Optimism Rises Over Nearly $1 Trillion Aid Package Deal

WASHINGTON — Negotiators reported continued progress on a nearly $1 trillion COVID-19 economic relief package Saturday, with growing optimism that long-delayed talks will soon produce a deal. The Senate called for a session on Saturday, while members of the House waited for a vote that will not come before Sunday.

A new government shutdown at midnight Sunday was serving as a backstop for the tortuous negotiations, which were taking place largely in secret between the top four leaders of the warring tribes on Capitol Hill.

A key negotiator said talks continued in good faith.

“But the American people can’t feed their families or pay their bills with good faith discussions in Congress,” said Majority Leader Mitch McConnell, the leader of the Republican faction in the Senate. “We need to wrap up our talks, write a law and land this plane.”

The massive package would wrap much of Capitol Hill’s unfinished business for 2020 in a take-it-or-leave-it behemoth that promises to be a foot thick or more. House lawmakers will probably only have a few hours to study it before voting on Sunday afternoon. A vote in the Senate would follow, and another interim funding bill is likely to be needed to avoid a shutdown at midnight on Sunday.

The House approved the temporary funding bill on Friday with a vote of 320-60. The Senate approved it by voice vote almost immediately afterward, and President Donald Trump signed it on Friday night.

McConnell did not give an update on the talks, but one pending issue involves an effort by conservative Republicans to rein in the Federal Reserve’s emergency lending powers. Democrats said the Republican proposal would deprive President-elect Joe Biden of crucial tools to manage the economy.

An agreement in principle on Saturday would be a precursor to more hours to translate the commitments into detailed legislation. Lawmakers are eager to get out of Washington and close out a tumultuous year.

House lawmakers were told they would not have to report to work on Saturday, but a session was likely to be held on Sunday. The Senate will vote on the nominations on Saturday.

The $900 billion package comes as the pandemic is generating its scariest surge yet, killing more than 3,000 victims a 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 pop-up deal would deliver more than $300 billion in aid to businesses and provide the unemployed with an additional $300 a week federal unemployment benefit and renewal of state benefits that would otherwise expire just after Christmas. Also includes direct payments of $600 to individuals; vaccine distribution funds and money for renters, schools, the Postal Service and people who need food assistance.

On Friday, Democrats criticized a provision by conservative Sen. Pat Toomey, R-Pennsylvania, that would shut down more than $400 billion in potential Federal Reserve lending powers established under a relief bill in March. Treasury Secretary Steven Mnuchin will shut down the programs at the end of December, but Toomey’s language goes further, barring the Fed from restarting lending next year.

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“As we navigate through an unprecedented economic crisis, it is in the interest 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 fewer loans to Main Street businesses, higher unemployment and greater economic pain across the country.”

The Fed programs in question made loans to small and medium-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 support from the Treasury Department to restart the programs, which Biden’s Treasury Secretary nominee Janet Yellen, a former Fed chair, would likely provide. The Treasury could also provide funds to support those programs without congressional approval and could ease loan requirements. That could encourage more loans 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 billion in aid, plus a generous $600 a week in additional unemployment benefits and $1,200 in direct payments to individuals.

The measure largely follows a blueprint laid out by a bipartisan group of senators and a team of House pragmatists. But the top leaders are firmly in control, though relations are frayed by months of war.

The COVID-19 package would be added to a $1.4 trillion government appropriations bill that would fund federal agencies through next September. That measure is likely to provide a final installment of $1.4 billion for Trump’s US-Mexico border wall as a condition of getting his signature.

For Republicans, the most important COVID-19 relief provision was a long-sought second round of “paycheck protection” payments for especially hard-hit businesses and the renewal of soon-expiring state unemployment benefits for the long-term unemployed.

Democrats have been denied direct tax relief for state and local governments, a top priority, and got a supplemental COVID-19 unemployment benefit that was only half the size of what the CARES Act provided. 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 being outmaneuvered.

In fact, McConnell has been in the catbird seat since Senate Republicans exceeded expectations in November, while House Democrats barely held on to their majority. Pre-election Democratic demands for a bill topping $2 trillion were quickly cut by more than half. Still, Biden is pushing for a deal, fearing a weakened economy awaits him on inauguration day.

Biden promises another bill next year, but if Democrats lose the Georgia Senate runoff next month and fail to win a majority in the Senate, they may have little leverage. Instead, GOP leaders say privately that the delivery of an aid bill may help their current candidates in the January runoffs, GOP Sen. Kelly Loeffler and David Perdue.

Most economists, including Federal Reserve Board Chairman Jerome Powell, strongly support additional economic stimulus as needed to keep businesses and households afloat during what is anticipated to be a harsh winter. Many forecast that the economy could contract in the first three months of 2021 without further help. Standard & Poor’s said in a report Tuesday that the economy would be 1.5 percentage points smaller in 2021 without more help.

By Andrew Taylor of Associated Press. AP economics writer Christopher Rugaber contributed.

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