Fed deal removes hurdle for US COVID relief

Top congressional lawmakers reached a late-night deal on the last major hurdle to a COVID-19 economic relief package costing nearly $1 trillion, clearing the way for votes on Sunday.

A Democratic aide said in an email that a deal had been reached by Saturday night and compromise language was being finalized to seal a deal to be released Sunday.

The breakthrough involved a fight over the Federal Reserve’s emergency powers that was defused by an odd couple: the Senate’s top Democrat and a senior conservative Republican.

“We’re getting very, very close,” Minority Leader Chuck Schumer, DN.Y., said Saturday as he spent much of the day going back and forth with Republican Sen. Pat Toomey of Pennsylvania. Toomey had been pushing a provision to close Fed lending facilities that Democrats and the White House say was worded too broadly and would have tied the hands of the incoming Biden administration.

COVID-19 legislation has been delayed after months of dysfunction, posturing and bad faith, but the talks turned serious in December when lawmakers on both sides finally faced a deadline to act before leaving Washington for Christmas.

The bill, lawmakers and aides say, would establish a temporary supplemental jobless benefit of $300 a week and direct stimulus payments of $600 for most Americans, along with a new round of subsidies for the smallest businesses. affected and funds for schools, health care providers and tenants. facing eviction.

Schumer said he expected both the House and Senate to vote on the measure on Sunday. That would require more cooperation than the Senate can normally muster, but the deadline to shut down the government loomed at midnight Sunday and all sides were itching to be gone by Christmas.

Fed emergency programs

Toomey defended his controversial provision in a floor speech, saying the emergency powers were designed to stabilize capital markets at the height of the COVID panic this spring and would expire at the end of the month anyway. The language he had sought would prevent the Biden administration from restarting them.

Toomey has a stubborn streak and Democrats stood their ground too, but both sides saw the need for a compromise to clear the way for the $900 billion-plus COVID-19 relief measure, which was attached to a bill government-wide spending of $1.4 trillion. and a series of other bills that compiled much of Capitol Hill’s remaining Trump-era legislative output.

At issue were the Federal Reserve’s emergency programs, launched amid the pandemic this spring, which provided loans to small and medium-sized businesses and bought state and local government bonds. Those bond purchases made it easier for those governments to borrow, at a time when their finances were under pressure from job losses and health costs stemming from the pandemic.

Treasury Secretary Steven Mnuchin said last month that those programs, along with two that bought corporate bonds, would be shut down by the end of the year, prompting an initial objection from the Federal Reserve. Under the Dodd-Frank financial reform law passed after the Great Recession, the Federal Reserve can only establish emergency programs with the support of the Treasury secretary.

Democrats in Congress also said Toomey was trying to limit the Fed’s ability to boost the economy, just as Biden was preparing to take office.

“These are the existing authorities that the Fed has had for a long time, to be able to use them in an emergency,” said Sen. Elizabeth Warren, D-Massachusetts. “This is a lending authority to help small businesses, the government state, local government in the midst of a crisis.”

Toomey disputed that charge, saying his proposal “is emphatically not a broad overhaul of the Federal Reserve’s emergency lending authority.”

pandemic surge

The massive package would wrap much of Capitol Hill’s unfinished business for 2020 in a take-it-or-leave-it measure that promised to be a foot thick or more. House lawmakers would likely have only a few hours to study it before voting Sunday night.

A vote in the Senate would follow, possibly on Monday. One more short-term funding bill would be needed to avoid the looming deadline, or a partial shutdown of non-essential agencies would begin on Monday.

The $900 billion package was winding down as the pandemic triggered its scariest surge yet, killing more than 3,000 victims a day and straining the health care system. While the vaccines were on the way, most people wouldn’t get them for months. Jobless claims were on the rise.

The pop-up deal would deliver more than $300 billion in aid to businesses, as well as the extra $300 a week for the unemployed and renewal of state benefits that would otherwise expire just after Christmas. It included direct payments of $600 to individuals; vaccine distribution funds; and money for renters, schools, the Postal Service and people who need food assistance.

It would be the first significant legislative response to the pandemic since the landmark CARES Act passed virtually unanimously in March, providing $1.8 trillion in aid, plus a generous $600 a week in additional unemployment benefits and $1,200 in direct payments to individuals.

The government-wide appropriations bill would fund the agencies through next September. That move is likely to provide a final installment of $1.4 billion for President Donald Trump’s US-Mexico border wall as a condition of getting him signed.

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