The White House and Congress on Monday tried to design another giant bailout package aimed at combating the coronavirus pandemic’s economic and health fallout, scrambling to resolve last-minute snags over loan access and testing.
If a deal is reached, the nearly $500 billion measure would become the fourth virus-related bill rushed through Congress in just two months at a total price tag of almost $3 trillion.
The negotiators’ urgency shows how worried Republicans and Democrats are about the deteriorating economy, which has seen massive job losses and led to the closure of many American firms. But they are also dealing with growing political pressures amid bipartisan outrage about how some of the bailout programs have been handled so far, particularly the uneven distribution of loans to small businesses.
The new package would amount to roughly $470 billion in new spending, with $370 billion directed to small businesses, $75 billion going to hospitals, and $25 billion set aside for testing.
President Trump hailed the emerging deal at his daily coronavirus briefing Monday evening, calling it “a great plan” and saying he hoped for a Senate vote on Tuesday.
“We’re talking about $75 billion for hospitals and other health-care providers,” Trump said. “Many providers and their employees have taken a huge financial hit in recent weeks. … Hospitals have really been fantastic.”
Funds for testing emerged Monday as one of the last things to resolve.
Democrats were pushing for a “comprehensive national testing strategy,” Senate Minority Leader Charles E. Schumer (D-N.Y.) said in a tweet. The Democrats were seeking “free testing for all, and expanding reporting and contact tracing,” Schumer said.
Pelosi said on CNN that “we need a national strategy for testing.”
But Treasury Secretary Steven Mnuchin and other Trump administration officials were seeking a “state-driven approach and flexibility,” according to a senior administration official, who spoke on the condition of anonymity to describe the private talks.
The official said “states must outline their plans for testing and share those” with the secretary of the Department of Health and Human Services so they can “inform their public about what they intend and help us allocate resources appropriately.”
The differing approaches echoed the dispute growing nationally, as governors blame the federal government for the shortage of tests, while Trump and other administration officials insist there have been record numbers of tests performed and that governors need to try harder.
It wasn’t immediately clear what a solution to the testing dispute might look like, although officials involved said they were making progress on the issue.
The package comes several weeks after Congress devoted a record $2 trillion to arresting the economic fallout from the novel coronavirus, underscoring the depth of the crisis and the growing demand for a robust federal response. More than 22 million people have lost their jobs in the past month as the economy nose-dives into a recession.
The new measure would seek to devote an additional $310 billion to the Paycheck Protection Program, an initiative created by last month’s Cares Act that was initially funded $349 billion but has since run dry. The Small Business Administration stopped accepting loan applications for the program last week after 1.6 million firms obtained taxpayer-backed, forgivable loans. The White House and Republicans demanded more money for the program, but Democrats said they would only support the measure if they received more money for hospitals, cities and states.
The White House and Democrats appeared to resolve most of their differences Sunday, but sticking points remained on Monday. In addition to the dispute over testing, the Congressional Hispanic Caucus released a letter calling for $65 billion in the small-business loan program to be channeled through Community Development Financial Institutions, a type of lender that tends to cater to smaller firms and nonprofit organizations.
“These institutions play a leading role in serving farmers, as well as veteran, family, women, and minority-owned small businesses in rural, urban and suburban communities," Rep. Joaquin Castro (D-Tex.), chairman of the CHC, said in a statement. Democrats led by Rep. Nydia M. Velázquez (D-N.Y.), chairwoman of the House Small Business Committee, were also pushing for inclusion of other small lending institutions that operate in underserved areas, including the Minority Depository Institutions and SBA microloan intermediaries.
Rep. Alexandria Ocasio-Cortez (D-N.Y.), whose New York City district has been hard hit by the virus, also announced her opposition, saying Congress must do more faster to help affected communities.
“I’m not here with the luxury of time,” Ocasio-Cortez said in a video. “I need legislation that is going to save people’s lives.”
As negotiators from the Trump administration and congressional leadership worked behind the scenes to resolve the outstanding issues, Senate Majority Leader Mitch McConnell (R-Ky.) announced on the floor that the Senate will convene Tuesday at 4 p.m. with the goal of passing a deal at that time. There had been hopes of approving an agreement in the Senate on Monday, but the deal was not finalized in time.
“At this hour, our Democratic colleagues are still prolonging their discussions with the administration, so the Senate regretfully will not be able to pass more funding for Americans’ paychecks today,” McConnell said.
“However, since this is so urgent, I have asked that the Senate meet again tomorrow in a new session that was not previously scheduled, and the Democratic leader has agreed to my request. It is past time to get this done for the country.”
After speaking on the floor, McConnell donned a face mask to talk briefly to reporters at the Capitol, telling them, without offering details, that negotiations are continuing.
As they finalized the package, lawmakers were circling around an increase of $310 billion for the Paycheck Protection Program, of which $60 billion would be reserved for smaller financial institutions to distribute. Half of that would be provisioned for lenders with less than $10 billion in assets and the other half for institutions with between $10 billion and $50 billion in assets. An additional $60 billion in loans and grants would go to a separate small-business emergency lending program that is out of money.
Congressional aides cautioned, however, that talks were ongoing and details remained in flux.
Lawmakers and the administration worked late into the night Sunday trying to hammer out the agreement, but Democrats said Monday that issues remained unresolved on the hospital spending and some elements of the small-business programs, in addition to testing. They also insisted they had not abandoned their push for relief for state and local governments whose budgets have been hollowed out by the pandemic, but Republicans and administration officials continued to reject those demands.
If the Senate succeeds in passing the legislation Tuesday the House would vote on it as early as Thursday, Majority Leader Steny H. Hoyer (D-Md.) told lawmakers late Monday night. He said the House would also take the opportunity to vote on a rules change allowing for proxy voting, essentially allowing lawmakers to vote from afar in the future by designating colleagues to cast votes for them.
Both chambers are out of session, but Republicans have said they will insist on a roll-call vote in the House, which will require a majority of lawmakers to be present.
In videos on Twitter and in an interview with CNBC, Sen. Marco Rubio (R-Fla.), the principal author of the Paycheck Protection Program, defended it amid reports of large companies getting loans, in some cases with more than one affiliate receiving the maximum $10 million. The loans are supposed to go to companies with fewer than 500 employees and are forgivable if the businesses keep workers on their payrolls.
Rubio said some companies had been approved for loans that he didn’t think should have, but he hoped regulations would be tightened to prevent that from happening.
“Look, there were glitches made, no doubt about it, but in the end take comfort in the fact that the money has to go to the workers ultimately, it doesn’t really matter who the worker’s working for, we want to keep them employed. This is not a bailout of any company,” Rubio said. “But I think certainly the goal here is to get money into the hands of businesses who don’t have anywhere else to go for money, including the stock market, shareholders, other sort of credit lines.”
House Minority Leader Kevin McCarthy (R-Calif.) spoke in favor of the emerging agreement in an interview on Fox Business, accusing Democrats of holding it up to make a variety of demands.
“What it would do is something that we’ve been requesting for the last two weeks, more funding for the small-business program,” McCarthy said. “This business program has worked very well, more than 1.6 million businesses requested the money to pay their employees, to pay their rent.”
Seung Min Kim, Mike DeBonis and Paul Kane contributed to this report.