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U.S. coronavirus stimulus package stuck in Congress over paid sick leave

[March 13, 2020] By Andy Sullivan

WASHINGTON (Reuters) - As schools close, offices clear out, and sporting events are canceled across the United States, a familiar Washington problem - partisan gridlock - threatened on Thursday to derail the U.S. government's ability to contain the economic damage from the coronavirus pandemic.

Democrats and Republicans clashed over safety-net programs that play a central role during economic downturns in a fight that could slow aid to hard-hit communities.

Democrats in the House of Representatives unveiled a plan Wednesday night that would expand programs including food assistance and unemployment aid. President Donald Trump and his fellow Republicans have spent the past few years trying to scale them back.

The plan did not include the extensive payroll tax cuts that Trump has championed.

Most of those benefits would be temporary, echoing the recession-fighting approach taken by Washington in response to the 2008 and 2009 financial crisis when Congress passed $990 billion in stimulus packages that included tax cuts, enhanced benefits, direct cash payments and aid to state and local governments.

But one key part of the Democrats' package - paid sick leave for workers who currently lose wages when they stay home due to illness - would be permanent. Democrats have tried unsuccessfully to pass a nationwide sick-leave benefit since 2004.

The Trump administration has said it is open to addressing the problem, and the conservative Heritage Foundation think tank has called for tax breaks to businesses in hard-hit industries to cover sick leave costs.

But Republicans said on Thursday that the current version was unacceptable, accusing Democrats of taking advantage of the crisis to advance policies that would otherwise stand no chance of becoming law.

"It appears that over in the House, left-wing political messaging may have taken priority over the needs of our country," Senate Republican Leader Mitch McConnell said.

Public-health advocates warn that the disease could spread more quickly if sick workers do not have the ability to get paid while they recover at home.

Both Democrats and Republicans have been eager to show they are trying to head off a recession ahead of the November presidential and congressional elections.

Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi have held multiple conversations on stimulus, and McConnell said Thursday afternoon the Senate would stay in town next week rather than adjourning as planned, presumably to pass a bill.

DEEP IDEOLOGICAL DIVIDE

In order to do so, they must overcome a deep ideological divide over U.S. benefit programs.

For example, the Democrats' proposal would temporarily suspend the Trump administration's efforts to tighten the "food stamp" program that helped 34 million low-income people buy groceries last year.

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President Donald Trump addresses the nation during a live television broadcast regarding the COVID-19 coronavirus pandemic, from inside the Oval Office at the White House in Washington, U.S., March 11, 2020. REUTERS/Tom Brenner/File Photo

Some 700,000 childless, able-bodied adults are due to lose their benefits if they are not working or enrolled in training, under a new rule due to take effect on April 1.

Advocates say it does not make sense to cut off those benefits at a time when unemployment is likely to rise.

"I think it's a really sensible policy that won't take food assistance from people who are going to struggle to work during a national health emergency, or who themselves might be sick," said Stacy Dean of the Center for Budget and Policy Priorities, a liberal think tank.

Agriculture Secretary Sonny Perdue, who oversees the program, told Congress on Tuesday that he would be willing to let states loosen the work requirement for people who are too sick to hold a job.

But he did not say he would suspend the new rule, and Republican lawmakers say Democrats should not try to derail it.

"I'm concerned about them using this legitimate crisis to pursue issues they can't get done otherwise," Republican Representative Michael Conaway, the top Republican on the Agriculture Committee, told Reuters on Wednesday.

The Democrats' plan would also extend unemployment benefits by an additional six months beyond the three to six months that are currently available at the state level -- a move that some conservatives say is unwarranted.

"This seems like something that can wait for later," said Matt Weidinger, a fellow at the American Enterprise Institute, a conservative think tank.

Jay Shambaugh of the Brookings Institution's Hamilton Project said some aspects of the Democrats' plan, such as helping states cover the cost of the Medicaid program for the poor, have enjoyed bipartisan support in the past and should again.

And lawmakers should make sick leave a priority, he said, despite their differences.

"This crisis has demonstrated why we need it more than ever," Shambaugh said. "Other countries are looking at us and saying, 'You've got people who might go to work when they're sick -- what is wrong with you?'"

(Reporting by Andy Sullivan; Editing by Heather Timmons and Daniel Wallis)

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