In this May 20, 2020, file photo, House Speaker Nancy Pelosi of Calif., speaks during a news conference on Capitol Hill in Washington. Congress is at a crossroads in the Covid-19 crisis. Lawmakers are wrestling over whether to “go big” as Pelosi wants for the next relief bill or hit “pause” as Senate Majority Leader Mitch McConnell insists. (AP Photo/Manuel Balce Ceneta)

Congress shifts attention to overhauling small-business aid

May 26, 2020 - 11:16 pm

WASHINGTON (AP) — Deadlocked over the next big coronavirus relief bill, Congress is shifting its attention to a more modest overhaul of small-business aid in hopes of helping employers reopen shops and survive the pandemic.

Bipartisan legislation that would give small employers more time to take advantage of federal subsidies for payroll and other costs is expected to pass the House this week, as lawmakers return to Washington for an abbreviated two-day session.

Yet absent from the agenda is formal talks between congressional leaders on the next phase of the federal coronavirus response. Democrats have already pushed a $3 trillion-plus measure through the House, but negotiations with the GOP-controlled Senate and White House have yet to begin.

“We can’t keep propping up the economy forever,” Senate Majority Leader Mitch McConnell said Tuesday in Lexington. It was one of his first public appearances in his home state of Kentucky since mid-March because of the pandemic.

“The ultimate solution is to begin to get back to normal,” he said. “There are three things that are essential to have full normalcy — testing, treatment and vaccine.”

Senate Republicans are divided on the next steps and wary of another sprawling negotiation where Democrats and the White House call the shots. They are also split on a central element — how much aid to provide state and local governments and other coronavirus response after earlier relief bills totaled almost $3 trillion.

Even as they hit “pause” on a larger bill, Republicans are enthusiastic about improving the Paycheck Protection Program, which was established in March under the $2 trillion coronavirus relief bill and was replenished last month. All told, Congress has provided about $660 billion for the program.

Sen. Marco Rubio, R-Fla., a key architect of the aid, said in an interview that the program has shifted from one that was intended to keep paychecks flowing during the shutdown to a bridge to help businesses pay workers as they reopen — in many cases, at less than full capacity.

“It’s taken on a different level of importance now,” Rubio said. “The program has evolved from simply keeping people from getting unemployed to actually helping rehire people as these businesses open up but the cash flow lags.”

The House bill would provide a 24-week window to spend PPP funds and would eliminate a requirement that 75% of the forgivable loans be used for payroll costs. The goal is to give businesses more flexibility to pay rent and other overhead costs such as installing protective equipment.

Under the original program, businesses are required to spend their loan money within the eight-week window to have their loans forgiven. That deadline is fast approaching. Without forgiveness, they would face a debt burden that, for many, would be hard to bear in a struggling economy.

But the eight-week window has created a problem, particularly for restaurants. Under the law, they were required to rehire all their laid-off workers despite being closed or limited to takeout and delivery. Many restaurant owners feared that they would use up their loan money before being allowed to reopen, or reopening with reduced revenue because of social distancing requirements.

The House's return to Washington for voting Wednesday comes after Senate Republicans — who are on recess after spending the past three weeks in Washington — have been knocking the decision by top Democrats to largely stay out of session during the pandemic.

House GOP leader Kevin McCarthy’s office announced it was filing a lawsuit Tuesday against the new system of proxy voting. Approved by House Democrats earlier this month, the first-of-its-kind rules change will be in practice this week as dozens of lawmakers sign up to have another vote on their behalf so they can avoid travel to Washington. Republicans call it unconstitutional.

House Speaker Nancy Pelosi called the lawsuit a “sad stunt” as the nation's virus-related death toll approaches 100,000.

It appears the House could be out of session for much of June as well. The House, which has more than four times as many members as the 100-person Senate, is operating under the Capitol physician’s guidance, as Washington, D.C., remains under stay-home orders.

Majority Leader Steny Hoyer, D-Md., said there isn't much legislation ready for floor votes, and committees are just beginning to write must-pass legislation like agency budget bills, the annual defense policy measure and a major reauthorization of water projects.

Hoyer said political messaging bills, usually a feature of election years, are likely to take a back seat for now, as voting in the House has become an arduous and time-consuming process because of social distancing rules.

In the meantime, Democrats are focused on touting the more than $3 trillion measure that they passed earlier this month, a more than 1,800-page measure crafted in response to Pelosi's admonition that they “go big” in the response.

Republicans and the White House have dismissed the bill as a liberal wish list, but they have yet to coalesce around an alternative despite acknowledging the need for more legislative action.

One idea gaining steam among Republicans — pushed by Rep. Kevin Brady of Texas and Sen. Rob Portman of Ohio — would deliver a bonus to unemployed people who return to their jobs. It's discussed as a replacement for the $600 per week supplemental unemployment benefit that expires July 31.

“It’s something we’re looking at very carefully,” said White House economic adviser Larry Kudlow. He called the jobless aid “a major disincentive to go back to work.”

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Associated Press writers Joyce Rosenberg in New York and Bruce Schreiner in Lexington, Ky., contributed to this report.

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