Tuesday, September 22, 2020

White House, Democrats scramble to assemble massive spending packages as coronavirus fallout worsens

Mar 20. 2020
File photo of Treasury Secretary Steven Mnuchin / Syndication Washington Post
File photo of Treasury Secretary Steven Mnuchin / Syndication Washington Post
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By The Washington Post · Jeff Stein, Mike DeBonis, Erica Werner · NATIONAL

Treasury Secretary Steven Mnuchin on Thursday said the Trump administration is working on a plan that would send most Americans $1,000 within three weeks and an additional $500 for every child as a way to flood the country with money and try to blunt the coronavirus pandemic's impact on the U.S. economy.

Mnuchin, speaking on Fox Business, said a second round of payments for the same amount could be sent within the next six weeks if the crisis continued. The White House's urgency has intensified as economic forecasts have become increasingly gloomy. A J.P. Morgan Chase analyst forecast that the U.S. economy could shrink by 14% between April and June, which would mark the worst quarterly contraction since World War II.

Mnuchin's comments are part of the rapidly evolving fiscal stimulus plan that the White House and congressional leaders are scrambling to assemble amid growing signs that large parts of the economy are grinding to a halt. House Democrats, meanwhile, are working on their own set of proposals, and negotiations with the White House are expected to begin very soon.

The White House until several days ago had sought to pass a large tax cut measure to try and boost the amount of money people took home, but that idea was panned by lawmakers from both parties and seemed ineffective given an expected spike in unemployment. So this week the White House shifted to a goal of sending cash payments to many Americans, as quickly as possible.

The Treasury Department has estimated that such an approach could cost $500 billion and serve as a large part of their $1 trillion economic rescue package it wants Congress to authorize immediately. They also are proposing helping small businesses obtain funding in a way that avoids mass layoffs, creating an emergency lending facility for airlines, and providing liquidity to another range of firms that have been hammered by cancellations and closures.

But many parts of the White House's approach remain in flux, and lawmakers from both parties are debating a number of different ideas.

Some Republican senators want to cap the payments to prevent taxpayers who earn over $75,000 annually from receiving the checks, according to two people aware of the GOP's internal negotiations, who cautioned the talks were fluid and the numbers could change. And some other Republican senators want to substitute enhanced unemployment benefits or small business payroll assistance for at least some of the direct cash assistance Mnuchin has proposed.

Mnuchin and Trump initially suggested the money could reach American taxpayers within two weeks, although Mnuchin on Thursday suggested it would take three.

"Most people, we have their information," Mnuchin said, suggesting the money could be directly deposited in consumers' bank accounts.

House Democrats, wary of being sidelined as a potential trillion-dollar stimulus bill is negotiated between the White House and Senate Republicans, are trying to assert their power by proposing their own sweeping coronavirus economic rescue package in the coming days.

But Democrats have their own issues to work through -- including how to put their own stamp on what is emerging as the centerpiece of the Republican-led plan being drafted in the Senate that could be unveiled as soon as Thursday: an estimated $500 billion plan to deliver checks directly to Americans over the next 90 days.

Tensions over the shape of the package emerged in a conference call Wednesday of House Democratic leaders and committee chairmen.

House Majority Whip James Clyburn, D-S.C., and Financial Services Committee Chairwoman Maxine Waters, D-Calif., argued for outgunning Republicans on the size of the cash payments, according to three participants on the call.

Waters, for instance, circulated a plan Wednesday calling for $2,000 per adult and $1,000 per child monthly stipend until the crisis abates.

But other Democrats -- including Speaker Nancy Pelosi -- while not ruling out direct payments, urged a more balanced course. Multiple committee chairmen argued that beefing up existing safety net programs -- such as unemployment insurance and Medicaid, as well as small business assistance, would provide more targeted and effective relief.

All Democrats on the call, according to the participants, agreed that any cash payments should be means-tested to exclude the wealthiest Americans, a sentiment the White House appears to share.

In a letter to fellow Democrats late Wednesday, Pelosi alluded to the debate as "ongoing discussions in our Caucus on how to put money quickly in the hands of Americans."

"Our Chairs are suggesting ways which are structural," she wrote. "For example, solutions include expanding eligibility for Unemployment Insurance which will expedite financial relief for more people. In terms of helping small businesses, solutions include funds to ensure that workers continue to be paid. Refundable tax credits including the [Earned Income Tax Credit] and the child tax credit continue to be priorities as Members discuss other cash payments in the days ahead."

But to many Democrats, discussions revolving around esoteric subjects like refundable tax credits are both insufficient in the face of a national crisis and a political loser when compared to the relatively easy-to-grasp concept of a check to every household.

"I think members are really just concerned about, what's the fastest way to go?" said one House Democrat, who spoke on the condition of anonymity to frankly describe conversations with colleagues.

Regardless of the cash-payments debate, House Democrats are eager to insert themselves in the debate after taking a lead role in shaping the second round of coronavirus pandemic response, which was passed by the Senate and signed by President Trump Wednesday.

House members left Washington after passing the second-round bill early Saturday morning, leaving the Capitol to the Senate this week as House Democrats try to do their business through emails and conference calls. The House's operations were further thrown into disarray Wednesday after two members announced they had tested positive for covid-19, while several others who came in contract with them chose to self-quarantine.

Schumer and Senate Democrats have released a framework of their own -- a $750 billion package that prioritizes a "medical surge," federal funding for child care and a emergency liquidity for small businesses. Much of the bill is devoted to existing safety net programs -- not cash payments.

But payments have backing among Senate Democrats, too -- notably, a proposal from Sens. Michael Bennet (Colo.), Cory Booker (N.J.) and Sherrod Brown (Ohio) that would put an immediate $2,000 into the hands of every American adult and child, with more possibly to follow.

 

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