New round of stimulus talks face GOP roadblock
Senate Republicans on Thursday signaled they won’t be ready to launch into another round of economic stimulus talks until next month.
The GOP resistance puts a damper on Speaker Nancy Pelosi’s (D-Calif.) and Senate Democratic Leader Charles Schumer’s (N.Y.) efforts to seize the political momentum on a phase-four coronavirus relief package.
Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday said he’s not opposed to more money for hospitals and health care providers “down the line” but said Democrats are already asking for money for programs that have yet to receive funding allocated for them in the CARES Act, which became law March 27.
“Certainly we need to see … the existing funding begin to work before we know what additional resources may be needed,” he said on the Senate floor.
McConnell spoke after the Senate failed to move forward dueling proposals from Republicans and Democrats.
Sen. Ben Cardin (D-Md.) on Thursday said Democrats are focused now on negotiating with Treasury Secretary Steven Mnuchin in hopes that by getting President Trump on board with a new coronavirus relief package, it will put pressure on Senate Republicans to come on board.
“If we can get the administration on board that we will have a much better chance of getting it done,” said Cardin, the senior Democrat on the Senate Small Business Committee.
He noted that Schumer and Mnuchin “have a pretty good relationship.”
Yet so far, there’s been no daylight between McConnell and Trump, suggesting there’s little reason for the GOP leader to bend.
The president backed up McConnell this week by assuring him that he would veto the Democratic proposal to pair $250 billion in small-business funding with $250 billion in aid to states and hospitals.
And Senate Republicans are sticking with McConnell’s position for now.
“The ink barely dry on the $2.2 trillion dollar Cares Act, money largely not yet out the door (except for PPP), and Schumer and Pelosi to seek more spending for spending’s sake,” Sen. John Cornyn (R-Texas) tweeted Thursday, referring to the popular small-business lending Paycheck Protection Program.
“We need to make sure what we have already done works as intended. Then, fill the gaps,” he added.
Senate Republican Policy Committee Chairman Roy Blunt (Mo.) said Thursday that Congress needs to wait at least until May to assess the impact of the $2.2 trillion package it approved only two weeks ago.
“The first focus of the Congress should be to clear up any problems or shortcomings that the CARES Act itself had. And we will know a lot more what we need by early summer, a month from now, than we know today.”
Republicans note that much of the $150 billion provided to stabilize state budgets has yet to be distributed and the CARES Act gives the administration 30 days to allocate the funding.
A senior Republican aide said “hospitals are awash in money” after receiving $117 billion through the last relief package.
Republicans also want to assess the impact of the Federal Reserve’s announcement Thursday morning that it would pump out $2.3 billion in loans to mid-sized businesses and local governments during the coronavirus crisis.
Some economic experts are warning of unforeseen consequences from the massive federal action to prop up companies and businesses.
“Unless we want a state-sponsored economy where the government owns most of everything, we’re going to have to [move to] a period when private market participants … have the right to set the price,” Chamath Palihapitiya, the CEO of Social Capital, a venture capital firm, warned in a CNBC interview discussing the Federal Reserve’s huge balance sheet.
“What you have is you have an obfuscation in the capital markets and a reality in Main Street … and they don’t reflect the same story,” he added, arguing that government intervention may be in some ways counterproductive to the economy healing quickly.
Pelosi, who is collaborating closely with Schumer, on Thursday expressed skepticism that Republicans will undergo any sort of quick conversion on getting another relief package put together within days.
Asked if she planned to work through Easter Weekend, the Speaker replied: “I don’t have any intention of spending one second on Sunday trying to convince anybody that it’s necessary for us to address the needs of everyone in our society. If they don’t know that, if we don’t share that value, they’re not going to get it on Easter Sunday or on Passover or Ramadan.”
Democratic strategists acknowledge that McConnell is a significant obstacle to passing another tranche of federal stimulus immediately but predict he will come under growing pressure from fellow Republicans to unleash hundreds of billions of dollars in more federal aid.
“McConnell wants to keep his caucus together, and he’s very good at doing it, but you see that senators on the Republican side are putting out some big proposals there that McConnell is going to have to address,” said Jim Kessler, a former aide to Schumer who now serves as executive vice president for policy at Third Way, a centrist Democratic think tank.
Kessler pointed to the call from Sen. Josh Hawley (R-Mo.), an up-and-coming Senate conservative, for a sweeping federal intervention to cover 80 percent of wages for all workers, up to the median wage, until the crisis is over.
“We cannot afford to make a few fixes to existing programs and hope for the best. We must think differently and be bold,” Hawley wrote in The Washington Post.
He also proposed offering businesses a bonus for rehiring workers laid off over the past month.
“The goal must be to get unemployment down — now — to secure American workers and their families, and to help businesses get ready to restart as soon as possible,” he wrote.
Hawley argued that “Congress must crack down on crisis profiteering by Wall Street” by pushing for strong antitrust enforcement and “stiffer corporate transparency rules” to ensure that when the economy revives “we don’t have a wave of mergers and liquidations that set our workers back again.”
Kessler predicted that other Republican senators will start to come under pressure from Republican governors to push for more federal aid to states.
“Waiting would be a mistake,” he said. “This is a situation where you have to act big, you have to act quickly and then you have to constantly adjust.
“There will be enough Republican senators who have situations in their states where they’ll say we need this too. Florida is really going to be desperate. And Louisiana is going to be disparate,” he added.
JPMorgan Chase, a prominent investment firm, revised its projections for the second quarter Thursday, predicting the economy will contract by 40 percent and the unemployment rate for April to soar to 20 percent.