployment as a result of it if we don’t do a PPP Two,” Rubio said. “If they believe that one is on the way, they might hold the line for a couple more weeks. But if they believe there’s no chance of another one, I think you’re more certain to see small-business layoffs start.”

Senate Appropriations Chairman Richard C. Shelby, R-Ala., summed up the situation by saying, “There’s optimism, and then there’s pessimism.”

Clyde McGrady, Niels Lesniewski, Lindsey McPherson and David Lerman contributed to this report.