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Gridlocked Congress Hears Aid Pleas After 17 Million Job Losses

Dems push for more aid to states and hospitals while Republicans want more limited measures.

(Bloomberg) -- Congress faces intense pressure to negotiate an interim rescue package this week as the impact of the coronavirus pandemic accelerates across the country.

Some 17 million Americans have lost their jobs in the past month, $349 billion in funding for a small-business relief program may run out within days, and the Covid-19 death toll in the U.S. has soared past 22,000.

And yet partisan deadlock reigns in Washington. Republicans want to add more money to Small Business Administration loan programs while Democratic leaders issued a statement early Monday demanding changes to that aid, including urgent funding for states and municipalities and additional help for struggling hospitals and health-care workers.

“Eligible small businesses continue to be excluded from the Paycheck Protection Program by big banks with significant lending capacity,” Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer wrote. “Funding for Covid-19 SBA disaster loans and grants must be significantly increased to satisfy the hundreds of billions in oversubscribed demand.”

Before the country can reopen, more testing is needed, they said. The Democrats also insisted on a boost to food stamps.

“We all desire an end to the shutdown orders so we can get Americans back to work and back to normal,” the leaders said. “However, there is still not enough testing available to realistically allow that to happen.”

While the stock market soared last week, trimming some of its sharp year-to-date losses, the economy faces fierce headwinds that have leaders in both parties proposing massive additional spending.

The nation’s governors are demanding Congress provide half a trillion dollars in economic aid, far more than even the Democrats have suggested so far, to plug revenue gaps.

Without “unrestricted” money from Washington, “states will have to confront the prospect of significant reductions to critically important services all across this country, hampering public health, the economic recovery, and -- in turn --our collective effort to get people back to work,” Governor Larry Hogan of Maryland and Andrew Cuomo of New York wrote on Saturday in a bipartisan statement for the National Governors Association.

The partisan stalemate in Congress continued over the weekend in advance of a pro-forma session in the Senate on Monday, which would be the first day that any additional aid could begin moving.

Treasury Secretary Steven Mnuchin, who brokered the $2.2 trillion rescue package that passed in late March, talked with Democratic leaders Senator Chuck Schumer and Speaker Nancy Pelosi last week, though there was no sign of a breakthrough.

Schumer, after talking to Mnuchin on Friday, sounded a hopeful note about bipartisan talks and the possibility of reaching an agreement early this week. “There’s no reason why we can’t,” Schumer said.

President Donald Trump also struck an optimistic tone.

“Despite what you’re reading -- you know, there’s back and forth -- but we are getting along with the Democrats,” he said at a White House briefing on Friday.

Democrats want changes to the Paycheck Protection Program to focus more of the money on smaller banks and smaller businesses. They also want to allocate $250 billion in aid to states and hospitals -- something Republican leaders and Trump have said can wait until later.

Republicans painted Democrats as obstructionists for blocking the $250 billion in additional funding for the PPP program sought by the Trump administration and Senate Majority Leader Mitch McConnell. The loans give small businesses as much as $10 million each that will be forgiven if they maintain their payrolls.

GOP Representative Devin Nunes of California said Saturday on Fox News that the Republican effort was “just a plus-up” of the small-business program, while Democrats want it loaded up “with a lot more junk.”

More than half of the PPP money has already been allocated. As of Saturday morning, 725,000 applications had been approved, representing more than $182 billion in commitments, according to the Small Business Administration. It’s unclear how much money has actually reached business owners.

Political Risks

Senate Finance Chairman Chuck Grassley of Iowa said Saturday the money would be depleted by Friday. The political risks of delay will ramp up once the money is gone, given that millions of businesses -- particularly smaller ones -- risk getting left out as banks prioritize their best customers. Many small businesses are on the brink, or worse.

Given that dynamic, a deal appears all but certain. But lawmakers will once again have to find a way to bridge the partisan split so that legislation can be approved by unanimous consent.

And even if the leaders agree, any one senator or House member can force days of delays or even roll call votes, which as of now must be conducted in person despite the risk of spreading infection. Objections are all but certain unless both parties can get at least some of what they want.

With most of the country social-distancing all month, Congress so far isn’t scheduled to return in force for another week, and there have been discussions about delaying that even further.

So far, the machinations are a near replay of what happened a few weeks ago, when McConnell sought to run over Democrats by holding multiple votes on the Senate floor while key negotiations between Schumer, Mnuchin and top White House legislative liaison Eric Ueland happened in private.

Give and Take

Those talks, which included input from Pelosi, ultimately added hundreds of billions of dollars to what was then the third rescue package, swelling it to about $2.2 trillion and yielding an historic 96-0 Senate vote.

A wish list of ideas from Pelosi and her progressive wing helped give McConnell a political foil to keep his troops in line, while oversight provisions and the extra spending on assorted Democratic priorities -- including a vastly expanded unemployment insurance program and $150 billion for states -- appeased liberals.

There was no such bipartisan give-and-take last week.

In addition to this interim infusion, both sides have been talking about a larger follow-on package. But exactly what that will entail remains up for debate.

Pelosi has tamped down hopes among some for a massive infrastructure plan in the next bill. But senators in both parties have proposed all sorts of pricey ideas that could run into the trillions of dollars -- from extending aid to businesses to pay their workers, to expanded unemployment insurance, to assorted tax cuts.

Voting Measures

One item that has divided sharply on partisan lines so far is making it easier for people to vote without need to line up at the ballot box.

Dr. Anthony Fauci, the top U.S. infectious disease specialist, said Sunday it was uncertain if Americans will be able to vote safely in person in November, should Covid-19 have a resurgence in the fall.

Democrats say Congress should allocate billions of dollars for states to implement easy access to mail-in ballots, which states like Oregon have long had. McConnell has resisted new federal mandates over elections, and Trump has slammed mail-in ballots, even though he has voted absentee by mail.

Expect that to remain one of the toughest fights as both parties seek every advantage with control of the Congress and the White House up for grabs this fall.

To contact the reporter on this story:

Steven T. Dennis in Washington at [email protected]

To contact the editors responsible for this story:
Kevin Whitelaw at [email protected]
Joe Sobczyk, Ros Krasny

© 2020 Bloomberg L.P.

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