Northwest Arkansas Democrat-Gazette
2-day stopgap passes, holding off shutdown
Government to run as virus-aid talks drag
WASHINGTON — Congress swiftly passed a twoday stopgap spending bill Friday night, averting a partial government shutdown and buying time for slow endgame negotiations on an almost $1 trillion coronavirus relief package.
The virus aid talks remain on track, both sides said, but closing out final disagreements is proving difficult.
The House passed the temporary funding bill by a 320-60 vote as lawmakers headed for a Sunday session. All the no votes came from Republican lawmakers and Rep. Justin Amash, a Michigan Libertarian.
The Senate approved the bill by voice vote almost immediately afterward, sending it to President Donald Trump. Sen. Bernie Sanders, I-Vt., held up the vote and urged lawmakers to approve another round of $1,200 stimulus payments, but quickly withdrew his objections after a short speech.
House Majority Leader Steny Hoyer, D- Md., said there were “still some significant issues outstanding”
in the way of a coronavirus relief deal. He added that House lawmakers should not expect to vote earlier than Sunday at 1 p.m.
Asked about the appearance of holding such a swift vote, Hoyer said he was not “nearly as worried as I am about the optics of thousands of people in food lines and millions of people worried about how they’re going to pay the rent … how they’re going to survive the next day. Much more worried about that.”
Senate Majority Leader Mitch McConnell, R-Ky., said both sides remain intent on closing the deal, even as Democrats opened a concerted campaign to block an effort by Republicans to rein in emergency Federal Reserve lending powers. The Democrats said the GOP proposal would deprive President-elect Joe Biden of crucial tools to manage the economy.
It appeared unlikely there would be a deal reached Friday night, lawmakers and aides said.
And lawmakers were hardly unanimous. Sen. Ron Johnson, R-Wis., criticized the effort to send another round of taxpayer funds to prop up the sputtering economy.
“We will not have learned the lessons from our very hurried, very rushed, very massive earlier relief packages,” Johnson said. “We’re just going to do more of the same, another trillion dollars.”
FED PROVISION
Democrats came out swinging at a key obstacle: a provision by conservative Sen. Pat Toomey, R-Pa., that would close down more than $400 billion in potential Federal Reserve lending powers established under the relief bill in March. Treasury Secretary Steven Mnuchin is shutting down the programs at the end of December, but Toomey’s language goes further, by barring the Fed from restarting the lending next year, and Democrats say the provision would tie Biden’s hands and put the economy at risk.
Some Republicans are wary that the Fed might use the programs to become something more akin to a lender of “first resort” instead of “last resort,” as Toomey has put it. He says the Fed shouldn’t be engaging “in fiscal policy, social policy or allocating credit,” and should leave those decisions to elected leaders on Capitol Hill.
Toomey defended his position Friday and emphasized that the emergency lending programs were always intended to close out at the end of the year.
“The language Senate Republicans are advocating for affects a very narrow universe of lending facilities and is emphatically not a broad overhaul of the Federal Reserve’s emergency lending authority,” Toomey said.
However, “What the current proposal on the table appears to be is something that goes well beyond the CARES [Coronavirus Aid, Relief, and Economic Security] Act,” said Bharat Ramamurti, a Democratic member of the Congressional Oversight Commission. “This proposal isn’t just, ‘let’s go back to the world as it existed the day before the CARES Act.’ It’s actually a significant reduction of the authorities that the Treasury and Fed had before the CARES Act.”
“What’s happening here is a rewriting of the Fed’s emergency powers at the last minute, without any hearing, without any debate of what the implications are,” Ramamurti said.
And, “As we navigate through an unprecedented economic crisis, it is in the interests of the American people to maintain the Fed’s ability to respond quickly and forcefully,” said Brian Deese, Biden’s choice to chair the National Economic Council. “Undermining that authority could mean less lending to Main Street businesses, higher unemployment and greater economic pain across the nation.”
“These authorities should be maintained to allow for the Federal Reserve to act to prevent hardship to families across the country,” Sen. Michael Bennet, D-Colo., said in a statement. “If ever there is a time to put politics aside and do the right thing, it should be in the middle of a pandemic and corresponding economic crisis.”
“We’ve got to be able to solve that,” Sen. Richard Durbin, D-Ill., said of the dispute over the Fed’s powers. “I can’t believe all this effort and assistance to millions of Americans has come down to this obscure fund. It would be such a terrible waste.”
The key Fed programs at issue provided loans to small and midsize businesses and bought state and local government bonds, making it easier for those governments to borrow, at a time when their finances are under pressure from the pandemic.
The Fed would need the support of the Treasury Department to restart the programs, which Biden’s Treasury Department secretary nominee, Janet Yellen, a former Fed chairman, would likely provide. The Treasury Department also could provide funds to backstop those programs without congressional approval and could ease the lending requirements. That could encourage more lending under the programs, which have seen only limited use so far.
SUNDAY SESSION
The battle obscured progress on other elements of the hoped- for agreement. After being bogged down for much of Thursday, negotiators turned more optimistic, though the complexity of finalizing the remaining issues and drafting agreements in precise legislative form was proving daunting.
The central elements appeared in place: more than $300 billion in aid to businesses; a $ 300- per- week bonus federal jobless benefit and renewal of soon-to-expire state benefits; $600 direct payments to individuals; vaccine distribution funds and money for renters, schools, the Postal Service and people needing food aid.
House lawmakers were told that they wouldn’t have to report to work today but that a Sunday session was likely. The Senate will be voting on nominations today.
The pending bill is the first significant legislative response to the pandemic since the landmark CARES Act, passed virtually unanimously in March — delivering $1.8 trillion in aid, $600-per-week bonus jobless benefits and $ 1,200 direct payments to individuals.
The legislation passed at a moment of great uncertainty and unprecedented shutdowns aimed at stopping the coronavirus, but after that, many Republicans focused more on loosening social and economic restrictions as the key to recovery instead of more taxpayer-funded aid.
Now, Republicans are motivated chiefly to extend business subsidies and some jobless benefits, and provide money for schools and vaccines. Democrats have focused on bigger economic stimulus measures and more help for those struggling economically.
The emerging package falls well short of the $ 2 trillion-plus that Democrats were demanding this fall before the election, but Biden is eager for an aid package to prop up the economy and help jobless and poor Americans. While he says more economic stimulus will be needed early next year, some Republicans say the current package may be the last.
“If we address the critical needs right now, and things improve next year as the vaccine gets out there and the economy starts to pick up again, you know, there may be less of a need,” said Sen. John Thune, R-S.D.
Most economists, however, strongly support additional economic stimulus as necessary to keep businesses and households afloat through what is widely anticipated to be a tough winter. Many forecast the economy could shrink in the first three months of 2021 without more help.
The details were still being worked out, but the measure also includes a second round of paycheck protection payments to especially hard-hit businesses, $25 billion to help struggling renters with their payments, $45 billion for airlines and transit systems, a temporary 15% or so increase in food stamp benefits, additional farm subsidies, and $10 billion for the Postal Service.
The emerging package would combine the $900 billion in covid-19 relief with a $1.4 trillion governmentwide funding bill. Then there are numerous unrelated addons that are catching a ride, known as “ash and trash” in appropriations panel shorthand.
A key breakthrough occurred this week when Democrats agreed to drop their much- sought $ 160 billion state and local government aid package in exchange for McConnell abandoning a key priority of his own — a liability shield for businesses and other institutions like universities fearing covid-19 lawsuits.
Senate Majority Leader Mitch McConnell, R-Ky., said both sides remain intent on closing the deal, even as Democrats opened a concerted campaign to block an effort by Republicans to rein in emergency Federal Reserve lending powers.
OF OPPOSITE MINDS
Federal Reserve Chairman Jerome Powell himself has repeatedly said the slate of emergency lending programs propped up in the spring were not meant to be permanent.
“When the time comes, after the crisis has passed, we will put these emergency tools back in the box,” Powell said at a news conference Wednesday.
But as Republicans seek to rein in the Fed, Democrats have pushed in the opposite direction. Many wanted to widen the Fed’s lending programs so they could help more businesses and local governments on the brink. Liberal policymakers also want the Fed to put more focus on racial inequality and climate issues, arguing they pose risks to economic growth.
The Fed is one of the most powerful financial institutions in the world, and much of its reputation rests on its independence from the White House. The chairman cannot be fired by the president over policy differences — a question that came up when Powell was on the receiving end of Trump’s routine attacks. Fed governors are unelected officials, subject to Senate confirmation, and can fill terms of up to 14 years.
But a highly partisan climate in Washington, mixed with the Fed’s large footprint, have made for a fraught combination.
Brian Gardner, chief Washington policy strategist at Stifel Financial Corp, said there’s “always this giveand-take about Fed independence,” with the lending programs emerging as the latest flash point.
“I think there are a lot of Republicans saying, ‘wait a second, what’s going on here?’” Gardner said. “This is a way to send a message to the Fed about who’s in charge.”
Democratic lawmakers also said Toomey is using the Fed as a political instrument in the final days of the lameduck session.
“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., said in a statement.
Sen. Brian Schatz, D-Hawaii, on Twitter blasted the move as a last-minute intervention and “the reason we don’t have a deal.”