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Divided House Approves Dems' Expansive $3T Virus Relief Bill

By Andrew Kragie · May 17, 2020, 4:16 PM EDT

The House narrowly approved Democrats' sprawling $3 trillion coronavirus relief bill late Friday despite nearly unanimous Republican opposition and 14 Democratic defections, officially opening the round for negotiations as Congress crafts the next pandemic relief package.

The 208-199 vote sends the Heroes Act to the Senate, where it is dead on arrival. Republicans have dismissed the 1,800-page bill as a political stunt, and Democrats acknowledge that the current text will never become law. But the vote officially blesses the proposal as House Democrats' first offer in negotiations with Senate Republicans and the Trump administration that will likely stretch into June.

"This is a very strategically planned piece of legislation that is tailored strictly to meet the needs of the American people regarding the coronavirus pandemic," Speaker Nancy Pelosi, D-Calif., said on the House floor Friday. "The chairman of the Fed has told us to think big.  'It's never going to be cheaper,' he said, because the cost of credit is so low."

Minority Leader Kevin McCarthy, R-Calif., derided the plan.

"Instead of going big, it seems you went crazy," he said Friday on the House floor. "This is a political messaging bill that has no chance at becoming law."

Despite the criticism, many Republicans acknowledge that a number of House provisions are likely to be included in the eventual compromise legislation, particularly some type of aid to state and local governments and an extension of the employee retention tax credit.

"My guess is negotiations will start fairly soon after we pass this bill," House Budget Committee Chairman John Yarmuth, D-Ky., told reporters Friday. "Sometime after Memorial Day would be a time when we could possibly get down to forging a bipartisan compromise."

The Vote

Friday's balloting fell mostly along party lines. The only Republican in support of the bill was Rep. Pete King of New York, who said his state desperately needs aid. Thirteen centrist Democrats, many just elected in 2018 and facing tough reelection battles, said they opposed the bill because it did not reflect bipartisan negotiations. Despite rumblings in the party's left wing that the package was not generous enough, only one progressive voted no.

The final vote came after nearly 12 hours of debates and procedural votes.

Earlier Friday, Democratic leaders had to fend off a Republican effort to block expansion of direct payments to noncitizens with Taxpayer Identification Numbers. That procedural maneuver was meant to pressure Democrats in competitive districts, who could face campaign attacks for sending money to unauthorized immigrants.

House leaders avoided defections on their left flank during the final vote. Progressive Caucus Co-Chair Pramila Jayapal, D-Wash., was the only member of that group to oppose the bill. Jayapal told reporters Friday that she wanted to see an income guarantee for workers and a broader health coverage plan, such as a temporary expansion of Medicare to include laid-off workers who lose coverage and the use of Medicaid to cover the uninsured.

Sen. Bernie Sanders, I-Vt., on Thursday called the proposal to have the government cover COBRA premiums for people who lose jobs "a massive giveaway to the health insurance industry." He also said it was not enough to expand the employee retention tax credit, instead urging the government to fully guarantee worker salaries up to $90,000.

A variation of that dramatic income guarantee surprisingly has some traction on the right: Sen. Josh Hawley, R-Mo., wants to cover 80% of wages — or 120% for rehired workers — up to nearly $50,000. Sen. Cory Gardner, a Colorado Republican facing a tough reelection fight, backed that plan Thursday.

What Comes Next

The Heroes Act that passed the House on Friday now faces certain opposition from Senate Republicans, and the White House has threatened a veto.

A former senior Republican staffer told Law360 on Thursday that, while GOP leaders may dismiss the package, it includes many elements that could make it into a final deal: some amount of state and local aid, extension of the employee retention tax credit and perhaps a measure that would give the cannabis industry access to banks.

In negotiations over enormous packages, the former aide said, "Inevitably each chamber accepts something it wouldn't normally."

Senate Majority Leader Mitch McConnell has publicly urged a pause while lawmakers assess the impact of earlier relief legislation. On May 4, the Kentucky Republican told reporters that he has not "felt the urgency of acting immediately."

However, senators have not been idle. They have introduced various standalone bills that could be included in a Senate package, including a bipartisan proposal on state and local aid. McConnell has said his top priority is a broad liability shield for businesses operating and reopening during the pandemic.

"We've solicited ideas," said the second-ranking Senate Republican, Majority Whip John Thune of South Dakota. "There's a lot of good stuff that's come in the door, much of which is kind of being vetted and thought about and discussed how it might be integrated."

McConnell may hold off until pressure builds inside his conference. Whenever serious negotiations commence, the key players are likely to be Pelosi, McConnell and Treasury Secretary Steven Mnuchin, who has represented the administration in coronavirus relief discussions.

"Mnuchin has clearly proven to be a pivotal player in this administration, with his ability to successfully engage on both sides of the aisle," the former aide said. "He can talk to Donald Trump and Nancy Pelosi. There aren't too many people in that position."

What's in the Bill

It's not clear when negotiators will get down to business, but passing the Heroes Act stakes out a position for House Democrats.

The core of the Health and Economic Recovery Omnibus Emergency Solutions Act is nearly $1 trillion for state and local governments responding to the pandemic and suffering from revenue losses; on Thursday, California updated its budget to reflect an estimated tax loss over $40 billion.

The bill has a slew of other virus-related provisions as well as measures that Republicans criticize as a liberal wish list: hazard pay for essential workers, more direct relief payments, a special enrollment period for health coverage, protections for some unauthorized immigrants, employer tax credits, some student loan forgiveness and much more.

The Democratic proposal would affect employment law, unemployment benefits and pensions aid, broadband internet access and government contracts.

It also includes a bipartisan proposal to give the cannabis industry access to banks. Although the House previously approved the proposal with more than 90 Republicans in support, Senate Republicans have decried its inclusion in a pandemic relief bill.

The Heroes Act's tax provisions include an expansion of the employee retention tax credit, a repeal of recent changes to net operating losses, and a two-year elimination of the cap on state and local tax deductions. The congressional Joint Committee on Taxation estimated Friday that the bill's tax changes would cost over $760 billion. The Congressional Budget Office has not yet estimated other budget impacts.

Rep. Kevin Brady of Texas, the top Republican on the tax-writing Ways and Means Committee, on Wednesday predicted a "show vote dead on arrival in the Senate."

Along with the Heroes Act, the House also voted 217-189 to allow remote official committee proceedings and allow some remote voting: Representatives can designate other members to cast their votes by proxy. All Republicans opposed the change, which Democrats said is necessary to function during the pandemic.

--Editing by Kat Laskowski.

For a reprint of this article, please contact reprints@law360.com.

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