White House: Friday or bust for virus aid deal

McConnell to keep Senate in session next week; Pelosi softens on overall spending target

White House Chief of Staff Mark Meadows, left, and Treasury Secretary Steven Mnuchin arrive for a meeting with Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer in the Capitol on Wednesday, Aug. 5, 2020.  (Caroline Brehman/CQ Roll Call)
White House Chief of Staff Mark Meadows, left, and Treasury Secretary Steven Mnuchin arrive for a meeting with Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer in the Capitol on Wednesday, Aug. 5, 2020. (Caroline Brehman/CQ Roll Call)
Posted August 5, 2020 at 5:02pm, Updated at 7:04pm

Top Trump administration officials say they need to reach an agreement in principle on the major issues hanging up COVID-19 relief talks by Friday or there's little point in continuing the discussions.

That was the message White House Chief of Staff Mark Meadows and Treasury Secretary Steven Mnuchin delivered to Democratic leaders in their latest meeting Wednesday, which would leave just two days to broker a bipartisan deal.

Mnuchin told reporters that if there's no such accord by the end of the week, the Trump administration would look at taking executive actions to provide some limited pandemic relief.

“We set an objective to see if we can deal with the major issues by Friday,” Mnuchin said after meeting with Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer. “If we can reach a compromise on these big issues, I  think everything else will fall in place. If we can't reach an agreement on these big issues, then I don't see us coming to an overall deal. And then we'll have to look at the president taking actions under his executive authority.”

Big-ticket dividing lines have included what to do about state and local government assistance, for which Democrats are seeking over $900 billion while Republicans have officially put forward zero. They are also hung up on how to handle an extension of emergency unemployment benefits after a $600 weekly add-on lapsed last week.

Meadows said on CNN the administration might take unilateral action to extend a moratorium on evictions from federally backed housing, which has been done once. He also said the administration could tap unspent funds from the $2 trillion March aid package and distribute unemployment funds to the states under "executive privilege."

President Donald Trump told reporters in a Wednesday evening press conference he was also looking at a "term-limited suspension of the payroll tax." Some of his allies and advisers have suggested Trump can legally suspend the collection of payroll taxes, but some tax experts are skeptical he has such authority.

Meadows had said earlier Wednesday after a lunch with GOP senators that "there's no sense to continue" negotiations past Friday if the outlines of a deal aren't clear by then.

After his comments got back to Pelosi and Schumer, the Democratic leaders confronted Meadows in the meeting, Schumer said. According to Schumer, Meadows backtracked, saying "I didn't quite say that."

"We will stay here as long as it takes to get an agreement, and we urge Mr. Meadows to sit down and continue to work with us to do it as long as it takes," Schumer said. He acknowledged there are still "wide differences" the parties need to overcome, particularly on high-cost items.

Meadows later said he thought Pelosi had also been in agreement that Friday was a logical deadline. He clarified that Friday is "not a drop-dead date" but made clear talks would only get harder after that.  "My optimism continues to diminish the closer we get to Friday and certainly falls off a cliff ... exponentially after Friday," he said.

A deal by week's end on the parameters would give staff time to draft the legislation in advance of floor action next week. Pelosi earlier in the day had offered a similar timetable during a webinar hosted by the American Hotel & Lodging Association, saying she hoped a bill would be ready "within the next 10 days."

After the Wednesday meeting with Meadows and Mnuchin, however, she seemed less certain. "I feel optimistic that there is a light at the end of the tunnel, but how long that tunnel is remains to be seen," Pelosi said.

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Meanwhile, the Senate's top Republican confirmed Wednesday afternoon that the chamber would remain in session next week. Senators had planned to leave town by Friday and return to Washington after Labor Day.

“We're certainly going to be in next week,” Senate Majority Leader Mitch McConnell said. “We'll see what happens after that.”

Business meals

While few details have emerged from the closed-door talks, Pelosi said Wednesday that Democrats would be open to a provision that Trump wants to provide companies the ability to fully write off the cost of business meals, doubling the current 50 percent deduction through the end of the year, but only if Republicans agree to provide funding for food assistance for low-income individuals.

“We do have our concern about the meal deduction, because we’re saying we’re OK with that, but why don’t you want to have any more money for food stamps?” she said. “We can't say we'll give you a meal deduction and we have starving kids in America.”

Pelosi also said Democrats are interested in having tax credits in the bill to help businesses set up healthy workplaces, but she said they have yet to agree with Republicans on the details.

Democrats in their House-passed bill included a 30 percent payroll credit for pandemic-related expenses, with an increase to 50 percent for essential workers. Republicans proposed a 50 percent payroll tax credit for expenses incurred to protect workers from COVID-19, capped based on the number of employees.

The parties are also still working out the details of another round of small-business loans to be issued through the popular Paycheck Protection Program, Pelosi said. As negotiators look to make the second round more targeted to smaller businesses with higher revenue losses, Democrats are trying to ensure that the bill has guardrails so women- and minority-owned businesses are not disadvantaged.

Another area where Pelosi said negotiators are “having a back-and-forth” is on housing provisions, including the eviction moratorium for renters and mortgage forbearance for homeowners.

“There's not a whole lot of interest in helping with forbearance on residential, although we think there should be,” she said. “But nonetheless, we're having some conversations about the rental part. When we talk about the commercial side of it, we’re not very far along the way. But that’s where the biggest hit is.”

She also for the first time acknowledged that the total cost of the package will be less than what House Democrats passed in May.

“We have a big, strong package, $3.4 trillion,” Pelosi said. “Now we anticipate that we will negotiate at some other place moneywise, but that’s what we need.”

Postal woes

The afternoon meeting in Pelosi's office also featured a special guest: Postmaster General Louis DeJoy.

DeJoy recently implemented sweeping operational and procedural changes at the Postal Service in an effort to cut costs, but those have resulted in significant mail delays.

Part of the discussion Wednesday focused on those delays and other potential impacts on the election, which is expected to have record numbers of mail-in ballots.

Service changes imposed by DeJoy last month include orders that mail be kept until the next day if postal distribution centers are running late and the elimination of overtime for hundreds of thousands of postal workers.

Schumer said the talks were "heated" and that DeJoy didn't provide adequate explanations.

“We are demanding that the regulations they put in place, which cut employment and cut overtime, be rescinded; particularly because of COVID and because of the elections,” Schumer said.

The Postal Service, which hasn’t received tax dollars to cover its operating expenses since 1971, has long-standing financial issues.

In 2019, the supposedly self-sustaining federal agency reported losses nearing $9 billion. Some of that pain is, in part, of Congress’ own making. In 2006, Congress enacted legislation requiring the Postal Service to annually pre-fund the future retirement health benefits of its current employees. That multibillion-dollar expenditure was put in place at the beginning of a major drop in revenues as the volume of first-class mail plummeted. The USPS has incurred annual losses since 2007.

The coronavirus pandemic has also meant a reduction in some mail, but also an increase in package shipping, which temporarily postponed an imminent cash crisis that the Postal Service had predicted might strike earlier this summer.

The agency warns it will run out of money by the end of September without help from Congress. The service reported a $4.5 billion loss for the quarter ending in March, before the full effects of the shutdown took hold, and expects losses totaling more than $22 billion over the next 18 months.

The coronavirus relief package that House Democrats passed in mid-May would set aside $25 billion to keep the mail flowing. In March, Congress approved a $10 billion loan for the service, which was finally freed up last week after a deal between Treasury and the Postal Service on certain loan conditions.

David Lerman and Mary Ellen McIntire contributed to this report.