Protracted internal negotiations between the White House and Congressional Republicans have delayed the scheduled release of the GOP’s counter-proposal for the next round of coronavirus aid to next Monday, July 27. The legislation to be unveiled by Majority Leader Mitch McConnell (R-KY) and various committee chairmen next week is not expected to include general-purpose aid to states and localities, or transportation-specific aid to state transportation departments or local mass transit agencies – but it may contain an additional tranche of up to $10 billion in aid to airports. But the final bill won’t take shape until after additional negotiations with Democrats.

This week was the Senate’s return from a two-week recess, and this was expected to be the week that the Senate started work on its latest coronavirus bill. But a July 20 meeting between McConnell, House Minority Leader Kevin McCarthy (R-CA), and President Trump, and a July 21 internal Senate Republican policy caucus, revealed sharp disagreements that could not be papered over before the Senate let town yesterday afternoon.

By week’s end, the President had backed off of his insistence on a payroll tax cut, but there was still enough dissensus on the spending side that McConnell announced that their bill would be “laid down” on Monday. A big part of the problem is “sticker shock” amongst Republicans who (at least before the Trump Administration) thought of themselves as fiscal conservatives. The estimated ten-year cost of the coronavirus response bills enacted so far this year is $2.4 trillion, and even though McConnell is trying to keep the cost of his next offer below $1 trillion, that’s still too much spending for some in his conference. See this series of tweets from Sen. Rand Paul (R-KY) after he left the closed-door GOP policy meeting on Tuesday the 21st:

Combine a few more Republicans who think like Paul with 47 Democrats or Democratic-caucusing Independents who won’t vote for the bill because it doesn’t spend enough, and McConnell quickly drops below the 50 mark necessary to pass legislation, even if filibusters and other supermajoritarian thresholds did not exist.

But those thresholds do exist, and the magic number in the Senate is 60, not 50. No bill can get there in the current Senate without Democratic votes, and Minority Leader Chuck Schumer (D-NY) is holding those votes back until a bill more to his liking can be negotiated between McConnell, the White House, and Speaker Nancy Pelosi (D-CA).

However, the era of good feelings that existed three months ago, when the Senate passed the $1.7 trillion CARES Act by a unanimous vote of 96 to 0 is probably gone. Any bill that gets the Trump-Pelosi-McConnell signoff will probably not be able to get support from the far right and far left flanks in either chamber.

The bill that McConnell will unveil next week appears likely to contain the following:

• Legal liability protections to prevent coronavirus-related lawsuits against businesses and governmental institutions that open for business.
• Around $105 billion in financial aid to schools that open on schedule this fall (reportedly $70 billion for K-12, $29 billion for higher education, and $5 billion to governors’ flex funds that can go to either) .
• An extension of special coronavirus unemployment insurance past the scheduled July 31 expiration date (though the extra benefit above normal, currently $600 per week, will be reduced).
• Another round of stimulus checks for individuals (though the income cutoff, which was $75 thousand last time, may be lowered, and the face value might not be $1,200 this time).
• Another round of small business PPP loans.
• A new employee retention tax credit and a temporary increase in the business meal deduction back to 100 percent.
• In addition to the $105 billion in appropriation for school aid, about $200 billion in other appropriations, including up to $10 billion in additional aid to airports, under a new formula that revises the earlier formula in the CARES Act.

This is all just a response to the $3.4 trillion bill passed by the House in mid-May (H.R. 6800, the Heroes Act). The top priority of that bill was financial aid to state and local governments – the bill would provide a staggering $915 million for aid to municipalities (including territorial governments and Indian tribes), on top of $150 billion enacted in March in the CARES Act. Some additional aid to state and local governments will almost certainly be contained in the final version of this legislation, but with the House proposing such a high number, McConnell apparently felt compelled to hold the line at zero in his version so as to have a better hand in the eventual negotiations.

The amount in the House bill would be split: $540 billion for states, $375 billion for locals. (By comparison, the latest NASBO state expenditure report indicates that in fiscal year 2019, all state expenditures for all purposes only totaled $2.1 trillion, so $540 billion would support about one-fourth of all such spending.)

Any potential aid to state DOTs hinges on the conditions that are put on the general-purpose aid to state governments. If Pelosi is successful in insisting that states get an amount of general-purpose bailout money that Republicans feel is exorbitant, it would sort of poison the well against any proposal to give state DOTs a specific bailout in addition to the general-purpose state money. (If a state governor doesn’t want to give enough, or any, of their general-purpose COVID aid to their DOT, should the federal government then give the state DOT extra money just because the governor had higher, non-transportation priorities?)

The situation with mass transit aid is a bit different. Structurally, mass transit agencies and airport authorities are a lot alike – they are almost always arms of local governments (occasionally state governments). The big difference is that airports are almost always cash cows for their sponsoring governments, while transit agencies always require subsidies from their sponsoring governments. The House-passed Heroes Act adds another $15.75 billion in transit aid to the $25 billion, but the heavy-handed way by which the bill distributed that aid ($11.75 billion in formula funding, but only for the 14 biggest cities, whether or not those cities are particularly transit-dependent, which screws cities like Baltimore, Portland, Denver and Minneapolis) may have made it easier for the Senate to decline additional funding in its initial response.

Total transportation and muni funding provided in the CARES Act, and that would be provided by the Heroes bill, is shown below, in millions of dollars.