Overnight Finance

On The Money: Sweeping COVID-19, spending deal hits speed bumps | Deal set to include smaller stimulus checks, jobless benefit support | Biden, Powell praise progress toward agreement

Greg Nash

Happy Wednesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL—Sweeping COVID-19, spending deal hits speed bumps: Negotiations over a $900 billion coronavirus relief bill are running into 11th-hour snags, threatening to push Congress into a rare weekend session.

Lawmakers had hoped to clinch a sweeping deal, which would also fund the government through Oct. 1, on Wednesday after the top four congressional leaders signaled that they were closing in on an agreement following months of stalemate. 

But instead, lawmakers and staff warned that — while they still thought they would get the agreement — the final stages of the talks are moving slowly as they continue to haggle over details and field requests for changes.

“It’s still a ways off, I think. They’ve still got some things they’re negotiating. … It’s been a slow roll so far,” said Sen. John Thune (S.D.), the No. 2 Republican in the upper chamber, after he left the Capitol following the Senate’s final votes of the day. The Hill’s Jordain Carney tells us why here.

Senate and House leaders were on the cusp of a coronavirus relief deal that will include $600 to $700 direct stimulus payments and $300-per-week supplemental unemployment assistance, according to sources familiar with the talks.

  • The $900 billion package is the result of months of stop-and-start negotiations that received a boost in early December when a bipartisan group of senators and House members unveiled their own $908 billion package.
  • The emerging deal is based largely on a revised $748 billion relief bill that the bipartisan group of Senate and House moderates unveiled Monday.
  • Senate and House leaders want to attach the new coronavirus relief package to a $1.4 trillion omnibus spending package that needs to pass by Dec. 18 to keep the government funded.

The Hill’s Scott Wong and Alexander Bolton tell us more about the package here.

The details: 

  • The emerging deal will not include $160 billion in new state and local aid or liability protection for businesses and other organizations — two of the most contentious issues on the table.
  • The new round of stimulus checks cost approximately the same as the $160 billion in state and local aid that negotiators have set aside in hopes of reaching a deal by week’s end.
  • It would provide between $320 billion and $330 billion for the second round of Paycheck Protection Program small-business loans, according to sources familiar with the talks, as well as money for broadband Internet services, food assistance and rental insurance.

The prognosis: The head of the House Democratic Caucus predicted Wednesday that the party will rally behind the emerging coronavirus relief package with “strong support” from Democrats despite some liberal grumbling that the aid being discussed is insufficient.  

Yet the package may be hard to swallow for liberal Democrats, who had demanded hundreds of billions of dollars to help state and local governments pay their front-line workers, only to see that funding stripped from the package altogether. The Hill’s Mike Lillis has additional reporting on that dynamic here.

Read more on the push for a COVID-19 deal: 

  • Leading lawmakers in both parties are voicing support for another short-term extension of government funding — if one is needed to prevent a shutdown at the end of the week.
  • Federal Reserve Chairman Jerome Powell on Wednesday praised progress toward another coronavirus economic relief bill as the U.S faces a daunting and deadly winter.
  • President-elect Joe Biden on Wednesday also commended the latest progress toward a bipartisan coronavirus relief package but described it as a “down payment” on what will ultimately need to be enacted early next year.

 

LEADING THE DAY

Millions have fallen into poverty amid pandemic, study finds: Nearly 8 million Americans have fallen into poverty since June due to a combination of rising coronavirus cases and dwindling federal support, according to a study released Wednesday by economists at the University of Chicago and the University of Notre Dame.

The national poverty rate rose by 2.4 percentage points from 9.3 percent in June to 11.7 percent in November, putting 7.8 million people below the poverty line, according to the paper from Notre Dame’s James X. Sullivan, Chicago’s  Bruce D. Meyer and Jeehoon Han of Zhejiang University.

  • The researchers pinned the rise in poverty on households exhausting stimulus checks and the July 31 expiration of enhanced unemployment benefits, both issued through the $2.2 trillion CARES Act passed in March.
  • Those stimulus checks and enhanced unemployment benefits helped reduce poverty from 10.9 percent before the pandemic to 9.3 percent through March, April and May. 
  • But the expiration of that aid and the subsequent slowing of the U.S. economy have thrown more households into poverty even as the unemployment rate declined, the researchers said.

“The entire decline in poverty through June can be accounted for by the one-time stimulus checks the federal government issued, predominantly in April and May, and the expansion of unemployment insurance eligibility and benefits. In fact, in absence of these programs, poverty would have risen sharply,” they wrote. Read more on the study here.

The troubling new data comes as the White House and Congress race to strike a deal on a follow-up to the CARES Act and prevent millions more Americans from falling into poverty or deeper financial hardship. And the study was far from the only warning sign released Wednesday.

  • Biweekly survey data from the Census Bureau shows that 85.4 million American adults, or 35.6 percent, report trouble paying for typical household bills such as food, medicine and rent. 
  • Roughly 9.4 million Americans will lose their unemployment benefits by the end of the month without action from Congress, according to another study released Wednesday by the JPMorgan Research Institute.
  • Retail sales fell by 1.1 percent in November as surging coronavirus cases across the U.S. prompted a pullback in consumer spending and a new wave of restrictions.

 

Stung by Trump, Fed chief gets fresh start with Biden: Federal Reserve Chairman Jerome Powell may finally catch a break from White House pressure and major disputes with the administration when President-elect Joe Biden takes over in January. 

  • President Trump picked Powell to be the Fed chief, but then spent most of the next three years criticizing his policies while nominating loyalists to the board who could be chosen to replace him as soon as possible.
  • Powell seemed to have a close relationship with Treasury Secretary Steven Mnuchin, but even that frayed last month during a dispute over emergency lending facilities.

Powell, however, is unlikely to face a constant barrage of attacks from Biden — an institutionalist intensely focused on bipartisanship. Fed experts say Powell’s strong rapport with his predecessor and Treasury Secretary nominee Janet Yellen gives him a sympathetic partner deeply knowledgeable about the ins and outs of the central bank.

“I think Powell will find sailing the sea of monetary policy much easier with the strong tailwind from the Biden administration behind him,” said David Beckworth, senior research fellow at George Mason University’s Mercatus Center and a former Treasury Department economist.

I explain why here.

 

GOOD TO KNOW

  • Stimulus checks have emerged as a key issue in the runoffs for two Senate seats in Georgia that will determine which party controls the upper chamber.
  • The Treasury Department on Wednesday labeled Switzerland and Vietnam as currency manipulators, applying the designation to the two countries for the first time.
  • The Federal Reserve’s policymaking committee estimates that the overall economic blow of the coronavirus pandemic will be smaller than it had expected in September, according to new projections released Wednesday.
  • Reuters: “President-elect Joe Biden should keep pressing China to stick to the ‘Phase 1’ trade deal, which Beijing has done a “reasonably good job” implementing parts of, using tariffs as leverage, U.S. Trade Representative Robert Lighthizer told Reuters.”

 

ODDS AND ENDS

  • Ten state attorneys general on Wednesday filed a lawsuit against Google, accusing the search giant of illegally stifling competition in the advertising technology market.
  • A group of 27 senators in both parties is urging Senate leadership to include a deal to protect patients from massive “surprise” medical bills in a year-end legislative package now being negotiated.
  • New York Gov. Andrew Cuomo (D) on Wednesday signed a bill into law banning the sale or display of Confederate battle flags on state property.
Tags Andrew Cuomo Donald Trump Janet Yellen Joe Biden John Thune Robert Lighthizer Steven Mnuchin

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