The US House of Representatives is expected to pass Nancy Pelosi’s plan for $3tn in new stimulus spending later on Friday, despite the objections of Republicans and many rank-and-file Democrats.
The Democrat-controlled House, which has been in recess for most of the time since lockdowns began, reconvened on Friday for a vote on the proposed “Heroes Act”, an 1,815-page bill that includes $500bn for state governments and $375bn for local authorities struggling to balance increased costs and lower tax revenues triggered by the pandemic.
The Democratic proposals, which would come in addition to the almost $3tn in economic relief that Congress has already appropriated since the start of the pandemic, were drafted by Mrs Pelosi, the speaker of the House, and Democratic House committee chairs without input from Republicans, who accused their colleagues of compiling a “liberal wish list”.
In addition to funding for state and local governments, the Heroes Act includes a $200bn hazard pay fund for “essential workers”, another round of $1,200 means-tested “economic impact payments” for US adults earning up to $75,000 a year, and an extension of enhanced unemployment benefits through early next year.
The $2.2tn Cares Act, which was signed into law in March, gave unemployed Americans an extra $600 a week in federal unemployment payments for four months.
Republicans say extending the extra payments will force businesses to “compete” with unemployment benefits for workers. They have also taken issue with other measures that would provide protections for undocumented workers or subsidise healthcare costs for people who lose their jobs, without provisions to prevent federal funding being used to pay for abortions.
“With more than a $3tn price tag, there [are] a lot of bad things in there, including bailouts to failed states, paying illegals, taxpayer money going to fund abortion,” Steve Scalise, the House Republican whip, told Fox News on Thursday. “What does any of that have to do with getting our economy back on track and recovering from this pandemic?”
Rank-and-file Democrats from across the ideological spectrum have also raised red flags about the proposals.
Ro Khanna, a progressive Democratic congressman from California, said on Friday that “bold leadership” was needed, and suggested liberal presidents of the past, including Franklin Roosevelt and Lyndon Johnson, would have “scoffed” at proposals to subsidise private health insurance companies.
“We have a healthcare crisis yet no expansion of Medicaid or Medicare,” said Mr Khanna, a proponent of “Medicare for All”, which would effectively eliminate private health insurance in the US.
Abigail Spanberger, a moderate Democratic congresswoman from Virginia, said on Friday that she would also vote against the bill, saying some of her colleagues “have decided to use this package as an opportunity to make political statements and propose a bill that goes far beyond pandemic relief and has no chance at becoming law, further delaying the help so many need”.
Mitch McConnell, the Senate’s top Republican, has dismissed the Democrats’ proposals, but said he has spoken with the White House and US Treasury secretary Steven Mnuchin about the need for more stimulus after US unemployment hit a postwar high of 14.7 per cent in April.
US president Donald Trump has repeatedly called for the next stimulus to include a cut to payroll taxes — deductions for entitlements such as social security and Medicare — despite objections from many of his fellow Republicans.
On Friday, Larry Kudlow, the top White House economic adviser, also suggested that lower corporation taxes for US companies and looser regulations should be part of any future economic relief package.
Mr Kudlow said the Democrats’ $3tn package was “off target”, adding: “I don’t believe we can spend ourselves into prosperity over time . . . President Trump’s original policies, which reduced taxes and regulations, are exactly the tonic we should pursue going forward in a new round of negotiations.”