May 8, 2020

What Will CARES 2.0 Contain?

Elizabeth Thompson, Zack Marshall

Yesterday, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer announced plans to release their latest legislative response to the ongoing coronavirus pandemic as early as next week, following Speaker Pelosi’s directive that House committees finish their text by week’s end. The package, which will originate in the House, is expected to top $1 trillion and will serve as a marker of Democratic priorities. Senate Majority Leader Mitch McConnell has voiced significantly more skepticism about the timing—and scope—of any fifth package. With that in mind, however, here is what we see to be the most likely provisions included in the House’s comprehensive package:

We expect negotiations on this fifth package to be lengthy and difficult. As previously stated, Senate Majority Leader has taken a more cautious approach and tone when discussing the parameters of additional legislative action.  Modifying his original stance on state and local aid, McConnell now appears open to its inclusion but has repeatedly said he will not agree to any bill without the inclusion of a liability shield for businesses. It is worth noting, however, that McConnell will likely place strict, COVID-related limits on any state aid and has been actively outspoken against “bailing out” states who have mismanaged their finances, specifically their pension funds.

While the White House has struck a more conciliatory tone on state and local aid, similarly, it has also drawn a “red line” insisting on the inclusion of a payroll tax break in the next package, though Republicans and Democrats alike seem unconvinced of its necessity or value. Given the many competing political concerns and a dramatic election season nearly upon us, prepare for many offers and counteroffers before a final package can clear both chambers.