Covid relief deal looking distant as Pelosi’s deadline nears
WASHINGTON — House Democrats and the Trump administration remained far apart in economic relief negotiations Monday, and a resolution looked unlikely ahead of tonight’s deadline set by House Speaker Nancy Pelosi for a deal that could pass before the election.
President Donald Trump seemed to downplay chances for a positive outcome, telling reporters that “Nancy Pelosi, at this moment, does not want to do anything that’s going to affect the election. And I think it will affect the election negatively for her. So we’ll see what happens.”
But Pelosi, D-Calif., insisted in a call with Democratic colleagues that she did want to pass legislation before the election, saying she didn’t want to carry “the droppings of this grotesque elephant into the next presidency,” according to a person on the call who spoke on condition of anonymity.
She spoke by phone for nearly an hour Monday with Treasury Secretary Steven Mnuchin, with whom she’s been holding regular negotiating sessions over a bill between $1.8 trillion and $2.2 trillion. The two “continued to narrow their differences” and “the speaker continues to hope that, by the end of the day Tuesday, we will have clarity on whether we will be able to pass a bill before the election,” Pelosi spokesman Drew Hammill said on Twitter.
Pelosi set the deadline in an appearance on a Sunday talk show, indicating that if no agreement were reached by tonight it would not be possible to get legislation passed before the election two weeks from now.
Hammill said staff would be working around the clock, but the divisions appeared significant.
Before speaking with Mnuchin, Pelosi had joined a conference call with House Democrats in which she and other leaders detailed multiple areas where the two sides remain at odds, including liability protections for businesses sought by the administration.
“There isn’t a single Democrat who could vote for a bill with those provisions,” Rep. Diana DeGette, D-Colo., said on the call, according to several people listening in, who spoke on condition of anonymity.
Pelosi said there still was not agreement for funding levels for state and local governments, a key Democratic demand. And the two sides continued to wrangle over language for spending on health care and testing provisions, with Energy and Commerce Chairman Frank Pallone, D-N.J., saying Democrats could not sign off on what would amount to a “slush fund” for the administration.
There also were still disagreements over small-business funding and a variety of other issues.
SENATE BILLS
Meanwhile, Senate Majority Leader Mitch McConnell, R-Ky. — who has rejected spending the sums Pelosi and Mnuchin are discussing — announced the Senate will be voting today and Wednesday on more-targeted bills. Today the Senate will take up a bill to replenish the small-business Paycheck Protection Program, and on Wednesday, McConnell will try to advance an approximately $500 billion bill that includes money for schools, vaccines and some new unemployment insurance.
Senate Democrats blocked the same legislation last month, saying it’s insufficient because it leaves out multiple priorities, including $1,200 stimulus checks for individuals. It appears destined to meet the same fate this week.
Senate Minority Leader Charles Schumer, D-N.Y., blasted the legislation Monday as “emaciated” and said: “The Republican proposal was unacceptable a month ago. It remains unacceptable.” He said it was designed only to give the Republicans political cover.
McConnell, however, accused Democrats of taking an “all-or-nothing approach,” and said, “The speaker’s Marie Antoinette act needs to end.”
Congress has not passed any new economic or health care relief since an unprecedented $3 trillion burst of spending when the epidemic started in the spring. Many of those programs have run their course, the economy is weakening and the coronavirus is spiking around the country.
A number of House Democrats have been pressuring Pelosi to make a deal now, before the election.
“If we delay this until the Biden administration, we’re talking about three, four, five months. The American people cannot wait,” Rep. Max Rose, D-N.Y., a freshman facing a difficult race in Trump-friendly Staten Island, said on CNN. “With each passing day without action, the American people will be suffering more.”
But with Trump making a series of erratic pronouncements, including ending the talks altogether only to restart them and saying he wanted to spend even more than the Democrats, Pelosi has been holding out for more.
It’s not clear that any deal struck by Mnuchin and Pelosi could pass the Senate. McConnell said over the weekend that if Mnuchin and Pelosi come to an agreement, “the Senate would of course consider it.” Trump told reporters Monday that if a deal is reached, “Republicans will come along,” declining to say if he’d spoken with McConnell.
“The bigger issue is McConnell,” said Rep. Ro Khanna, D-Calif., who drew attention this month by publicly advising Pelosi to endorse Mnuchin’s $1.8 trillion topline. “I mean, the president has said, ‘Oh, I can get McConnell on board.’ Well, why doesn’t he call McConnell and get him on board?” he said on SiriusXM Urban View on Monday.
But Republicans have spent months talking about a smaller aid package, and the top GOP vote-counter, Sen. John Thune, said Monday that “it would be hard” to find the necessary Republican support for passage of any agreement in the range of $2 trillion.
UNTOUCHED FUNDS
In the face of these maneuverings, hundreds of billions of dollars already set aside by lawmakers to support the Federal Reserve’s emergency aid programs may never be touched, illustrating the unevenness of Congress’s bailout decisions earlier this year.
In March, Congress allotted $454 billion to the Treasury Department to support the central bank’s emergency lending programs, including those for struggling businesses and local governments. Of that pot, $195 billion has been committed to cover any losses the Fed might take, including through loans that companies fail to repay.
Seven months into the crisis, however, the remaining $259 billion still has not been committed to any of the Fed’s programs or any other purpose, and it is unlikely that it will be anytime soon.
The fate of this money — and its inability to address remaining cracks in the economy — shows the surprising limits of the nearly $3 trillion in emergency aid that Congress approved early in the pandemic.
Federal Reserve and Treasury Department officials say there are ways the money could be repurposed to more directly reach businesses and workers but say they cannot do so without congressional approval. White House officials tried redirecting the money without congressional approval but were told by administration attorneys that they could not do so legally, according to two people who spoke on condition of anonymity to describe internal conversations.
“It’s a total mismatch of resources,” said Ernie Tedeschi, a former Treasury Department economist and head of fiscal analysis at Evercore ISI, an investment banking advisory firm.
Now, as many companies continue to lay off workers or close altogether, the fate of these funds looms large while millions of Americans are barely getting by and are holding out hope for Congress and the White House to cut a deal.
Republican lawmakers have expressed openness to pass legislation to immediately repurpose these funds, but Pelosi has rejected that approach in favor of a more comprehensive bill.
Meanwhile, the Treasury Department and Federal Reserve have faced increasing pressure to make their borrowing facilities more attractive to private companies and local governments, with or without Congress. Some economists warn that businesses and local governments, whose budgets have been wrecked by the pandemic’s fallout, still urgently need help.
Those are the exact areas that two of the Fed’s lending programs are intended to address. But those programs have seen meager uptake and little participation from big banks, and critics say the programs’ onerous terms significantly limit the amount of money that can get out the door.