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Senate Republicans are proposing to beef up a “skinny” coronavirus relief package by more than 100 pages, including an enhanced deduction for charitable giving, $20 billion for farmers and ranchers and money for child care and stockpiling medical supplies, Roll Call reported. A vote on the package, which isn’t expected to advance over Democratic opposition, could come on Thursday, according to Senate Majority Leader Mitch McConnell. The Kentucky Republican said yesterday before introducing the revised bill that it would be “targeted” to the “very most urgent” needs facing Americans dealing with the continued pandemic fallout. "Senators will not be voting on whether this targeted package satisfies every one of their legislative hopes and dreams," McConnell said in floor remarks later on Tuesday. "We vote on whether to make laws, whether to forge a compromise, whether to do a lot of good for the country and keep arguing over the remaining differences later." McConnell also yesterday filed a motion to end debate on the underlying legislative vehicle, a measure which has already become law separately. Using a "shell" that has already passed both chambers enables the Senate to skip a procedural step and vote on cloture Thursday. An official price tag wasn’t available, but the new measure appears to contain more than $500 billion in assistance, which while larger than an earlier draft circulated last month would still be substantially shy of the $1 trillion July rollout that landed with a thud among Senate Republicans. Read more. 

In related news, a fresh U.S. Senate Republican coronavirus spending package introduced yesterday does not include new government assistance for U.S. airlines or airports, a text of the proposal showed, as the sector races to save jobs before October, Reuters reported. More than 35,000 workers at two of the largest U.S. carriers alone — American Airlines and United Airlines — are set to lose their jobs once an initial $25 billion in payroll support from the government expires this month. That has fueled a furious push by unions for a six-month extension of the aid, with flight attendants and other aviation workers planning to march outside the U.S. Capitol today. Last month a group of Senate Republicans backed extending $25 billion in payroll assistance for airlines, an idea Democrats also support. That proposal was excluded from the latest Senate measure, which was reviewed by Reuters and is expected to be voted on Thursday, but it is an opening salvo for talks that are expected to intensify once the U.S. House returns from recess next week. The Senate proposal also excludes $10 billion in assistance for airports that was part of an earlier Senate bill. Read more. 

Senators return to Washington, D.C., today from their annual summer recess, no closer than when they left three weeks ago to resolving sharp divisions over another coronavirus aid package and now facing a potential government shutdown that could deepen the economic pain, the New York Times reported. The impasse amounts to a fraught political situation for both parties less than two months before the November election, with millions still unemployed and cities and states beginning to enact significant budget cuts with no promise of relief from Congress. Senate Republican leaders are hoping to corral their caucus around a scaled-back stimulus plan that would reinstate lapsed federal unemployment benefits at $300 per week — half their previous level — and allocate $105 billion for schools and funds for testing and the Postal Service, according to Republican aides familiar with the discussions. The plan represents an effort to intensify pressure on Democratic leaders, who want to restore the $600 unemployment benefits and have refused to consider any measure below $2.2 trillion. The Republicans’ bill would carry a likely price tag of $500 billion to $700 billion, far less than the $3 trillion measure Democrats passed in the House and smaller than the $1 trillion measure Senate Republicans introduced in July. A procedural vote advancing the legislation could come as early as this week, according to Republican aides, but it remains unclear whether Republicans can coalesce around it. Even if they do, Democrats are expected to block it. In a letter to his caucus, Senator Chuck Schumer of New York, the minority leader, called the bill “emaciated” and urged Democrats to push for “another comprehensive, bipartisan bill that meets the moment facing our nation.” Lawmakers are more optimistic about the chances for a stopgap budget bill to avert a shutdown at the end of the month; Speaker Nancy Pelosi and Steven Mnuchin, the Treasury secretary, have reached an informal agreement on the bill. It is unclear how long the measure would provide funding after the new fiscal year begins on Oct. 1, but it would be all but guaranteed to last beyond the Nov. 3 election. Read more.

https://www.nytimes.com/2020/09/08/world/covid-19-coronavirus.html?acti…

In related news, states and cities across the nation have made an array of fiscal maneuvers to stay solvent and are planning more in case Congress can’t agree on a fiscal relief package after the August recess, the New York Times reported. House Democrats included nearly $1 trillion in state and local aid in the relief bill they passed in May, but the Senate majority leader, Mitch McConnell of Kentucky, has said that he doesn’t want to hand out a “blank check” to pay for what he considers fiscal mismanagement, including the enormous public-pension obligations some states have accrued. There has been little movement in that stalemate lately. Economists warn that further state spending reductions could prolong the downturn by shaking the confidence of residents, whose day-to-day lives depend heavily on state and local services. “People look to government as their backstop when things are completely falling apart,” said Mark Zandi, chief economist at Moody’s Analytics. “If they feel like there’s no support there, they lose faith and they run for the bunker and pull back on everything.” Collectively, state governments will have budget shortfalls of $312 billion through the summer of 2022, according to a review by Moody’s Analytics. When local governments are factored in, the shortfall rises to $500 billion. That estimate assumes the pandemic doesn’t get worse. Read more.

https://www.nytimes.com/2020/09/07/business/state-budgets-coronavirus-a…

As insurers brace for an expensive natural-disaster season because of storms and wildfires ravaging parts of the United States, the novel coronavirus is giving them an odd financial break, Reuters reported. Many companies that were damaged or evacuated because of natural catastrophes were already generating far less revenue due to the pandemic. That means they will get lower payouts upon filing business-interruption claims, according to analysts, lawyers and industry sources. It is another hit for small businesses that rebuilt after major disasters in recent years, only to see revenue screech to a halt during the pandemic, and then enter another aggressive disaster season. It could leave some companies unable to survive, said John Ellison, an attorney at Reed Smith LLP who has represented policyholders in cases stemming from hurricanes Katrina, Rita and Sandy. “There is a reasonable chance that any business in that situation is not going to make it,” he said.

U.S. property insurers have won a flurry of judicial rulings backing up their rejections of claims for businesses’ lost income during government-ordered shutdowns, dimming policyholders’ hopes of payments to help them rebound, the Wall Street Journal reported. In recent weeks, insurers have won more rulings than policyholders as the courts begin to work through more than 1,000 COVID-19 business-interruption coverage disputes. Still, policyholders scored success in a federal court in Missouri, boosting efforts to interpret property insurance as covering claims from the coronavirus. Across the U.S., restaurants, hair salons, retailers and other businesses are seeking policy proceeds to deal with the huge economic cost of the shutdowns, in one of the biggest fights the insurance industry has ever waged with its policyholders. In the rulings, the judges sympathize with businesses’ plight, but most so far support insurers’ legal arguments. Insurers say the policies are intended to help policyholders as they recover from events, such as fires, that lead to repairs and rebuilding, and were never intended to cover virus-related claims. Read more. (Subscription required.) 

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Senate Majority Leader Mitch McConnell (R-Ky.) expressed doubts about whether Congress can get a deal on another pandemic relief package after lawmakers return to Washington, D.C., after a month-long recess, despite the Trump administration push for a quick, targeted stimulus, Bloomberg News reported. “I don’t know if there will be another package in the next few weeks or not,” McConnell said. He said that talks between top administration officials and House Speaker Nancy Pelosi haven’t been fruitful, and that any embrace of bipartisanship in the Capitol has “descended” as the fall elections near. His comments come a day after Treasury Secretary Steven Mnuchin testified to Congress that parts of the U.S. economy urgently need additional fiscal stimulus to fully rebound from the COVID-19 crisis. Mnuchin told a House panel the most important thing is “that we deliver some relief quickly to the American workers impacted by this.” Mnuchin later initiated a call with Pelosi, amid the stalemate in talks. In a statement Tuesday night, the speaker said she told the Treasury chief that Democrats have “serious questions” remaining in any negotiations. That includes, she said, the view of the administration that a smaller package can be pursued now and a larger one later. There have been no negotiations since the last round broke up almost a month ago. Democrats have offered to lower their demand for a $3.5 trillion package to about $2.2 trillion. Senate Republicans originally put forth a $1 trillion plan, but are now discussing with the administration a smaller $500 billion package they say will be more focused on areas of the economy most affected by the pandemic. Mnuchin singled out the travel industry and small businesses as needing more aid.

Treasury Secretary Steven Mnuchin urged Congress to appropriate more money to combat the effects of the coronavirus pandemic, saying at a hearing yesterday that he was ready to sit down with Democratic leaders to resume negotiations at any time, the Wall Street Journal reported. For more than a month since key provisions of the landmark CARES Act expired, Democrats and Republicans have been at loggerheads over the size and content of another relief package. House Democrats in May proposed an additional $3.5 trillion of relief, while Senate Republicans rolled out a $1 trillion bill in July. Without a new agreement, jobless workers have gone without a $600 federal supplement to weekly unemployment insurance since July 31, and a federal eviction moratorium expired on July 25, leaving millions of tenants at risk of losing their homes. In yesterday’s hearing, Mnuchin suggested that the gap between the two sides may be narrowing and mentioned a new, higher number for the administration’s proposed ceiling for a follow-on bill: $1.5 trillion. The secretary also indicated that the Trump administration has softened its opposition to a Democratic proposal to apportion more money for state and local governments. Read more. (Subscription required.) 

In related news, Fed Governor Lael Brainard said yesterday that the Federal Reserve “in coming months” will need to roll out new efforts to help the economy overcome the impact of the coronavirus pandemic and live up to the U.S. central bank’s new promise of stronger job growth and higher inflation, Reuters reported. “With the recovery likely to face COVID-19-related headwinds for some time, in coming months, it will be important for monetary policy to pivot from stabilization to accommodation,” Brainard said, and do what’s appropriate to hit the new goals of “maximum employment and average inflation of 2% over time.” That decision “will be guided” by the new strategy which trades risks of higher inflation with efforts to promote further job growth, she said. Brainard, among the architects of the new long-term strategy the central bank adopted last week, is the first Fed official to tie that new approach directly to the need for further monetary stimulus, likely in the form of more aggressive bond-buying or more ambitious promises about returning the country to low unemployment. Read more.

Treasury Secretary Steven Mnuchin said yesterday that the Trump administration and Senate Republicans have been in regular contact over possible coronavirus relief measures and the Senate’s top Republican will “hopefully” unveil a new bill next week,  Reuters reported. Asked about the collapse of talks with Democrats over aid legislation, Mnuchin said that he and White House Chief of Staff Mark Meadows have been speaking regularly with Senate Republican leader Mitch McConnell. “Hopefully Mitch will enter new legislation next week,” Mnuchin said. No negotiations on another round of coronavirus aid have taken place since early August, when talks collapsed as Congressional Democrats and the Republican Trump administration could not bridge a gap of more than $1 trillion between their proposed relief packages for small businesses, state and local governments, school districts and health care providers. Trump has since signed an executive order extending expired supplemental unemployment benefits and deferring some payroll taxes, but details on implementation have been uncertain. Mnuchin is due to testify today before the Democrat-controlled House Select Subcommittee on the Coronavirus Crisis on the administration’s economic response. Republicans who control the U.S. Senate have discussed proceeding with their own legislation that would be narrower than the House’s $3 trillion plan approved in May, but thus far have not introduced any new proposals. Some Republicans oppose new aid out of concern for a massive and growing budget deficit predicted to approach $4 trillion this year.