Congressional leaders reached a deal on a roughly $900 billion spending package to bolster the US economy amid the coronavirus pandemic giving politicians a short time to review and pass the second largest economic-rescue measure in the nation’s history.
Senate Majority Leader Mitch McConnell, House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer announced the agreement on Sunday. The legislative text was still being written, but the House was expected to vote on it Monday, followed by the Senate.
The plan would provide direct payments of $600 to most Americans and $300-per-week in enhanced unemployment benefits through March. Expiring programmes for gig workers and the long-term unemployed also would continue.
There would be $284bn for the Paycheck Protection Programme that provides forgivable loans to small businesses. The package includes money for transportation – including for airlines – vaccine distribution, schools and universities, and food aid.
Negotiators failed to bridge partisan differences over a liability shield for companies wanted by some Republicans, and aid for state and local governments that Democrats had demanded, and left those out. A last-minute dispute over the Federal Reserve’s emergency lending authority threatened to derail an agreement until a compromise late on Saturday cleared the way for the broader deal.
The agreement came together after rounds of negotiations over the past week among Ms Pelosi, Mr Schumer, Mr McConnell and House Republican leader Kevin McCarthy. Treasury Secretary Steven Mnuchin also took part in the talks.
The relief plan will be attached to a $1.4 trillion bill that would fund the federal government through the end of the fiscal year on Sept. 30, 2021. The haggling over the relief package forced Congress to twice pass temporary funding for government operations. The current stopgap expires at midnight Sunday. The House passed another one-day extension to give time for votes on Monday; the Senate was expected to take it up Sunday night.
“At long last we have the bipartisan breakthrough the country has needed,” Mr McConnell said on the Senate floor.
Ms Pelosi and Mr Schumer lauded the agreement, though they expressed disappointment that the package wasn’t bigger.
“While this bill is far from perfect, nor is it the bill that we would pass if Democrats had a majority in the Senate. It is a strong shot in the arm to help American families weather the storm,” Mr Schumer said at a news conference with Ms Pelosi. “We will do more, we must do more.”
The deal came about after a months-long standoff that followed passage in March of the largest in a series of pandemic relief packages: a $1.8tn mix of spending and tax breaks that represented the biggest such measure in US history.
Since then, the economy has struggled to fully recover and another round of lockdowns is threatening to put millions of jobs at risk as deaths from coronavirus rise above 300,000.
Ms Pelosi and the Trump administration were close to a $2tn deal before the November 3 election – which Senate Republicans never fully embraced – and the final agreement is less than half that.
While the deal would represent a substantial infusion of aid, it also will put immediate pressure on the incoming Biden administration to spell out the next steps and then wrangle it through Congress.
President-elect Joe Biden last week said the emerging deal was an “important down payment on what’s going to have to be done at the end of January, the beginning of February”.
Mr McConnell has said he expects another relief proposal from Mr Biden, but he has not backed away from his opposition to direct aid to states and localities, or his insistence that employers be protected from Covid-19-related lawsuits. That signals the fight over any new round won’t be any less contentious.
The accord comes as the economy is showing signs of deterioration. About 7.8 million Americans have fallen into poverty since June as benefits from the previous covid relief package lapsed, according to an analysis of ongoing census data by economists at the University of Chicago and University of Notre Dame.
The 2.4 percentage point rise in the estimated US poverty rate through November is nearly double the largest annual increase since the 1960s, the economists said. The increase in poverty has been sharpest in states with more limited unemployment insurance benefits.
Separately, a government report last week showed US retail sales tumbled much more than expected in November, while the latest weekly jobless claims figure jumped to the highest level in three months. Payrolls might even contract in December, said Michael Feroli, chief US economist at JPMorgan Chase. The relief package “should be very helpful for the economy,” he said on Bloomberg TV.
“Nine hundred billion is a large number,” Mr Feroli said. “You’re talking about a 2 per cent to 3 per cent boost to GDP” over time, he estimated.
The package also has implications for the still-unsettled contest for control of the Senate. Mr McConnell told GOP senators on a private call Wednesday that passage will help Republican Senators David Perdue and Kelly Loeffler, who face January 5 runoffs.
Democrats would gain control of the Senate if both lose. McConnell specifically mentioned that their Democratic opponents, Jon Ossoff and Raphael Warnock, were using the delay in getting a deal and additional stimulus payments as attack lines in their campaigns.