Are COVID-19 economic stimulus negotiations between the Trump Administration and Congressional Democrats hopelessly deadlocked?  Will the US experience a government shutdown prior to the November election?  What steps will Congress take to address these issues in September?

As partisan funding and policy differences over the next phase of COVID legislation continue to divide negotiators from congressional leadership and the White House, attention remains focused on critical issues including the extension of expired enhanced unemployment benefits, expanded COVID-19 testing, funding to support the safe reopening of schools, aid to state and local governments, and other legislative priorities.  While bipartisan talks have stalled in recent weeks, and President Trump has issued Executive Orders to address a handful of issues at the center of these disputes, hope remains that the urgency of the situation and the declining number of days on the congressional calendar will compel leaders back to the negotiating table.

Like any negotiation, coming to broad agreement on a massive legislative proposal requires great patience and skill, and the utilization of effective strategy and tactics.  Senior lawmakers and Trump Administration officials charged with developing consensus on pandemic relief legislation have proven over time that they are skilled in the art and science of negotiating deals.  As Alison Wood Brooks of Harvard Business School noted in her piece, “Emotion and the Art of Negotiation” from the December 2015 issue of Harvard Business Review,

Bringing anger to a negotiation is like throwing a bomb into the process, and it’s apt to have a profound effect on the outcome.”

The recent breakdown in bipartisan talks – and subsequent finger pointing – highlighted both sides applying time-honored tactics to the negotiating process.  To the outside world, this signaled a potential end to negotiations.  But, to those most intimately involved, it likely indicated an important new phase in the process.  Often times, in negotiating matters of great consequence, the process must blow up entirely before all sides come together to reconcile their differences and determine that a resolution is finally close at hand.

Subtle signs are emerging that the current logjam may soon be broken as opposing sides are floating legislative trial balloons, an important indication of a desire to resume talks.  In recent days, Senate Republicans have released a “skinny” COVID-19 relief bill, the “Delivering Immediate Relief to America’s Families, Schools and Small Businesses Act.”  While the Senate is not presently in session, and the legislation has not been formally introduced, the proposal is viewed as a potential counter offer or negotiating tool in response to legislation the House is expected to approve on Saturday, which provides US$25 billion in funding resources to the US Postal Service.

The Senate proposal includes liability protections for businesses and health care providers; a second round of Paycheck Protection Program loans; an extension of federal unemployment benefits at a reduced level of US$300 per week; and US$105 billion for schools, with funding distributed to elementary and secondary schools, higher education institutions, and to each state to address education-related priorities.  The proposal, however, does not include federal assistance for state and local governments, a provision that remains a top priority for House and Senate Democrats.

House Speaker Nancy Pelosi (D-CA) indicated earlier this week her openness to reducing the size and scope of the pending COVID-19 spending package, focusing on those areas where agreement is most likely, and potentially deferring action on additional legislative priorities until later this year or next year, when the political makeup of the House, Senate, and White House could be decidedly different.

With only 39 days until the end of the current fiscal year on September 30, there is growing speculation that the threat of a looming government shutdown will provide additional impetus to bring Administration officials and key congressional leaders back to the negotiating table.  While the House has marked up and passed the majority of its fiscal year 2021 funding bills, the Senate has thus far been unable to overcome partisan funding and policy disputes, and move any of its bills through the Committee process.  There is broad recognition on both sides of the Capitol that none of the 12 annual funding bills will be finalized or signed into law prior to the beginning of the new fiscal year on October 1.  If there’s one thing upon which Democrats and Republicans agree, it’s that passage of a Continuing Resolution (CR) in September is imperative.

Given this reality, Appropriations Committee staff are now beginning their traditional CR drills, preparing draft legislative text and engaging in conversations with federal government agencies about specific anomalies, or legislative provisions, that may be necessary to ensure there is no lapse in federal funding or policy for the yet-to-be-determined duration of the CR.  The Trump Administration is presently preparing a formal list of its CR anomaly priorities that will soon be transmitted to Congress for review and consideration.  The anomalies ultimately included in the CR will be negotiated between the House and Senate Appropriations Committees, and in consultation with the White House.

While no decisions have yet been made, combining COVID-19 legislation with a CR to ensure continuity of government funding through the November election, may become an appealing option to lawmakers.  Senate Appropriations Committee Chairman, Richard Shelby (R-AL), has signaled his support for this approach, while Speaker Pelosi, at this point, has indicated her preference for considering each proposal separately.  If negotiations over the next phase of pandemic relief extend into the early weeks of September, the likelihood increases of combining the CR and COVID-19 relief into a comprehensive legislative package.

The high-stakes drama over the next phase of COVID relief that has played out in public view in recent weeks is part of the broader negotiating process, with each side signaling to the other its intent to extract as many funding and policy concessions as possible.  Some political observers question whether a successful outcome is even possible for these negotiations which, thus far, have remained deadlocked and appear destined to fail.  Still, others take an opposing view by making the following observation:  with only 73 days remaining before the November election, and stakes particularly high for the national economy and tens of millions of Americans adversely impacted by the pandemic, failure to reach an agreement is not an acceptable option.