WASHINGTON (CN) — Relief for Americans walloped by the Covid-19 pandemic remains elusive, but Treasury Secretary Steven Mnuchin told lawmakers on Wednesday that a Republican proposal that has been making the rounds on Capitol Hill has President Donald Trump’s support.
“The president will sign the McConnell proposal that he put forward yesterday,” Mnuchin told members of the House Financial Services Committee during a hearing this morning on oversight of the Treasury Department and Federal Reserve. “We look forward to making progress on that.”
The proposal is a still-developing framework for relief that Senate Majority Leader Mitch McConnell rolled out just 24 hours ago to GOP leadership like House Minority Leader Kevin McCarthy and White House chief of staff Mark Meadows.
McConnell’s plan earmarks roughly $330 billion for small business assistance and about $257 billion for the federal Paycheck Protection Program. The Treasury, under McConnell’s offering, would also extend a $10 billion loan to the U.S. Postal Service and infuse $100 billion for education programs. Approximately $47 million would be spread out for Covid-19 testing, contact tracing, vaccine development, and distribution and therapeutics. Many of these funds would be restructured from an unspent pool of money left over from the $2.2 trillion stimulus package passed by Congress this spring.
There was no discussion from lawmakers or Mnuchin during Wednesday’s hearing of a bipartisan proposal announced on Monday that calls for $908 billion in aid. That proposal featured an allocation of $160 billion for state and local governments, many of which are feeling the pinch from budget shortfalls triggered by the pandemic.
A little over an hour after Mnuchin left the committee, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer announced that they were ready to reenter negotiations with Senate Leader McConnell and House Minority Leader Kevin McCarthy. The gesture came after private talks broke down Monday. Pelosi and Schumer intimated in a joint statement that the bipartisan $908 billion package was their ground floor.
“While we made a new offer to Leader McConnell and Leader McCarthy on Monday, in the spirit of compromise we believe the bipartisan framework introduced by senators yesterday should be used as the basis for immediate bipartisan, bicameral negotiations,” the Democratic lawmakers said. “Of course, we and others will offer improvements, but the need to act is immediate and we believe that with good-faith negotiations we could come to an agreement. With the imminent availability of the vaccine, it is important for there to be additional funding for distribution to take the vaccine to vaccination. This distribution effort will be led by the states further increasing the need for funding for state and local governments.”
State and local governments get nothing in the proposal from McConnell, a Kentucky Republican.
As the year draws to a close, amid rising rates of coronavirus infection and pervasive joblessness, Republican committee members peppered Mnuchin with questions Wednesday about the appetite in Washington for a deal.
The secretary called out the Democratic leader of the House, Speaker Nancy Pelosi.
“When we really needed to get this done, it got done with overwhelming bipartisan support,” Mnuchin said of the initial relief package passed by Congress. “When we needed to extend the PPP, people came together in an unprecedented response. Unfortunately, since that period of time, the speaker has said that half a loaf was not good enough and wanted a full loaf. I would encourage Congress: Let’s try to get something done.”
Pelosi and Senate Minority Leader Chuck Schumer, a New York Democrat, met with Mnuchin on Tuesday. It was their first meeting since October but Mnuchin was mum on details of their conference when appearing before Congress.
Government funding runs out in just over a week. A Democratic aide on background said Wednesday they see the strong potential for assistance — any kind of assistance — to be tacked onto a bill that will stave off a shutdown.
Federal Reserve Chairman Jerome Powell also testified along with Mnuchin on Wednesday. As he has said regularly when hauled before lawmakers for oversight hearings of his agency, the chair repeated a now familiar mantra from the Federal Reserve: Economic recovery will move slow until vaccinations for the novel coronavirus are widespread.
“The rise in new Covid-19 cases, both here and abroad is concerning and could prove challenging for the next few months,” Powell said. “A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. Recent news on the vaccine front is very positive for the medium term. For now, significant challenges and uncertainties remain, including timing, production and distribution and efficacy across different groups. It remains difficult to assess the timing and scope of the economic implications of these developments with any degree of confidence.”
Unemployment claims have been filed at record-breaking rates for over 30 weeks in the United States, and federal and state backed unemployment benefits are poised to expire on December 26. Think tanks like the progressive-leaning New Century Foundation published a report in mid-November estimating that roughly 12 million people will be on some sort of unemployment program when the funding runs dry in a few weeks.
This was particularly magnified for Representative Cindy Axne, an Iowa Democrat and newcomer to Congress who unseated incumbent Republican Representative David Young during the 2018 midterms.
In Iowa, a perfect storm is brewing: 100,000 are hospitalized with the virus, and infection rates are ticking back up, particularly for working-age people 30 to 39. Unemployment fell in the state during the last quarter to 4.7% but that was largely because more than 100,000 people dropped out of the labor force altogether, according to Iowa Workforce Development.
Not only are unemployment benefits set to expire in mere weeks, Axne noted, the eviction moratorium runs out on December 31, too.
Powell did not mince words when he told Axne he wants to see a deal struck sooner than later.
“If unemployment programs run out and expire by the end of the year, we would be concerned that the rate for people in the bottom quartile — which is about 20 percent — those are the people with relatively low savings — we would be concerned that they would be vulnerable to losing their houses or rental,” Powell said.
Mnuchin touted U.S. economic recovery as a success, if a strained one, during the House hearing. In many respects, his remarks were an echo of ones he made a day earlier during a public hearing with members of the Senate Banking Committee. At the meeting, Mnuchin announced his decision to close emergency Federal Reserve loans for corporate and municipal debt by the year’s end because, in his opinion, money there was not being fully utilized.
Instead, he called for the $455 billion in emergency loans to be reallocated. The Federal Reserve’s Powell initially appeared apprehensive of the proposal, saying on Tuesday he would prefer to see the emergency loans extended beyond December for the stake of greater economic stability.
But on Wednesday, the chair’s opinion appeared to change as Powell told lawmakers he fully supported Mnuchin’s plan for the loans.
“The secretary has sole authority under CARES Act funding. His reading of the law is thus the authoritative one,” Powell said.
Mnuchin’s appearance for a public hearing with Congress might very well be his last as treasury secretary. He is set to be replaced by President-elect Joe Biden’s pick for the spot: Janet Yellen.
Yellen was the chair of the Federal Reserve under President Barack Obama. Current Federal Reserve chair Jerome Powell does not see his term expire until 2022.