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White House Proposal Increases Price Tag on Stimulus, Adds Direct Payments, Nixes Supplemental Unemployment

  • White House proposes $916 billion stimulus package, an $8 billion increase over the $908 billion measure currently offered as a bipartisan compromise in Congress
  • Proposal includes direct payments but cuts $300 a week in supplemental unemployment, instead extending federal unemployment programs set to expire Dec. 26
  • Democratic leaders reject idea of reducing unemployment as well as Senate Majority Leader Mitch McConnell’s suggestion of removing state and local aid from package

Reentering the debate over economic stimulus for the first time since Election Day, the White House has proposed a $916 billion package. The offer, representing an $8 billion increase over a $908 billion bipartisan measure currently under consideration in Congress, restores direct payments to American taxpayers while eliminating supplemental unemployment benefits.

While Democratic leaders welcomed the offer as a sign of progress on an economic stimulus bill, they were also critical of the proposed unemployment cuts and said the suggestions should not obstruct congressional negotiations. Democratic leaders also denounced Senate Majority Leader Mitch McConnell’s idea to eliminate support for state and local governments and liability protections from the bill, two areas that have proved to be major points of contention in reaching a compromise.

Treasury Secretary Steven Mnuchin said in a statement that he had extended the offer to House Speaker Nancy Pelosi, but supplied few details. He said the measure would be funded in part by $429 billion in monies that have been approved but not spent, including $130 billion left on the table when the Paycheck Protection Program to support small businesses expired in August.

Those familiar with the White House offer said it includes $600 in direct payments, half the amount delivered in stimulus checks under the $2.2 trillion CARES Act passed in the spring. It would also cut the allocation for unemployment from $180 billion to $40 billion, providing no supplemental payments but extending two federal jobless programs to assist unemployed people who have exhausted their state benefits or are ineligible for those benefits. The programs are currently set to expire on Dec. 26.

The White House proposal mirrors several elements of the measure before Congress, including liability protections as well as funding for new PPP loans, the distribution of COVID-19 vaccines, state and local governments.

Liability protections and aid to state and local governments are key sources of partisan disagreement on a new stimulus bill. Republicans generally favor liability protections for businesses, health care providers, and schools, while Democrats believe it could allow these entities to escape repercussions for any irresponsible practices that endangered public health. Democrats have been supportive of state and local funding while Republicans have largely been opposed, charging that such an appropriation would amount to a blue state bailout.

Neither issue has so far proved to be as pressing as first believed. State and local revenue shortfalls have been less onerous than projected, and few lawsuits related to COVID-19 have been filed against companies.

McConnell proposed eliminating the issues in the current bill and addressing them later. This led to pushback by Democrats, who said eliminating state and local funding could potentially hinder vaccine distribution.

Key features in the current bill include $288 billion for PPP loans, $180 billion for $300-a-week supplemental unemployment benefits, $160 billion in state and local funding, and a temporary moratorium on coronavirus-related lawsuits against businesses.

McConnell has promised that the Senate won’t adjourn without passing a stimulus bill. Some senators who helped craft the bill have described it as a short-term measure to get the nation through the current wave of COVID-19 infections and into the new year, when widespread vaccine distribution is anticipated. President-elect Joe Biden has also expressed his support of passing some relief now and more after he takes office.

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