Senate leaders call for compromise to strike virus relief deal on Saturday

Senate Minority Leader Chuck Schumer (D., NY) said lawmakers were still negotiating the final stumbling block on Saturday: a push by Sen. Pat Toomey (R., Pa.) For restrict the Federal Reserve’s emergency lending powers.

“Sen. Toomey’s legislation creates barriers to emergency loans that go far beyond the current law, ”Schumer told the Senate on Saturday. “This is about tying the hands of the next Treasury secretary and the next Fed chairman in a real emergency.”

Senate Majority Leader Mitch McConnell (R., Ky.) Said Democratic leaders and Treasury Secretary Steven Mnuchin have had productive talks all week and have urged lawmakers to complete their negotiations. He did not specifically discuss the Toomey proposal.

“We need cooperation and focus from all sides,” McConnell told the Senate. “There is a sort of gravitational pull here in Congress where, unless we’re careful, any major negotiation can easily slip into an endless catalog of disagreements. Let us beware of this.

Senate Republicans were due to speak with Mnuchin over the phone early Saturday afternoon.

Senate Majority Whip John Thune (R., SD) said work continued on developing legislative language for the less controversial parts of the bill to speed up the process an once the deal was done, but said it was possible for the process to spill over. On Monday.

Although congressional leaders dwelled a few days ago on the contours of the relief package, they were still scouring the latest political disagreements.

On Friday evening, House Majority Leader Steny Hoyer (D., Md.) Said the first House vote on a possible deal would take place at 1 p.m. on Sunday. Even if the negotiators reach an agreement shortly, Hoyer said they would still need time to draft the bill.

“We hope they will come to an agreement in the near future,” he said. “They haven’t reached one yet. There are still important outstanding issues. “

The White House has been pushing for a resolution, and Mr. Trump has been particularly keen to secure another round of direct household assistance checks, GOP lawmakers have said.

The president “made it clear that he wanted the next round of relief to include significant number stimulus checks.” We are working with Congress to reach a deal that can be passed as soon as possible, ”White House spokesman Ben Williamson said.

The program is expected to include $ 300 per week in improved unemployment benefits, a second round of stimulus checks and funding for schools, health care providers, vaccine distribution and small businesses. Negotiations accelerated this week after congressional leaders agreed to drop two provisions: funding for hard-hit state and local governments, which Democrats and some Republicans had sought, and accountability protections for companies and other entities operating during the pandemic, a high GOP priority.

Lawmakers have said they plan to reconsider both issues in early 2021, given Democratic President-elect Joe Biden has said that all Congress does this year will be a down payment on additional aid.

Mr Toomey pushed to insert a measure that would restrict the Federal Reserve’s ability to establish the kinds of emergency loan programs it authorized in March to stem an emerging financial panic. This step would go beyond an earlier proposal to revoke the $ 429 billion provided to the Treasury to offset losses in the Fed’s lending programs.

Mr Schumer said on Saturday that Mr Toomey’s proposal, which had only recently emerged in negotiations, was “the only significant obstacle to reaching a deal”.

Mr Mnuchin last month refused to allow programs to continue after Dec.31, saying he didn’t think it was legally allowed. A non-partisan congressional research arm challenged that interpretation on Thursday.

In March, Congress provided $ 454 billion to the Treasury to cover losses from the Fed’s loan programs as part of the $ 2 trillion Cares Act stimulus package. Credit markets rebounded strongly after the Fed announced loan programs to maintain credit to large corporations, cities and states. The Fed ultimately bought less than $ 30 billion in loans and other assets.

Mr Toomey insisted that the Fed be prevented from relaunching these programs without the explicit approval of Congress. In terms the Wall Street Journal examined, Mr Toomey’s legislative proposal would bar the Fed and the Treasury from implementing any “program-like” loan programs created earlier this year with Cares Act money. .

In a statement Friday, Toomey said his proposal was strictly designed to ensure that loan programs, after expiring this year, “cannot be restarted or duplicated without permission from Congress.”

Currently, the Fed and the Treasury are allowed to establish emergency loan programs if they jointly agree. In justifying his decision to shut down lending programs this year, Mnuchin had said the Fed and Treasury would be free to restart them next year.

Fed Chairman Jerome Powell has made the same point repeatedly, including at a press conference on Wednesday, in a bid to reassure markets if conditions deteriorate.

Democrats said Republicans were limiting the tools available to the new administration. “The proposal to withdraw the Fed [emergency lending] The authority would set a terrible precedent, undermine the independence of the Fed and weaken its ability to react quickly to future crises, ”said Democratic Senator from Virginia Mark Warner, member of the Senate Banking Committee, on Friday.

A senior economic adviser to President-elect Joe Biden said on Friday that the Republican proposal would unduly limit the Fed’s ability to respond to a crisis. “The good faith effort of Congress to provide immediate assistance must not be held up by arrangements that could jeopardize our future financial stability,” said Brian Deese, who is expected to be the director of the House’s National Economic Council. White.

Lawmakers were also working on differences in the distribution and eligibility of direct checks of around $ 600 that should be included in the final bill, the duration and limits of a temporary increase in food stamp benefits. and how to structure a relief program for live people. performance venues and other industries that ask for help.

Democrats were pushing to adjust the cost sharing between the federal government and state and local governments for emergency aid. Democrats want the Federal Emergency Management Agency to cover more pandemic-related expenses for state and local governments, while Republicans want to place more restrictions on how that money could be used.

Write to Kristina Peterson at [email protected] and Andrew Duehren at [email protected]