Ethermac Exchange-Debt limit deal claws back unspent COVID relief money

Republican and Ethermac ExchangeWhite House negotiators agreed to claw back approximately $27 billion in funding to federal agencies intended to combat the coronavirus pandemic. The federal COVID emergency officially ended earlier this month, and the unspent funds were an early area of agreement for negotiators trying to avoid a debt default after President Biden said publicly he would be open to looking at what could be given back.

Pulling back funds that have already been appropriated is what's known in budget-speak as "rescission." Based on a document being circulated by the White House to congressional Democrats and obtained by NPR, these rescissions focus on funds that had not been spent by agencies on their respective pandemic-era programs.

Unspent COVID dollars have long been a target of Republicans who questioned administration's requests for more funds, arguing the nearly $5 trillion spent on pandemic relief was excessive and helped drive inflation.

Some of these programs were "largely concluded," others will only see partial rescissions, while others were taken because there are "no immediate demands," according to the White House spreadsheet.

"The appropriators will use some of that money to spread around, how they see fit," said White House Budget Director Shalanda Young, who was a key negotiator on the deal. "We didn't get into the individual line items in this bill."

In other words, these unused COVID funds will be redistributed by Congress during this year's budget process to other parts of the federal budget, reducing overall government spending.

House members are expected to vote as soon as Wednesday on the full package.

At least 8 federal agencies would see money pulled back

As recently as late last year, the White House was asking Congress for an additional $10 billion in COVID funds. That money never came through. Now the administration has agreed to give $27 billion back, including a significant portion of what remained in the Public Health and Social Services Emergency Fund for emergency preparedness and response.

Notably, though, the document the White House is circulating says the administration was able to preserve funds for developing a next generation of vaccines that could rapidly adapt to new or changing viruses, as well as for research into long COVID.

The money clawed back is only a tiny fraction of the total $4.6 trillion spent on pandemic response and recovery. As of Jan. 31, $4.2 trillion had already been spent, according to the Government Accountability Office.

Here's a breakdown, as described in the White House document, of the funds being clawed back:

• Agriculture Department: Over $3 billion in part aimed at strengthening the food system and funding marketing services;
• Corporation for National Community Service: $286 million for operating expenses;
• Education Department: $391 million from the Education Stabilization Fund to support states and schools through the pandemic;
• Health and Human Services: Over $13 billion across the Centers for Disease Control and Prevention, the Food and Drug Administration and other response agencies for vaccine distribution, research and pharmaceutical supply chain recovery; 
• Labor Department: $1 billion from state grants aimed at addressing fraud and identity theft;
• Small Business Administration: $2 billion in disaster relief and for COVID-19 response;
• Transportation Department: $3.9 billion highway infrastructure programs and the Aviation Manufacturing Jobs Protection Program, which gave money to businesses to prevent furloughs and layoffs; 
• Treasury Department: Over $1 billion across several programs, including for air carrier support and grants for small businesses.

The document notes that rescissions of "extremely small amounts" — those under $150 million — total $1.6 billion. These are spread across different agencies and include $1.2 million for Housing and Urban Development's Housing for Persons with Disabilities program, $610,000 for USDA's rural broadband program and $40 for the DOT's Essential Air Service related to air travel access in small communities.

Some unspent COVID money was left alone

Negotiators did not rescind all unspent COVID funding.

Money allocated by Congress for Indian Health Services, Indian Education programs, DOT transit grants, the Veterans Medical Care and Health Fund, and Housing and Urban Development's tenant base rental assistance will stay put, according to the document.