Congress in March approved three separate major bills responding to the COVID-19 pandemic – and work was not even finished on the third and largest bill before lawmakers began considering a possible “Phase 4” of the legislative response.
The House and Senate are currently not planning any legislative activity before April 20, unless events dictate otherwise. But work is already underway on ideas for Phase 4, with an eye toward late April for potential passage.
The Phase 3 bill is frequently called a “stimulus” but in reality its purpose was to stabilize the economy and prevent total collapse as businesses shut down and jobs vanish. Phase 4 is envisioned to pivot from stabilizing the economy to stimulating growth – from disaster mitigation to recovery.
Lawmakers do expect to have some cleanup to do from Phase 3, realizing that a $2 trillion bill assembled in only a few days is likely to require some technical corrections and clarifications. And they may also be looking to extend some of the benefits from previous legislation, depending on circumstances. For example, the Phase 3 aid to small businesses was designed to help them with payroll for about eight weeks – but that may not be enough if large segments of the economy remain shut down.
The $350 billion for small business loans may be inadequate, and talks are already underway to replenish the Small Business Administration’s 7(a) loan program because the CARES Act expanded the definition of “small business.” Further, small businesses, especially independent small businesses, are looking for help from Congress to expand business interruption insurance to include pandemics.
Democrats want another round of cash payments to individuals. And both they and President Trump want to send additional funds to states and localities as their budgets collapse from lost tax revenue and increased spending needs. In particular, congressional Democrats want a fix for the District of Columbia, which was treated as a territory rather than a state in Phase 3 – a difference that cost the District $750 million in additional funding.
Both sides also want to do more for front-line healthcare workers to address the risks they face in confronting the virus – but there is disagreement on how to do so. Democrats want enforceable standards for guarding against airborne contagions through the Occupational Safety and Health Administration, but Republicans have objected to the idea. President Trump and Treasury Secretary Steven Mnuchin have both suggested hazard pay for healthcare workers as an element of Phase 4. Funding for protective equipment for healthcare workers is also on the table, and some lawmakers want to make treatment for the virus free in addition to testing.
Democrats are planning to push for aspects of their Phase 3 proposal that were not included in the final bill, including vote-by-mail provisions, pension protections, and boosts to food stamps and federal matching funds in Medicaid.
Republican congressional leaders Sen. Mitch McConnell, R-Ky., and Rep. Kevin McCarthy, R-Calif., both are focusing on implementation of the Phase 3 package. They say lawmakers should let those programs work, and that their impact should guide potential further legislation as needed. Republicans have also warned against Democrats treating COVID-related legislation as an opportunity to push their ideological “wish list.” The same concern caused deep tension among lawmakers as they crafted Phase 3.
Nonetheless, there is a more aspirational aspect to some Phase 4 plans – including a major infrastructure investment that both sides have sought.
House Speaker Nancy Pelosi, D-Calif., on March 30 outlined the likely areas of focus for Democrats in the next legislation, and indeed included infrastructure; she said the “next bill will lean toward recovery, how we can create good-paying jobs as we go forward.” Specifically, Pelosi and her committee chairs mentioned 5G and rural broadband as well as water infrastructure and the electrical grid, and additional funding for hospitals and nursing homes, in addition to more than $100 billion included in Phase 3.
Congress also must reauthorize funding for transportation infrastructure before current funding expires at the end of September – and Rep. Peter DeFazio, D-Ore., and Sen. John Barrasso, R-Wy., who lead the committees of jurisdiction in their respective chambers, have signaled they will seek to include a large-scale overhaul in COVID-19 recovery legislation. Pay-for disagreements typically bedevil major infrastructure spending – but stakeholders see the $2 trillion price tag on Phase 3 as evidence that typical deficit concerns are on the back burner in this unprecedented crisis.
Indeed, Trump on March 31 tweeted that Phase 4 should include $2 trillion in infrastructure spending.