Home Personal Finance Coronavirus deal key to Republicans protecting Senate majority

Coronavirus deal key to Republicans protecting Senate majority

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Vulnerable Republicans up for reelection are facing high unemployment and serious budget shortfalls in their home states, giving White House negotiators and Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellCoronavirus talks collapse as negotiators fail to reach deal Pelosi, Schumer say White House declined T coronavirus deal COVID-19 bill limiting liability would strike the wrong balance MORE (R-Ky.) more incentive to cut a relief deal to protect their Senate majority.

Talks between Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump tees up executive orders on economy but won’t sign yet Overnight Health Care: Trump to take executive action after coronavirus talks collapse | Vaccine official says he’d resign if pressured politically Coronavirus talks collapse as negotiators fail to reach deal MORE, White House chief of staff Mark MeadowsMark Randall MeadowsTrump tees up executive orders on economy but won’t sign yet On The Money: Five takeaways from the July jobs report Overnight Health Care: Trump to take executive action after coronavirus talks collapse | Vaccine official says he’d resign if pressured politically MORE and Democratic leaders fell apart Friday afternoon, but Senate Republicans are still feeling pressure to reach agreement, even as President TrumpDonald John TrumpJoe Arpaio loses bid for his old position as sheriff Trump brushes off view that Russia denigrating Biden: ‘Nobody’s been tougher on Russia than I have’ Trump tees up executive orders on economy but won’t sign yet MORE’s threatens to use executive action instead.

Democrats said they are still open to negotiations, arguing a bipartisan bill signed into law would be far more effective than a series of executive orders.

A compromise measure that includes state aid and enhanced unemployment benefits would give a boost to GOP incumbents in places like Colorado and Arizona, two states where Democrats have the best chance of knocking off Republicans in November.

In Colorado, the unemployment rate was 10 percent in June, the most recent state-level data available. Arizona’s was slightly higher at 10.5 percent. The national rate, from July, is 10.2 percent.

Iowa, Maine and North Carolina — where GOP senators are neck-and-neck in the polls with Democratic challengers — are also facing serious economic challenges as a result of the coronavirus recession.

On top of that, these battleground states are attempting to navigate budgetary shortfalls that could lead to a wave of state and local government layoffs in the fall, eating into overall economic growth much like it did during the Great Recession.

With lapsed unemployment benefits and expired moratorium on evictions, endangered incumbents like Sen. Martha McSallyMartha Elizabeth McSallyFrom a Republican donor to Senate GOP: Remove marriage penalty or risk alienating voters Hillicon Valley: Facebook bans ads from pro-Trump PAC | Uber reports big drop in revenue | US offers M reward for election interference info Senate passes legislation to ban TikTok on federal devices MORE (R-Ariz.) are now under growing pressure to deliver for their constituents.

“It’s really critical for the survival of all elected officials,” said Thomas Volgy, a professor of political science at the University of Arizona and former Democratic mayor of Tucson. 

“Sen. McSally is caught in an incredible vise because if she deviates at all from the White House’s position she jeopardizes a significant percentage of Republican support. But if she doesn’t, then she jeopardizes a very significant amount of independent support,” he said.

Polls show McSally trailing Democratic challenger Mark Kelly by an average of more than 6 points.

“The airwaves in Tucson have been flooded with ads urging the senator to support a bailout of local jurisdictions,” Volgy added.

Arizona faces an $864 million decline in tax revenues this year and an $873 million drop in 2021, but Volgy said that doesn’t capture the full extent of the budget problems. 

In Tucson, the University of Arizona, the city’s largest employer, is looking at a possible budget shortfall of $500 million, according to Volgy. University of Arizona President Robert Robbins announced a budget gap of $280 million earlier this year.

In Colorado, where Sen. Cory GardnerCory Scott GardnerFrom a Republican donor to Senate GOP: Remove marriage penalty or risk alienating voters The US military has options against China McConnell goes hands-off on coronavirus relief bill MORE (R) is trailing in the polls to Democrat John HickenlooperJohn HickenlooperRepublicans uncomfortably playing defense Obama announces first wave of 2020 endorsements Gardner says GOP committee should stop airing attack ad on opponent Hickenlooper MORE, state lawmakers earlier this year made steep cuts to colleges and universities, as well as K-12 education, to get in front of a projected $3 trillion shortfall. 

The state faces a $968 million decline in revenues for 2020, a figure that’s forecast to balloon to $2.6 billion next year, according to the nonpartisan Center for Budget and Policy Priorities. 

Maine had a lower unemployment rate in June than most states, at 6.6 percent, but still faces a budget shortfall of $1.4 billion over the next three years.

Democratic Gov. Janet MillsJanet MillsTrump expected to visit Maine despite governor’s concerns Firefighter dead after building explosion in Maine Maine allows for ranked-choice voting without governor’s signature MORE on Wednesday called for sweeping cuts, directing state department officials to identify 10 percent reductions.

“I think there’s a pretty big amount at stake for Susan CollinsSusan Margaret CollinsFrom a Republican donor to Senate GOP: Remove marriage penalty or risk alienating voters The Hill’s Campaign Report: Trump’s visit to battleground Ohio overshadowed by coronavirus New polls show tight races for Graham, McConnell MORE,” said Mark Brewer, a professor of political science at the University of Maine, referring to one of the most vulnerable GOP senators. Collins faces a formidable challenge from Democrat Sara Gideon.

“The aid to state and local governments is the much bigger [issue] here. If it’s not at the top of people’s radar at the moment, it will be soon,” he said. “At some point before November the pain here in Maine, and really across the country, will be pretty intense.”

“Sara Gideon and her supporters are going to go after Susan Collins for it and some voters are going to be sympathetic to those claims,” he said.

A Quinnipiac University poll published Thursday showed Gideon ahead of Collins by 4 points.

Janet Martin, a professor of government at Bowdoin College, said there’s “quite a bit of pressure” on Collins to deliver another relief package.

“There are businesses that keep going out of business,” Martin said. “Everyone in the state of the state of Maine is being affected by their own loss of a job or a business closing down.”

Collins, one of the lead authors of the Paycheck Protection Program (PPP), which was signed into law in late March, hailed the small-business lending initiative as a “lifeline” for Maine businesses. She said 76 percent of small businesses in Maine accepted PPP funds.

But now, many small businesses that accepted federal loans are running out of money and need another round of PPP support, which is currently being held up by the impasse over the size of the next relief bill.

The dire economic picture in battleground states has emboldened Democratic leaders to take a tough line in negotiations with Treasury Secretary Steve Mnuchin and White House chief of staff Mark Meadows.

Trump, whose average approval rating is just above 40 percent nationwide, and Senate Republican incumbents, whose electability is tied to Trump’s performance, both need a deal or relief of some kind to show they are responding to the crisis.

But strategists warn that taking too tough a line in the negotiations could backfire for both sides.

“The most important thing is to get a package passed — period. That’s far more important than the details of what’s in it for most voters,” said Republican pollster Whit Ayres.

“Who knows how much more time we have with this virus? But if you look at the 1918 flu pandemic as an example, we may not even be halfway through it at this point,” he added. “In an emergency, you spend what you need to try to address the problem and then figure out how to pay for it later.”

There’s less pressure on Speaker Nancy PelosiNancy PelosiDemocratic convention lineup to include Ocasio-Cortez, Clinton, Warren: reports Trump tees up executive orders on economy but won’t sign yet New postmaster general overhauls USPS leadership amid probe into mail delays MORE (D-Calif.) to protect what’s seen as a safe Democratic majority, or Senate Minority Leader Charles SchumerChuck SchumerPostal Service says it lost .2 billion over three-month period A three-trillion dollar stimulus, but Charles Schumer for renewable energy — leading businesses want to change that Democrats try to force Trump to boost medical supplies production MORE (D-N.Y.), who can play offense against 23 Senate Republican seats up for reelection while only having to worry about a dozen on the Democratic side.

In North Carolina, where June’s unemployment rate was 7.6 percent, the $600-a-week federal enhancement of state unemployment benefits passed by Congress in March has helped shore up deficiencies at the state level. That federal plus-up expired at the end of July.

“There’s been a lot of stories in the media here about the inadequacy of the state unemployment system,” said Andrew J. Taylor, a political science professor at North Carolina State University.

Failure to pass another round of federal aid will certainly be used as political ammo by Cal Cunningham, the Democratic challenger to Sen. Thom TillisThomas (Thom) Roland TillisFrom a Republican donor to Senate GOP: Remove marriage penalty or risk alienating voters The Hill’s Campaign Report: COVID-19 puts conventions in flux  Sabato’s Crystal Ball shifts Iowa Senate race to ‘toss-up,’ Georgia toward GOP MORE (R-N.C.).

A bipartisan agreement, meanwhile, would allow Tillis to argue he’s delivered crucial resources to his constituents. 

“If there isn’t an agreement, then Cunningham will go after it. If there is, Tillis will tout it as being adequate and Cunningham will argue it isn’t adequate. It will play a role,” Taylor said.

Cunningham has opened up a 9 lead over Tillis, according to the RealClearPolitics polling average.

McConnell and other GOP leaders signaled this past week that they are committed to passing another relief package, though talks between Democrats and the White House collapsed on Friday.

“There is a desire on the part of both the Democrats and the Republicans, at least most of the Republicans, not every single one, that we get to an outcome because the economy does need an additional boost until we get the vaccine,” McConnell said Thursday on CNBC.

McConnell has allowed endangered incumbent senators to return to their home states to campaign this week. But the leader has advised them to be ready to return to Washington quickly in case an agreement is reached.



ABC Finance News

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