Covid-19: Optimism rises for deal on nearly $1 trn relief package in US

Democrats said Toomeys stand on the Fed would deprive President-elect Joe Biden of crucial tools to manage the economy.

Negotiators reported continued progress on an almost $1 trillion COVID-19 economic relief package on Saturday, with optimism rising that the overdue talks would soon produce an agreement.

The Senate convened a Saturday session, while House members stood by for a vote that will arrive no earlier than Sunday.

A new government shutdown of midnight Sunday was serving as a backstop for the tortuous negotiations, which were being conducted in secret largely among the top four leaders of Capitol Hill's warring tribes. A key negotiator said the talks continued in good faith.

But the American people cannot feed their families or pay their bills with Congress' good faith discussions, said Majority Leader Mitch McConnell, leader of the Senate GOP faction.

We need to conclude our talks, draft legislation, and land this plane." The massive package would wrap much of Capitol Hill's unfinished 2020 business into a take-it-or-leave-it behemoth that promises to be a foot thick or more.

House lawmakers will probably have only a few hours to study it before voting as early as Sunday afternoon. A Senate vote would follow, and another stopgap funding bill will likely be needed to avoid a shutdown at midnight Sunday.

The House passed Friday's temporary funding bill by a 320-60 vote. The Senate approved it by voice vote almost immediately afterward, and President Donald Trump signed it late Friday.

McConnell didn't give an update on the talks, but a remaining issue involves an effort by Republican conservatives to rein in emergency Federal Reserve lending powers. Democrats said the GOP proposal would deprive President-elect Joe Biden of crucial tools to manage the economy.

An agreement in principle Saturday would be a precursor to more hours of translating compromises into detailed legislation. Lawmakers are eager to exit Washington and close out a tumultuous year.

House lawmakers were told they wouldn't have to report to work on Saturday but that a Sunday session was likely. The Senate will be voting on nominations Saturday.

The $900 billion package comes as the pandemic is delivering its most fearsome surge yet, killing more than 3,000 victims per day and straining the nation's health care system. While vaccines are on the way, most people won't get them for months. Jobless claims are on the rise.

The emerging agreement would deliver more than $300 billion in aid to businesses and provide the jobless a $300-per-week bonus federal unemployment benefit and renewal of state benefits that would otherwise expire right after Christmas. It also includes $600 direct payments to individuals; vaccine distribution funds and money for renters, schools, the Postal Service and people needing food aid.

Democrats on Friday came out swinging at 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 a 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.

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 Biden economic adviser Brian Deese.

Undermining that authority could mean less lending to Main Street businesses, higher unemployment and greater economic pain across the nation." The Fed programs at issue provided loans to small and mid-sized 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 secretary nominee, Janet Yellen, a former Fed chair, would likely provide. Treasury could also 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.

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, more generous $600 per week bonus jobless benefits and $1,200 direct payments to individuals.

The measure in large part follows a template set by a bipartisan group of senators and a team of House pragmatists. But top leaders are firmly in charge, though relationship are frayed by months of warfare.

The COVID-19 package would be added to a $1.4 trillion governmentwide appropriations bill that would fund federal agencies through next September. That measure is likely to provide a last $1.4 billion installment for Trump's U.S.-Mexico border wall as a condition of winning his signature.

For Republicans, the most important COVID-19 aid provision was a long-sought second round of paycheck protection payments to especially hard-hit businesses and renewal of soon-to-expire state jobless benefits for the long-term unemployed.

Democrats have been denied direct fiscal relief for states and local governments, a top priority, and they got a supplemental COVID-19 unemployment benefit that was only half the size of what the CARES Act delivered. Democrats also won $25 billion to help struggling renters with their payments and $45 billion for airlines and transit systems, but some critics on the left said Democratic negotiators were getting outmaneuvered.

Indeed, McConnell has been in the catbird's seat since Senate Republicans outperformed expectations in November while House Democrats barely held their majority. Preelection Democratic demands for a bill exceeding $2 trillion were quickly cut by more than half. Still, Biden is pressing for an agreement, fearing a weakening economy will await him on Inauguration Day.


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


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