Trump, Congressional Leaders Say Deal on Virus Stimulus Close
Virus Response Plan to Total About $2 Trillion, Kudlow Says
(Bloomberg) --
President Donald Trump and congressional leaders said negotiators were closing in on an agreement for a coronavirus economic-relief plan that the top White House economic adviser said would provide a $2 trillion boost to the U.S. economy.
The economic measure is intended to “keep companies together, keep workers paid, so they can live and sustain,” Trump said at a White House briefing. “We’re asking people not to work because we have to stay away from each other,” he said, adding that the hope is to “win with as few lives lost as possible.”
Senate Majority Leader Mitch McConnell said Saturday night that key committee chairmen were drafting legislative text that reflects key points of a compromise with Democrats ahead of a procedural vote on Sunday. McConnell is aiming for a Senate vote on the legislation Monday.
Senate Democratic leader Chuck Schumer said he went over details of a possible deal the Treasury Secretary Steven Mnuchin for more than an hour on Saturday and that he’s “very optimistic” things might fall into place by Sunday. A full agreement hasn’t been struck, however.
“We’re not there yet, but we’re working all night and we’re making very, very good progress,” he said on CNN’s “Situation Room.”
The package is designed to address a pandemic that continues to rapidly unfold. The pandemic has sent markets plunging, eliminating gains in U.S. stocks made during the first three years of Trump’s term, and constricted much of the world’s economy.
White House economic adviser Larry Kudlow told reporters as he arrived for talks that the spending bill itself is expected to total $1.3 trillion to $1.4 trillion, plus additional loans that would eventually be paid back, for a total economic impact of about $2 trillion.
“The package is coming in at about 10% of GDP. It’s very large,” Kudlow said.
Mnuchin and Senate Democrats have been pushing to expand the GOP’s economic rescue plan. The final plan will need Democratic votes to pass both chambers of Congress and get to Trump’s desk for his signature. House Speaker Nancy Pelosi of California was heading to Washington for the talks, according to her office.
McConnell, Schumer, Pelosi and House Republican leader Kevin McCarthy were scheduled to meet Sunday morning.
“The building blocks of this thing are pretty much in place,” said No. 2 Senate Republican John Thune.
A $1.4 trillion third-stage package would be dramatically higher than the 2008 economic rescue plan that was designed to address the banking-based financial crisis. The $700 billion package signed into law in October of that year would be valued at $841 billion in today’s dollars.
“This is going to be the largest, when it’s concluded, relief package in history,” Senate Democrat Bob Menendez of New Jersey said. “So yes, speed is necessary. But getting this done right so that it actually has the effect that we want is equally as important.”
Unemployment Insurance
One of the sticking points has been Democrats’ insistence on boosting unemployment insurance.
Republicans made a preliminary agreement with Democrats to provide federal funding to increase weekly unemployment benefits by about $600 across the board, according to multiple people familiar with negotiations.
But the agreement will need sign off from their respective party members to solidify the agreement. Though states administer unemployment compensation, the federal government has provided additional funds to temporarily expand it in the past, including the aftermath of the 2008-2009 financial crisis.
That portion is intertwined with the GOP Senate plan to provide $1,200 in tax rebates to most individuals. Mnuchin has proposed two $1,000 checks for individuals at a cost of about $500 billion -- substantially more generous than McConnell’s bill. Lower income filers are expected to receive the highest rebate benefit, rather than a tiered one that gradually increased, as in the original Senate GOP proposal.
Fed’s Role
Democrats agree with the Treasury Department’s push to expand the Federal Reserve’s authority for an emergency credit facility to be managed by Treasury, but have pushed for it to be much broader than the administration’s proposal to back stop large companies and expand the Fed’s legal authority to financially back distressed state and local governments, something Republicans object to.
“I don’t think we should be bailing out governments right now,” said Sen. Richard Shelby, the Republican chairman of the Senate Appropriations Committee and former chair of the Senate Banking Committee. “We should be trying to get to mitigate the economic fallout and find a solution to the health situation.”
Senate Democrats have also mirrored some of their House counterparts in pushing for rent forgiveness and other housing subsidies.
Another provision that has grown larger is the amount available for loans to small businesses. Senator Susan Collins of Maine and Marco Rubio of Florida said Saturday that portion could be $350 billion, up from the $300 billion in the original GOP plan.
Technical Corrections
Appropriators are still working on a supplemental spending measure that would help government agencies continue to operate, a measure that could be tacked on to the broader stimulus. Shelby said he expects that funding bill to be included.
Senator Rob Portman of Ohio, one of the lead negotiators on the unemployment insurance and tax rebate portion of the emergency aid package, told reporters that while there remain “a couple of outstanding issues,” like technical corrections to the 2017 tax law, most of the legislative text Republicans plan to publish on those provisions has bipartisan support.
“The unemployment insurance package that will be in our product will be one that Democrats came to us on. And as you will see it is quite generous,” Portman said. He warned that any legislation this large would rely on many moving pieces coming together.
Senators continued to negotiate loans and loan guarantees to airlines as of Saturday afternoon, Democrat Maria Cantwell of Washington said in an interview. Democrats are pushing for more restrictions on the use of those loans, arguing that stock buybacks should be banned and that airlines should honor collective bargaining agreements, she said.
‘Draconian Measures’
A group of airlines said in a letter to congressional leaders Saturday that they won’t furlough workers through the end of August if Congress gives them $29 billion in grants. The letter pushes back on the Senate Republican proposal to give them $58 billion in loans, with no grants. The industry initially requested $29 billion in grants and $29 billion in loans.
“Unless worker payroll protection grants are passed immediately, many of us will be forced to take draconian measures such as furloughs,” said the letter, which was signed by chief executive officers of airlines including American, Delta and Southwest.
Regional airlines, which perform about 40% of all flights under contracts with the major carriers, are concerned, separately, that the Senate plan will be of little help. And a bipartisan group of senators has requested that airports, not just airlines, should receive federal aid.
It wasn’t immediately clear whether the $1.4 trillion figure cited by Kudlow on Saturday included a $45.8 billion supplemental spending proposal from the White House. It includes $8.3 billion for the Department of Defense to protect service members, about $11.5 billion for the Department of Health and Human Services, and $3.4 billion for the Centers for Disease Control and Prevention.
House Democrats have pushed for the supplemental to be included in this “phase three” bill, but they also believe the request was not big enough, House Appropriations spokesman Evan Hollander said in a statement.
“One of the goals in this package is to do everything we can to not have to do a phase four,” said GOP Senator Kevin Cramer of North Dakota. “That’s why I think you’re going to see a really big bill.”
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