Northwest Arkansas Democrat-Gazette
Loose ends tripping up stimulus talks
Fed power, structure of aid checks, help for theaters stumbling blocks
WASHINGTON — White House officials and congressional leaders are addressing 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.
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 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 today 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 stopgap spending bill by today, 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.”
The pending bill is the first significant legislative response to the pandemic since the Coronavirus Aid, Relief and Security Act passed virtually unanimously in March, delivering $1.8 trillion in aid and $600 per week bonus jobless benefits and $1,200 direct payments to individuals.
Congressional leaders have cited significant progress in recent days as talks accelerated. While several 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 lawmakers are still reviewing how to design eligibility for the stimulus checks and that disagreements over this issue remain “one of the biggest challenges.”
The addition of the $600 direct payments came after recent endorsements from President Donald Trump and progressives like Sen. Bernie Sanders, I-Vt., and Rep. Alexandra Ocasio-Cortez, D-N.Y., along with GOP Sen. Josh Hawley of Missouri.
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 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 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 to expire by the end of the year. Senate Banking Chairman 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 the Paycheck Protection Program.
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.
MNUCHIN DECISION
Separately, members of a congressional watchdog panel have asked for an investigation into why Treasury Secretary Steven Mnuchin ended U.S. Federal Reserve emergency lending programs, according to a letter obtained by Bloomberg News.
Mnuchin said the CARES Act required him to terminate some central bank emergency lending facilities to prop up small businesses, nonprofits, and state and local government during the pandemic.
The letter, addressed to Treasury’s acting Inspector General Richard Delmar and signed by the Congressional Oversight Commission’s two Democratic appointees, Bharat Ramamurti and Rep. Donna Shalala of Florida, says there may be “irregularities” in how Mnuchin came to that conclusion, including that he may not have consulted legal counsel before determining that the program should wind down by the end of the year and may have changed his position after Biden won the presidential election.
“We are concerned that the Treasury Department’s decision to terminate the programs may have preceded a comprehensive legal analysis of the Cares Act’s requirements, particularly given the inconsistencies with the Treasury Department’s prior, public positions,” Ramamurti and Shalala wrote.
Delmar said he has received the request, is reviewing it and will respond to the requesters “as soon as possible.”
Mnuchin in mid-November said he would pull unused money authorized by the CARES Act to back Federal Reserve emergency-lending facilities at year’s end. The Treasury also unveiled plans to park those funds, along with other leftover lending authorization — about $455 billion in all — in the department’s general fund, over which Congress has authority, rather than the Exchange Stabilization Fund, over which the secretary has greater discretion.
Lawmakers, including House Speaker Nancy Pelosi, have said the actions amounted to a misreading of the law and were politically motivated to hamstring the incoming Biden administration.
Mnuchin said a Congressional Oversight Commission hearing earlier this month said that Treasury’s lawyers had provided verbal advice that the CARES Act required him to terminate the lending program by the end of the year. He said the department was preparing a written memorandum to support that reasoning, but it has not yet been made public. Ramamurti said he was also preparing his own legal memo demonstrating that the funds can be used until 2026.
A Treasury Department representative Wednesday night declined to say whether the secretary would release the memo.
Mnuchin said Ramamurti’s interpretation was exploiting an “obvious loophole” in the statute and that he did not agree with the reading.
While the Fed said last month that it preferred to keep the “full suite” of its backstops in place into 2021, Powell has repeatedly said the Treasury secretary is the “sole” authority on interpreting the law and that the central bank had no dispute with the reading.
Mnuchin said fresh legislation could revive the facilities that are being phased out.