Posen: Policymakers Shouldn't Worry About Overdoing in Virus Fight
The top Democrats in Congress Wednesday proposed pushing the next round of economic stimulus to US$500 billion, double what the Trump administration and GOP leaders are seeking.
Treasury Secretary Steven Mnuchin asked Congress Tuesday to add US$250 billion to a program for small businesses, but House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a statement Wednesday that they also want US$100 billion for hospitals and US$150 billion for state and local governments. Democrats are also calling for a 15 per cent increase in nutrition assistance for the needy.
The next stimulus package “must provide transformational relief as the American people weather this assault on their lives and livelihoods,” the Democratic leaders said. “The American people need to know that their government is there for them in their time of great need.”
The Democrats’ counteroffer could complicate an attempt by the administration and Senate Majority Leader Mitch McConnell to approve additional funds by the end of the week for the US$350 billion Paycheck Protection Program for small companies. Republican Senator Marco Rubio said on Twitter that McConnell took a procedural step to have the US$250 billion in additional aid passed by a voice vote on Thursday, which wouldn’t require most lawmakers to return to Washington.
Doug Andres, a spokesman for McConnell, declined to comment about his plans for voting as soon as tomorrow and did not respond to a question about whether negotiations with Schumer are continuing. McConnell has said he plans to move a measure by unanimous consent, so any objection from Senate Democrats would block the effort.
Mnuchin on Wednesday said he still hopes Congress will approve the additional funds quickly.
“I want to assure all small businesses out there, we will not run out of money,” Mnuchin said in a CNBC interview. “We hope they pass this tomorrow and Friday. And we want to assure everybody, if you don’t get a loan next week, you’ll get a loan next week or the following week. The money will be there.”
President Donald Trump said that as of Tuesday the Small Business Administration had processed US$70 billion in guaranteed loans, “which is far greater than we would have ever thought.”
Mnuchin said previously that he’d spoken with Pelosi and Schumer as well as McConnell and House GOP leader Kevin McCarthy about quickly securing the money.
Pelosi said Tuesday she supported providing additional funding but didn’t commit to seeking quick approval without additional conditions. The speaker is scheduled to hold a conference call with House Democrats and Vice President Mike Pence at 1 p.m. Wednesday.
That program “needs money right away, we know that,” Pelosi said on CNN Tuesday. But she said the government doesn’t have data so far on who is receiving the money. Democrats want to make sure the program is benefiting everyone who qualifies for it, she said.
“So we have certain considerations if we need to go forward with that,” Pelosi said without elaborating.
Under the Democrats’ proposal Wednesday, half of the small business assistance -- or US$125 billion -- would be channeled through community-based financial institutions that serve farmers, family, women, minority and veteran-owned companies.
Businesses have rushed to tap the US$350 billion loan program that was part of the massive US$2.2 trillion stimulus passed by Congress in response to the economic crisis spawned by the coronavirus pandemic.
Stay-at-home orders across the country have particularly squeezed small businesses, which account for almost half of U.S. private employment.
Absent from their request on Wednesday were provisions that Schumer and Pelosi had previously called for in a follow-up stimulus package to the record US$2.2 trillion plan passed late last month.
In addition to an extension of the PPP program, Pelosi also proposed including an extension of the expanded unemployment insurance and more direct payments to individuals. She has estimated the bill would cost at least US$1 trillion.
Republicans have thus far been reluctant to enact a wide-ranging phase four stimulus bill. Now that they and their core business supporters such as the U.S. Chamber of Commerce are demanding an infusion for PPP, Democrats could have leverage to obtain more unemployment insurance and direct payment for workers.
Pelosi would have to weigh such an opportunity against the political costs of delaying aid to small businesses.
While there is support among Senate Democrats for expanding the Paycheck Protection Program’s funds, they want assurances that the pool of lenders in the program is broad enough that small businesses aren’t subjected to biases based on sex, race or other factors, according to a Senate Democratic aide. The aide added that community banks, microlenders and other sources should supplement the efforts of major banks.
A single lawmaker in either chamber could thwart plans for a quick vote. Two weeks ago, Kentucky GOP Representative Thomas Massie drew the ire of his congressional colleagues by forcing many of them to return to Washington to vote personally on the US$2 trillion stimulus bill, rather than allow a lightly attended voice vote-procedure for its passage.
Massie’s office did not immediately respond Tuesday to questions about whether he might again attempt to force a quorum of his colleagues to return to Washington should Pelosi schedule a vote. And at least one other House member, independent Justin Amash of Michigan, has been tweeting his dissatisfaction with the PPP program as now set up by Mnuchin.
Schumer separately on Tuesday unveiled his own plan for a next stimulus package. It would include a massive “Heroes Fund” to give hazard pay of up to US$25,000 each for workers including grocery store employees, transit workers and pharmacists who are risking their lives to stay on the job amid the coronavirus outbreak. That is also likely to have a price tag in the hundreds of billions of dollars.