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The maneuvers have called into question the fate of Congress’ relief program at a critical time, as coronavirus cases rise, unemployment insurance claims remain high and a wave of weakened data points underscore that American households and businesses face short-term economic hardships. even as vaccines give hope for a future rebound. Without renewed government support, millions of people could face a gloomy pandemic winter with little help at their disposal.
The language Mr. Toomey and other Republicans are advocating would cancel funding intended to support Fed credit for small and medium businesses, state and local governments, and large corporations. More alarming to Democrats, it would also prevent the Fed and the Treasury Department from restarting new versions of critical loan programs enacted this year.
It would take away a useful tool for Mr Biden as he takes office amid a continuing economic recession – and it angered Democrats, who blasted Treasury Secretary Steven Mnuchin for his decision last month to close the Fed’s programs at the end of the year.
Mr Toomey denied he was trying to harm the incoming Biden administration or ravage the economy. But he admitted his move was aimed at preventing Democrats from taking advantage of the Fed’s emergency lending programs to get cheap credit for senior borrowers. According to Toomey, the programs were aimed at preventing markets from collapsing, not helping municipalities or putting oil and gas companies at a disadvantage against green energy competitors.
“It would be a terrible idea to turn these programs into something else,” Toomey said on a call with reporters. According to the plans of some Democrats, he warned, “the Fed would not be the lender of last resort, it would be the lender of first resort.”
Mr Toomey, who said the new language was “the most important thing” to him, said it was also widely supported by Republicans in the Senate and by Mr Mnuchin. A senior administration official confirmed that the Treasury Secretary supported him.
Democrats have condemned the move, which would leave the Biden administration with even fewer tools to tackle the economic mess it will inherit.
“This is an important last-minute request from Senate Republicans that goes far beyond anything they have asked for in the past,” said Bharat Ramamurti, Democratic member of the congressional oversight committee responsible for overseeing the Fed’s programs. This would “drastically limit the ability of the Biden administration and the Fed” to provide credit and support markets next year, he said.
Reporting was contributed by Zolan Kanno-Youngs from Washington and Nicolas fandos from New York.
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