Flashpoints emerge as lawmakers negotiate new virus aid

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Photo credit Senate Majority Leader Mitch McConnell of Ky., right, and House Minority Leader Kevin McCarthy of Calif., listen as President Donald Trump speaks during a meeting in the Oval Office of the White House, Monday, July 20, 2020, in Washington. Congress is just starting to negotiate new legislation to renew coronavirus aid. But the biggest obstacles to a deal are already coming into view. The Democratic House passed a whopping $3.5 trillion coronavirus response bill more than two months ago and is demanding robust funding to help state and local governments. Republicans want to keep the bill closer to $1 trillion and are insisting on new legal protections for schools, businesses, and charities that are trying to reopen. It’s up to top congressional leaders to bridge the gaps as they negotiate with President Donald Trump's White House. (AP Photo/Evan Vucci)
By The Associated Press

WASHINGTON (AP) — Bipartisan Capitol Hill talks have only just begun on a sweeping renewal of coronavirus legislation, but areas of likely agreement — and flashpoints of discord — are becoming apparent as the package starts to take shape.

The Democratic House passed a whopping $3.5 trillion coronavirus response bill more than two months ago, re-upping a $600 per week federal unemployment benefit that expires July 31, another round of $1,200 payments to most people and almost $1 trillion for cash-starved states and local governments. Senate Majority Leader Mitch McConnell is set to unveil a $1 trillion COVID-19 aid package on Thursday. The GOP's response will have far less money than the Democrats' and will feature a sweeping liability shield for schools, businesses and charities that are trying to reopen. It's up to top congressional leaders to bridge the gaps.

A rundown of the top issues in play as the talks gain momentum.

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LIKELY IN THE FINAL BILL

—$1,200 direct payments. President Donald Trump, Speaker Nancy Pelosi and Mitch McConnell all agree that there should be another round of $1,200 direct payments to most Americans at a cost approaching $300 billion. It's seen as a slam dunk for inclusion despite grumbling that the aid isn't well targeted to those most in need.

—Aid to schools/universities. Both the House and Senate bills contain $100 billion or more to help schools and universities through the crisis and reopen as soon as possible. The emerging GOP draft would dedicate half of a $70 billion school aid package to schools that resume in-school learning, Republicans say, with half going to those reopening with remote learning. Democrats are sure to oppose the idea.

—Small business subsidies. The Paycheck Protection Program, or PPP, has received $660 million to help generally smaller businesses weather the pandemic, and Treasury Secretary Steven Mnuchin is pressing for more targeted to especially hard-hit sectors like restaurants. Democrats and Republicans have worked well together on the issue, and there's more than $100 billion in unspent PPP funding that they could re-purpose.

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LIKELY IN THE BILL, BUT ONLY AFTER A FIGHT

—State and local aid. A huge payment to state and local governments, including smaller cities left out of the huge $2 trillion CARES Act passed in March, is one of Pelosi's core demands. She's backed by a bipartisan gaggle of governors, Federal Reserve Chairman Jerome Powell, and Republicans like Susan Collins of Maine. Supporters say the funding is crucial to boost the economy, to prevent a wave of layoffs and to alleviate cuts to education and health care. Republicans so far are only promising new flexibility on $150 billion in state and local funding that was allocated in the March, but Democrats will insist on far more.

—Extension of jobless aid. A supplemental $600 per week federal pandemic unemployment insurance benefit that has kept millions of workers and households afloat expires on July 31. Democrats would extend the $600 through January 2021. Republicans want to slash the benefits because many workers make more on unemployment than they would if they were to reclaim their jobs. A robust fight is certain.

—Liability shield. Businesses and school systems are among those seeking protection from lawsuits arising from coronavirus exposure. McConnell and John Cornyn, R-Texas, have drafted a plan promising to shield employers from ordinary negligence lawsuits, imposing a higher, though temporary, legal standard. Liability protections are a must-have for McConnell, but Democrats and the still-powerful trial lawyers lobby are sure to resist.

—Business tax breaks. Republicans are pressing to extend both the employer retention tax credit, which helps businesses defray payroll costs, as well as the work opportunity tax credit, which subsidizes the hiring of disadvantaged workers. Those are likely to make it into the package, but lawmakers are unlikely to consider more ambitious tax breaks.

—Election assistance. States are scrambling to expand their absentee and vote-by-mail capacities during the pandemic. The House bill contains $3.6 billion to pay for printing ballots, for postage costs, and for protective equipment and training for poll workers. It'll end up being far less, but key Republicans support the initiative, despite Trump's campaign against mail-in voting.

POSSIBLY OUT OF FINAL BILL

—Payroll tax cut. Trump is pushing to temporarily reduce the 7.65% Social Security and Medicare payroll tax to boost take-home paychecks, but it has little buy-in from Senate Republicans, who are increasingly vocal in their opposition. Still, some version of it is likely to make it into McConnell's draft. Democrats are firmly against it, and Trump may not have the leverage necessary to make it happen — though he is pushing hard.