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Congress averts shutdown as fight continues over COVID-19 economic relief package

  • ASSOCIATED PRESS
                                Senate Majority Leader Mitch McConnell of Kentucky walks past reporters on Capitol Hill in Washington on Tuesday.

    ASSOCIATED PRESS

    Senate Majority Leader Mitch McConnell of Kentucky walks past reporters on Capitol Hill in Washington on Tuesday.

  • ASSOCIATED PRESS
                                Senate Minority Leader Sen. Chuck Schumer of N.Y., walks on Capitol Hill in Washington.

    ASSOCIATED PRESS

    Senate Minority Leader Sen. Chuck Schumer of N.Y., walks on Capitol Hill in Washington.

WASHINGTON >> Congress passed a two-day stopgap spending bill Friday night, averting a partial government shutdown and buying yet more time for frustratingly slow endgame negotiations on an almost $1 trillion COVID-19 economic relief package.

The virus aid talks remained on track, both sides said, but closing out final disagreements was proving difficult. Weekend sessions were on tap, and House leaders hoped for a vote on Sunday on the massive package, which wraps 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.

The House passed the 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.

Senate Majority Leader Mitch McConnell, R-Ky., said both sides remain intent on closing the deal, even as Democrats launched 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.

Negotiations continued into Friday night but an agreement wasn’t likely before Saturday, lawmakers and aides said. 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.

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 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 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, and Democrats say the provision would tie Biden’s hands and put the economy at risk.

“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.

Friday opened on an optimistic note after the talks appeared stalled for much of Thursday.

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 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 fiscal relief for states and local governments, a top priority, and they won 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.

Biden is promising another bill next year, but if Democrats lose Georgia Senate runoff elections next month and fail to win the Senate majority, they may have little leverage.

Most economists, including Federal Reserve Board Chairman Jerome Powell, 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. Standard & Poor’s said in a report Tuesday that the economy would be 1.5 percentage points smaller in 2021 without more aid.

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Bearing down on a midnight shutdown deadline, top negotiators on a must-pass, almost $1 trillion COVID-19 economic relief package are committed to sealing an agreement Friday as they resolve remaining differences in hopes of passing the legislation this weekend.

The pressure is on. Government funding lapses at midnight ET (7 p.m. Hawaii time) and a partial, low-impact shutdown would ensue if Congress fails to pass a stopgap spending bill before then. That’s not guaranteed, said Senate GOP Whip John Thune, who said some Republicans might block the stopgap measure to keep the pressure on if the talks haven’t borne fruit.

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 a relief bill in March. Treasury Secretary Steven Mnuchin is shutting down the program at the end of December but Toomey’s language goes further, and Democrats say the provision would tie President-elect Joe Biden’s hands and put the economy at risk.

“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,” said Sen. Michael Bennet, D-Colo. “President Trump had these authorities available to him. President-elect Biden should too.”

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.

But the central elements of a hard-fought compromise 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.

Lawmakers were told to expect to be in session and voting this weekend.

“The new deadline is Friday,” said House Rules Committee Chairman James McGovern, D-Mass., who hoped for a House vote by Saturday.

The hangups involved an effort by Senate conservative Pat Toomey, R-Pa., to curb emergency lending programs by the Treasury Department and the Federal Reserve, a Democratic demand to eliminate local government matching requirements for COVID-19-related disaster grants and myriad smaller disagreements over non-pandemic add-ons, lawmakers and aides said.

The delays weren’t unusual for legislation of this size and importance, but lawmakers are eager to leave Washington for the holidays and are getting antsy.

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

The CARES legislation passed at a moment of great uncertainty and unprecedented shutdowns in a failed attempt to stymie 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 during the pandemic. The urgency was underscored Thursday by the weekly unemployment numbers, which revealed that 885,000 people applied for jobless benefits last week, the highest weekly total since September.

The emerging package falls well short of the $2 trillion-plus Democrats were demanding this fall before the election, but President-elect Joe Biden is eager for an aid package to prop up the economy and help the jobless and hungry. While Biden 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,” Thune said.

The details were still being worked out, but the measure 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 a $10 billion bailout for the Postal Service.

The emerging package would combine the $900 billion in COVID-19 relief with a $1.4 trillion government-wide funding bill. Then there are numerous unrelated add-ons that are catching a ride, known as “ash and trash” in appropriations panel shorthand.

One leading candidate is an almost 400-page water resources bill that targets $10 billion for 46 Army Corps of Engineers flood control, environmental and coastal protection projects. Another potential addition would extend a batch of soon-to-expire tax breaks, including one for craft brewers, wineries and distillers.

The end-of-session rush also promises relief for victims of shockingly steep surprise medical bills, a phenomenon that often occurs when providers drop out of insurance company networks.

A key breakthrough occurred earlier 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.

The addition of the $600 direct payments came after recent endorsements from both President Donald Trump and progressives like Sen. Bernie Sanders, I-Vt., and Rep. Alexandra Ocasio-Cortez, D-N.Y., along with ambitious GOP Sen. Josh Hawley of Missouri. The idea isn’t very popular in other corners since it’s extremely costly and would give money to millions of people who may not need it, but it has enormous political appeal and proved difficult to stop.

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