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Here Are the 3 Issues Standing in the Way of a New Stimulus Bill

By Dana George - Dec 16, 2020 at 9:25AM

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Congress has only days to overcome the remaining sticking points and sign a new COVID-19 relief package.

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After months of debate, disagreement, and mudslinging, Congress appears to be closer to passing a bipartisan stimulus bill. Lawmakers from both sides released an updated package yesterday. It split the existing $908 billion compromise proposal into two: A $748 billion package containing less-controversial features such as unemployment assistance and small business support, and a separate $160 billion bill with the more divisive provisions. 

Here's a rundown of the three biggest hurdles in the negotiations.

1. Aid to state and local governments

Officials continue to express alarm at the size of possible state and local government shortfalls. Governing.com, a website for elected officials and public leaders, estimates the nationwide shortfall will be about $1 trillion by the end of 2022. Cities are expected to be $360 billion in the red, counties will face a collective deficit of $202 billion, and states will be a staggering $434 billion in the hole. 

Many local authorities have lost tax revenue -- especially income and sales tax -- during the coronavirus pandemic. At the same time, they have faced increased costs in dealing with record levels of unemployment and a global health crisis.

The initial aid from the CARES Act helped, but much of that money has now been spent. 

With less money to pay for necessary expenses such as social services, education, and police and ambulance services, states and local governments have tried to cut costs. But for many, there was no way to overcome the shortfall.

From the beginning of negotiations, Republicans -- led by Senate Majority Leader Mitch McConnell -- have balked at the idea of bailing out state and local governments. Some point out that state and local governments have already received $150 billion in aid, while others believe the price tag of another round of assistance will be too high. 

Democrats, on the other hand, have consistently pushed for aid to state and local governments. They argue local governments need more support if the economy is to survive and regain its footing. Democrats are also aware that it took state and local governments years to recover from the 2007 Great Recession. They hope federal aid now will speed the healing process. 

2. Liability shield for businesses

Another major sticking point is a liability shield for businesses. McConnell and various Republicans want to see restrictions on coronavirus-related lawsuits against businesses. Until recently, they'd demanded these protections be part of any stimulus package. Now, McConnell supports the idea to put the liability shield and state and local government funding into a separate package.

Democrats have refused to include a liability shield, concerned that blanket protection could mean employees are forced to work in unsafe conditions. As they see it, lawsuits are not ideal but may be the only real protection workers have. 

As of Monday, both sides are said to be working on a compromise regarding the liability shield. The overwhelming concern is that digging their heels in over this single issue could derail the entire spending bill. 

3. Another round of stimulus checks

Back in March, the CARES Act put $1,200 into the bank accounts of every American. There have been a number of stimulus proposals since then, and several have included a second stimulus check. 

However, checks to the American public are not part of the compromise proposal that's on the table right now. And, in what may be the oddest collaboration of 2020, Senator Bernie Sanders and Senator Josh Hawley are together pushing for a new round of checks. Sanders has called on Democratic leadership to reject any bill that excludes stimulus payments to the American people.

Republicans have not opposed the idea of more direct stimulus per se, but the GOP is reluctant to pass legislation with a higher price tag. Democrats maintain that millions of Americans have faced job losses, medical expenses, or other negative COVID-19 impacts. A stimulus check won't make them whole, but it may help them through.

After months of negotiations, there appears to be a willingness to pass some form of stimulus package this week. The government has until the end of the week before it breaks for Christmas. Many hope the latest package will be passed along with a government funding bill, which also needs to be agreed before Friday. With many of the provisions in the CARES Act due to expire before the end of the year, the clock is ticking. 

 

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