Thursday, September 23, 2021

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Stimulus talks could spill into weekend as lawmakers scramble to complete deal


WASHINGTON - White House officials and congressional leaders are trying to address a number of lingering policy disagreements as they race to finalize an approximately $900 billion coronavirus relief package, with growing signs that the talks will drag into the weekend.

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Among the most vexing issues is whether to curb the powers of the Federal Reserve and how to structure a new round of stimulus checks. Lawmakers are also clashing over aid for theaters and music venues, and relief for cities and states. They have fought over many of these issues since May, and they were trying to resolve them all at once on Thursday, creating a chaotic scene with numerous lawmakers unsure about the latest state of play.

Negotiators were hoping to resolve all of their differences and pass matching bills through the House and the Senate by Friday night to marry the stimulus bill with a government funding package. But the prospects of this all happening appeared to slip away late Thursday. If they do not pass at least a stop-gap spending bill by Friday night, the government will shut down Saturday.

"We need to complete this work and complete it right away," Senate Majority Leader Mitch McConnell, R-Ky., said late Thursday. "The Senate's not going anywhere until we have covid relief out the door. . . . In the meantime, we're going to stay productive."

Congressional leaders have cited significant progress in recent days as talks accelerated. While several difficult sticking points remain, aides are expressing optimism that no new problems would prevent an agreement.

The stimulus package under discussion would include $600 stimulus checks for millions of Americans, 10 weeks of jobless aid, $330 billion in small business assistance, money for vaccine distribution, and funding for a range of other programs. Sen. John Thune, R-S.D., said that lawmakers are still reviewing how to design eligibility for the stimulus checks and that disagreements over this issue remains "one of the biggest challenges."

Congressional leaders add stimulus checks to $900 billion economic relief deal

Many other issues remain unresolved. Republicans were still demanding limits to emergency lending programs of the Federal Reserve and the Treasury Department. Democrats believe these restrictions, pushed primarily by Sen. Pat Toomey, R-Pa., would constrain the ability of the incoming Biden administration to stabilize the economy during a downturn.

Toomey on Thursday told reporters the issue was a "bright red line" for him in negotiations. Sen. John Barasso, R-Wyo., the third highest-ranking Republican senator, also called language on the Fed facilities "critically important" for GOP lawmakers. Lawmakers on Thursday were consulting with Federal Reserve Chairman Jerome Powell about the impact of the Toomey push.

Democratic lawmakers, meanwhile, are seeking to include funding for the Federal Emergency Management Agency to give to states and cities in emergencies. Republicans are wary that measure could amount to a form of aid for states and cities and have pushed back against it. Republican lawmakers agreed to drop their demands for a sweeping coronavirus liability shield in exchange for Democrats agreeing to abandon their push for hundreds of billions in state and local aid, but the dispute about the FEMA money remains unresolved. Democrats say the measure would only cost about $1 billion.

Similarly, Democratic lawmakers are seeking to delay the Dec. 31 deadline that states and cities have to spend unused federal assistance before that funding expires and has to be returned. Republicans have been resistant to that change as well, aides said.

Democrats have insisted on an extension of a federal eviction moratorium that is set to expire by the end of the year. Senate Banking Chair Mike Crapo, R-Idaho, told reporters Thursday that he was seeking additional rental assistance to "avoid the need" for extending the moratorium. A one-month extension in the moratorium was included in the bipartisan compromise introduced by centrist lawmakers earlier this month.

"The question is whether there is one needed ... if we get an adequate rental assistance program," Crapo said.

Senate Minority Leader Charles Schumer, D-N.Y., is also pushing a $17 billion plan called "Save Our Stages" to devote federal assistance to venues shut down by the pandemic and at risk of permanent closure. Some senior Republicans view the request as excessive and think some of the funding would be better spent on restaurants and additional Paycheck Protection Program assistance, according to aides familiar with internal discussions. Schumer has pushed for funding for restaurants and a second round of PPP as well.

The "Save Our Stages" measure has some Republican support, including from Sen. John Cornyn, R-Texas, who co-authored a $10 billion aid bill earlier this year. Cornyn told reporters Thursday that lawmakers are trying to reach an agreement on a funding formula for the provision and the eligibility criteria for the pool of money, citing the needs of zoos, community theaters, museums and other groups.

"I think the Federal Reserve authority there's a really strong interest in making sure . . . that door is is shut. And that's a big priority for a lot of our members. 'Save Our Stages' I know is in play," Thune, told reporters on Thursday.

The scramble for a deal comes amid numerous signs the economy is deteriorating again. Jobless claims have risen in recent weeks as a surge in new coronavirus cases has led to new restrictions on commerce. The pace of hiring has also slowed, and retail sales came in weaker than expected in November, an ominous sign during the holidays.

Pelosi and Schumer spoke with Treasury Secretary Steven Mnuchin at 10:30 p.m. Wednesday and agreed to trade offers and resume conversations Thursday morning, a Pelosi spokesman said on Twitter.

"Everyone wants to see this get done, and soon," Schumer said in a floor speech. "None of the remaining hurdles cannot be overcome."

One central unresolved matter surrounds a Republican desire to tighten restrictions on the Federal Reserve's ability to exercise its emergency lending authority amid the pandemic. Treasury Secretary Steven Mnuchin in November moved to wind down several emergency credit facilities totaling $500 billion that were authorized by the Cares Act passed in March. But several Republicans - led by Toomey, the incoming GOP leader of the Senate Banking Committee - want firmer limitations on the Fed's own statutory powers to intervene under "unusual and exigent circumstances."

Toomey included language in a GOP-drafted coronavirus aid proposal that was blocked by Senate Democrats in September that would affirmatively prevent the Fed from pursuing any further lending past early January for facilities funded by the Cares Act. Republicans are pushing to include similar language in the pending bill, but Democrats are fiercely resisting the move - believing it will hamstring Biden and his nominee for treasury secretary, former Fed chair Janet Yellen, as they seek to guide the economic recovery.

"It's no surprise that Republicans are drawing a line in the sand over their ability to sabotage the economy, and tie the Biden administration's hands," Sen. Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, said in a statement. Sen Jon Tester, D-Mont., also criticized the timing of the change as "pretty obviously suspect."

The various lending facilities include funds meant to ensure liquidity in various commercial credit markets, as well as vehicles to back Main Street loans for small businesses and to buy up municipal bond obligations from states and certain large cities and counties - freeing up their balances sheets amid fiscal distress. The latter program, which held $1.45 billion in bonds at the end of November, is of special note because federal aid to states and cities has become politically treacherous on Capitol Hill, and many Republicans have pointedly opposed any aid that could be construed as helping to bail jurisdictions out of fiscal distress that predated the pandemic.

The legislation taking shape is expected to devote about $330 billion for small-business relief, including $257 billion for another round of Paycheck Protection Program funding, aides said. Under the plans being considered, firms would likely be required to show declines in revenue of as great as 25 percent to qualify for the assistance, according to two people briefed on discussions. The measure would also have aid directly targeted for the restaurant industry, which is bracing for a severe downturn amid the closure of winter dining due to the surging pandemic.

Congressional leaders have also said they would provide about $300 a week in additional federal unemployment benefits. Those benefits would last for 10 weeks, rather than the 16 weeks called for in the bipartisan plan released by House and Senate lawmakers earlier this week.

Cutting six weeks off the unemployment program was expected to save negotiators about $40 billion.

Base unemployment benefits and a federal unemployment program created in March for gig workers and independent contractors, among others ineligible for traditional unemployment, are also expected to be extended for 10 weeks, people briefed on the talks said. The legislation would not retroactively cover unemployment benefits after the $600 per week benefit approved by Congress expired this summer.

Republicans are also seeking to require beneficiaries from the federal unemployment benefit to receive at least $100 per week in state unemployment benefits, but Democratic aides have rejected that proposal, according to one person briefed on internal discussions. The White House had a similar provision in the unilateral action it took over the summer to extend federal unemployment benefits. Republicans say the measure is necessary to prevent fraud in the unemployment system, while Democrats contend it cruelly cuts the lowest-earners out of government assistance.

The bill is expected to include a second round of stimulus payments, but at $600 per person rather than the $1,200 per person approved in March. The legislation is likely to provide both $600 per adult and $600 per child. Eligibility will be based on the same income threshold as in the Cares Act, which gave full payments to those who had earned less than $75,000 in the previous year. Payments are smaller for those earning over that amount before disappearing entirely for those earning more than $99,000.

Thune suggested to reporters on Thursday that lawmakers were considering lowering that threshold to keep the cost of the provision down. Sen. Bernie Sanders, I-Vt., who along with Sen. Josh Hawley, R-Mo., has pushed for a second round of stimulus checks, told reporters he opposes lowering the income cap.

There are expected to be two other significant policy changes to how the stimulus checks are disbursed. Adults who are claimed as dependents would be eligible for checks, unlike the previous round of payments. And the final measure is likely to be similar to Florida Republican Sen. Marco Rubio's legislation to give stimulus payments to U.S. citizens and their children even if they are married to noncitizens. Aides said discussions were fluid and policies had not been finalized.

Thune suggested Wednesday that lawmakers may seek to prevent people on unemployment benefits from also receiving $600 stimulus payments, although he appeared to back off that proposal on Thursday. Aides said that suggestion has been rejected by congressional Democrats and was unlikely to be incorporated in a final agreement.

Published : December 18, 2020

By : The Washington Post · Mike DeBonis, Jeff Stein, Seung Min Kim