Mnuchin, Democrats remain far apart after first day of talks

Democrats and Treasury Secretary Steven Mnuchin remained far from agreement after the first day of talks on the next stage for an economic rescue package, a person familiar with the negotiations said, even as a crucial aid program for small businesses has run out of money.

The two sides, including staff for House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer, are set to talk again Thursday, and a Senate pro forma session scheduled for 3 p.m. is the next opportunity to act should there be a breakthrough.

But odds of that happening may be dimming.

Any deal would require unanimous consent with Congress not scheduled to return to Washington until May.

The talks are taking place as the $349 billion federal relief program for small businesses has been drained, according to a an official familiar with the situation.

The pressure on businesses from virus-related shutdowns was illustrated by government data Thursday that showed 5.25 million people applied for unemployment benefits last week, capping four weeks of losses that erased more than 10 years of job creation. The figures suggest an unemployment rate around at least 17% – far above the 10% reached in the wake of the recession that ended in 2009.

Mnuchin wants to add $251 billion to a $349 billion small business aid program known as the Paycheck Protection Program that is set to run out of money Thursday. Schumer and Pelosi have been insisting on some changes to the program as well as another $250 billion to aid hospitals and state and local goverments.

The two Democratic leaders are beginning to come under pressure to back down or move quickly to get a deal from moderates in their party who may be facing political backlash in the Republican-leaning areas they represent.

Democratic Senator Kyrsten Sinema of Arizona broke from her leadership Thursday morning in advocating for a quick infusion of cash for the small business program.

“The PPP program is going to run out of funding soon – the Senate should approve add’l funding by unanimous consent ASAP,” she tweeted. “Small businesses need our help to survive during this emergency.”

In the House, some moderate Democrats also are urging their leaders to get a deal done now, according to a Democratic aide.

Republicans also are ramping up attacks on Democrats over the standoff, particularly focused on Pelosi.

“Come back to Washington and do your job!” President Donald Trump tweeted at Pelosi on Thursday, characterizing her as her “incompetent” and a “pathetic puppet” of her party’s left wing.

Pelosi spokesman Drew Hammill responded in an email, “Every knock from him is a boost. It’s difficult to imagine more projection in one tweet.”

One issue that has proved contentious is whether and how much aid to send to state and local governments, many of which are starting to furlough employees and employ other spending cuts because their revenue is plummeting. Governors have bolstered the stance of Pelosi and Schumer.

Governor Larry Hogan of Maryland, a Republican who chairs the National Governors Association, has been leading the charge for a $500 billion aid package, far more than the Democrats are proposing in this round.

On Wednesday, the Democratic governors from three swing states crucial to Trump’s re-election hopes wrote asking the president to quickly get behind efforts to send more support to states and localities.

“Without this leadership, the damage to our state economies will be exacerbated by the cuts we know we will be forced to make,” Michigan’s Gretchen Whitmer, Wisconsin’s Tony Evers and Pennsylvania’s Tom Wolf wrote.

Senator Marco Rubio of Florida said earlier this week that negotiating a formula for disbursing additional aid would take time and the small business program is already running out of cash.

Pelosi has given no sign she’s ready to concede.

“State and local governments are desperate for resources. Hospitals, desperate for resources,” said Pelosi on CNN Wednesday.

Of the small business loans, Pelosi said, “Just give us 10% of the money for those who may not have a sophisticated banking relationship, who are getting cut out of this first come, first served,’ usually to the friends of the bank.”

Pelosi and fellow House Democrats have scheduled a conference call for Thursday afternoon.