Deal on Fed removes obstacle to agreement on COVID relief

Andrew Taylor and Christopher Rugaber
Associated Press
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Washington – Top congressional lawmakers struck a late-night agreement on the last major obstacle to a COVID-19 economic relief package costing nearly $1 trillion, clearing the way for votes as early as Sunday.

The breakthrough involved a fight over Federal Reserve emergency powers and was resolved by the Senate’s top Democrat and a senior conservative Republican.

Senate Minority Leader Sen. Chuck Schumer of N.Y., walks on Capitol Hill in Washington, Tuesday, Dec. 15, 2020.

Congressional aides confirmed the agreement late Saturday, which clears the way for an expected deal Sunday on the aid bill. The measure is finally nearing passage amid a frightening spike in cases and deaths and accumulating evidence that the economy is struggling through the pandemic.

“We’re getting very close, very close," Minority Leader Chuck Schumer, D-N.Y., as he left the Capitol late Saturday. Schumer spent much of the day going back and forth with GOP Sen. Pat Toomey of Pennsylvania. Toomey had been pressing a provision to close down Fed lending facilities. Democrats and the White House said it was too broadly worded and would have tied the hands of the incoming Biden administration.

The compromise, aides said, preserved Toomey's goal but retained the Fed's existing powers to restart similar facilities in the future.

The COVID-19 legislation has been held up after months of dysfunction, posturing and bad faith. But talks turned serious last week as lawmakers on both sides finally faced the deadline of acting before leaving Washington for Christmas.

The relief bill, lawmakers and aides say, would establish a temporary $300 per week supplemental jobless benefits and $600 direct stimulus payments to most Americans. It would provide a fresh round of subsidies for hard-hit businesses and money for schools, health care providers and renters facing eviction.

The measure is being added to a $1.4 trillion spending bill and lots of other unfinished work, including previously stalled legislation to extend tax breaks, authorize water projects, and address the problem of surprise sky-high medical bills for out-of-network procedures.

It would be virtually impossible for lawmakers to read and fully understand the measure before a House vote expected Sunday night.

Schumer said he hoped both the House and Senate would vote on the measure Sunday. That would take more cooperation than the Senate can usually muster, but a government shutdown deadline loomed at midnight Sunday and all sides were eager to leave for the holiday.

Toomey defended his provision in a Senate speech, saying the emergency powers were designed to stabilize capital markets at the height of the pandemic this spring and were expiring at the end of the month anyway. The language he had sought would block the Biden administration from restarting them.

Toomey has a stubborn streak and Democrats held firm as well, but both sides saw the need for a compromise.

The Fed's emergency programs provided loans to small and mid-size businesses and bought state and local government bonds. Those bond purchases made it easier for those governments to borrow, at a time when their finances were under pressure from job losses and health costs stemming from the pandemic.

In this Dec. 15, 2029, photo, Senate Majority Leader Mitch McConnell of Ky., walks past reporters on Capitol Hill in Washington.

Treasury Secretary Steven Mnuchin said last month that those programs, along with two that purchased corporate bonds, would close at the end of the year, prompting an initial objection by the Fed. Under the Dodd-Frank financial overhaul law passed after the Great Recession, the Fed can only set up emergency programs with the support of the treasury secretary.

Democrats also said that Toomey was trying to limit the Fed’s ability to boost the economy, just as Biden prepared to take office.

“This is about existing authorities that the Fed has had for a very long time, to be able to use in an emergency,” said Sen. Elizabeth Warren, D-Mass. “It’s about a lending authority for helping small businesses, state government, local government in the middle of a crisis.”

Toomey disputed that, saying his proposal “is emphatically not a broad overhaul of the Federal Reserve’s emergency lending authority.” His office issued a statement early Sunday calling the compromise with Schumer “an unqualified victory for taxpayers” that met Toomey's aim of shutting down the emergency facility.

A Senate vote would follow, possibly on Monday. One more short-term funding bill would be needed to avoid the looming deadline — or a partial shutdown of nonessential agencies would start on Monday.

The emerging agreement would deliver more than $300 billion in aid to businesses as well as the extra $300-per-week for the jobless and renewal of state benefits that would otherwise expire right after Christmas. It included $600 direct payments to individuals; vaccine distribution funds; and money for renters, schools, the Postal Service and people needing food aid.

It would be the first significant legislative response to the pandemic since the landmark CARES Act passed virtually unanimously in March, delivering $1.8 trillion in aid, more generous $600 per week bonus jobless benefits and $1,200 direct payments to individuals.

The governmentwide appropriations bill would fund agencies through next September. That measure was likely to provide a last $1.4 billion installment for President Donald Trump’s U.S.-Mexico border wall as a condition of winning his signature.

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