Senate GOP stimulus bill stalls on secret corporate ‘slush fund’ provision

“Moscow Mitch” McConnell’s Senate Republican stimulus bill, which no senator had time to read or absorb, or to debate failed on a 47-47 vote on Sunday, far short of the 60 votes needed for cloture. No Democrat voted for his bill, and five Republican senators are now in self-quarantine because of exposure to the coronavirus.

McConnell is continuing his effort to push his GOP bill and “ram it down, cram it down” the throats of Democrats without concern that his bill is woefully insufficient and will not address the extraordinary economic circumstances this country is going to face in the coming weeks. Senate falls far short of votes needed to advance coronavirus bill as clash between Republicans and Democrats intensifies:

Lawmakers had hoped to pass the enormous $1.8 trillion bill by Monday but Sunday night they were scrambling to revive talks, with the stock market poised for another sharp drop and households and businesses fretting about an uncertain future.

Although senators of both parties and Trump administration officials vowed to continue negotiating — around the clock if necessary — the failed vote was the latest negative signal about Congress’ ability to come together around the legislation, which aims to inject close to $1.8 trillion into businesses and households. Policymakers are scrambling to address a spike in layoffs and businesses gasping for assistance as millions of Americans stay home to avoid contagion.

Ever since Majority Leader Mitch McConnell (R-Ky.) introduced the legislation Thursday night, senators have missed one self-imposed deadline after another to reach a deal. The vote Sunday evening was delayed three hours so talks could continue after it became clear it would fail, but no resolution was reached and it failed anyway. McConnell set another procedural vote for 9:45 Monday morning and dared Democrats to block it, noting repeatedly that the vote would come shortly after the opening of the stock market.

* * *

Senate Minority Leader Charles E. Schumer (D-N.Y.) expressed optimism. “I think we’re very close. The teams are going to work through the night. We’re going to regroup the principals in the morning,” Mnuchin told reporters.

And while Schumer also struck an upbeat tone — saying he was “very hopeful” of a deal Monday morning — McConnell left the Capitol visibly angry and blaming Schumer for blowing up an emerging deal early Sunday.

If the sides do not reach pact by the early afternoon, a series of votes will unfold that are like to be a replay of Sunday’s blocked path, except this time the U.S. financial markets will be open and trading.

The bill would seek to flood the economy with money in an effort to protect millions of jobs and businesses that now appear to be on the brink. It would direct payments of $1,200 to most American adults and $500 to children. It would steer $350 billion towards small businesses to stem the tide of layoffs, and push billions more towards hospitals and the unemployment insurance system. And it would create a massive, $500 billion program for businesses, states, and localities, with the direction and velocity of this loan program left mostly to the Treasury Department’s discretion.

This $500 billion “slush fund” was a major sticking point for Democrats. Dems seize on ‘slush fund’ to oppose Republican rescue package:

As Senate Democrats went to the floor Sunday night to vote — the first time they’d been there in days — they had one thing on their minds: a secret “slush fund” for Corporate America.

That’s what Democrats are calling a $500 billion “Exchange Stabilization Fund” included in the massive Senate GOP proposal to rescue the U.S. economy from the coronavirus crisis. The fund, which would come under the control of Treasury Secretary Steven Mnuchin, is designed to aid distressed industries. It includes $58 billion for U.S. airline and air cargo companies, a source of significant controversy during the last three days of closed-door talks between senators of both parties and the White House.

But the language drafted by Senate Republicans also allows Mnuchin to withhold the names of the companies that receive federal money and how much they get for up to six months if he so decides.

That was way too much for Democrats, many of whom lived through the political furor surrounding the 2008 financial-services industry bailout. They remember facing the populist backlash and being pounded by the “Occupy Wall Street” movement. They aren’t going to do it again.

“We’re gonna give $500 billion in basically a slush fund to help industries controlled by Mnuchin with very little transparency? Is that what we ought to be doing?” asked Sen. Mazie Hirono (D-Hawaii.).

“We’re not here to create a slush fund for Donald Trump and his family, or a slush fund for the Treasury Department to be able to hand out to their friends,” railed Sen. Elizabeth Warren (D-Mass.), who made corporate accountability a big part of her White House campaign. “We’re here to help workers, we’re here to help hospitals. And right now, what the Republicans proposed does neither of those. “

The GOP bill is also insufficient to address the extraordinary needs right now. Democrats want bigger coronavirus appropriation in Senate bill:

[D]emocrats say the package falls short of what is needed.

Senate Democratic Whip Richard J. Durbin, D-Ill., said Sunday the appropriations portion of the legislation is “likely to” get bigger.

A House Democratic aide, not authorized to speak publicly about ongoing negotiations, called the bill “a Senate Republican wish list,” adding that Democrats “are continuing to negotiate in good faith on a package that matches the scale of the challenge facing our country.”

Nevertheless, the proposal incorporates some of the priorities sought by Democrats and is five times the size of a $45.8 billion supplemental appropriation the White House Office of Management and Budget requested last week.

Republicans said more than three-fourths of the funds would go to state and local governments.

The largest portion of the funding in the Senate GOP plan, $75 billion, would go to reimburse hospitals and health care providers for COVID-19 related expenses and lost revenue.

Sen. Debbie Stabenow, D-Mich., said the aid to hospitals in the bill is less than Democrats want. “We have to have the health care piece large enough to help our hospitals, and what we’ve seen so far is not,” she said.

Another $3.5 billion is set aside for development, manufacturing and purchase of vaccines and treatments for the virus.

Overall, the Department of Health and Human Services would receive almost $99 billion, with $4.5 billion of that directed to the Centers for Disease Control and Prevention for funding to state and local public health providers, nationwide surveillance of the pandemic, diagnostics and laboratory support.

Some $31 billion would go to the Department of Transportation, with $10 billion to maintain operations at airports, $20 billion in Federal Transit Administration public transit infrastructure grants for state and local governments, and $1 billion to Amtrak to cover revenue losses related to the virus.

The Supplemental Nutrition Assistance Program would get an additional $15.5 billion in anticipation of more people claiming the benefit due to the virus. The agriculture portion of the bill also would provide $9 billion in new funding for food purchases for child nutrition programs in schools.

Democrats, however, criticized the food stamp provision, saying while the funds would accommodate new enrollees, the proposal would not raise the individual level of benefits above the current level.

The proposal includes $19.7 billion for veterans, with almost all of that directed to increased demand for veterans’ health care including purchase of medical equipment and supplies, testing kits and increased use of telework and information technology.

The Defense Department would get almost $12 billion, with $2.5 billion to mitigate the effect of the virus on production lines and supply chains, and around $5 billion for medical care and other health-related initiatives.

“Moscow Mitch” McConnell’s attempt to exclude the House from negotiations, because the temperamental man-child Donald Trump has a burning hatred for Speaker Nancy Pelosi and cannot put the pressing needs of the country ahead of his own insecurities and emotional disabilities, has led Pelosi to propose a companion House bill this week. Pelosi pushes forward with her own emergency coronavirus package:

Speaker Nancy Pelosi is hitting pause on bipartisan negotiations on a $1.6 trillion-plus emergency package in the Senate, saying the House will forge ahead with its own bill to address coronavirus after congressional leaders failed to reach a deal earlier Sunday.

“From my standpoint, we’re [far] apart,” Pelosi told reporters as she entered Senate Majority Leader Mitch McConnell’s (R-Ky.) office Sunday morning.

Pelosi’s outlook for a deal wasn’t any better as she left the hour-long meeting, declaring plans for the House to introduce its own bill. Pelosi said the two sides were “still talking” but made clear that the Monday timeframe to pass something is McConnell’s self-imposed deadline, not hers.

“It’s on the Senate side because that’s their deadline for a vote,” Pelosi said about the Monday deadline. “We’ll be introducing our own bill and hopefully it will be compatible.”

Despite saying the House would move ahead on its own, Pelosi also continued to engage in bipartisan negotiations on the Senate bill Sunday afternoon, according to a source.

Senior House Democrats have been working on dual tracks for days — simultaneously drafting language for their own bill while also conferring with Senate Democrats on what they’d like to see in the McConnell-Schumer proposal.

The various House panels involved, from Financial Services to Ways and Means, Energy and Commerce and Education and Labor, were told to wrap up their portions of the bill Saturday night. The House Appropriations Committee is now compiling all of the language and legislative text could be expected as soon as Monday, according to multiple sources.

Democratic leadership also huddled on a conference call on Friday night, where Pelosi reiterated her plans to release a legislative framework that lets Democrats lay a marker in the talks.

It’s unclear what exactly will be in the final House Democratic package — just as it is unclear what exactly will be in the final Senate Republican package.

Robert Kuttner from The American Prospect writes in an op-ed at the New York Times, that This Stimulus Bill Will Not Save the Economy From Collapse (excerpt):

The financial crash of 1929 turned into a decade-long depression because government was too slow and too timid to counteract the broader impact. Will we repeat that epic mistake?

Treasury Secretary Steven Mnuchin told the Senate Republican caucus that unemployment could soon rise to 20 percent, and that could be optimistic. Goldman Sachs projects that G.D.P. could decline by 24 percent in the second quarter of 2020, an unprecedented drop for a single quarter. Even the trillion-dollar stimulus package proposed by the Trump administration, as embellished by Democrats, will be woefully insufficient. Giving everyone $1,000, even $2,000, will help. But that’s about three weeks’ pay. Paid medical leave, extended unemployment benefits, investment in needed medical equipment, aid for devastated industries like the airlines and small businesses, as well as deferrals on tax and debt payments, are all minimally necessary. So are the Federal Reserve’s rate cuts and gigantic purchases of bonds to keep financial markets solvent.

But none of these measures is remotely sufficient, given the scale and rate of likely economic collapse. We could easily see G.D.P. decline by Great Depression levels, and at a much more rapid rate than in the early 1930s. And the lessons we need to take are not from the 1930s, but from the 1940s.

Even after eight years of the New Deal, the economy was still not out of depression by 1940, as critics of Roosevelt never tire of pointing out. Unemployment was still over 14 percent when World War II broke out.

It was the war, and the astonishing mobilization for war, that finally cured the Great Depression.

* * *

Direct public spending is more effective than other forms of fiscal relief because every nickel gets spent and jobs are created directly. What is today’s equivalent of the World War II buildup, minus the war?

First, we need huge investment in hospitals and medical supplies. We need to reclaim supply chains for products like N-95 masks and ventilators that have been moved abroad. Government has the authority in an emergency to produce these needed materials itself if contractors can’t be found. In World War II, the Reconstruction Finance Corporation underwrote more than $20 billion in war production plants. Some of these were called GOCOs, for government-owned, contractor-operated. Upgrading our capacity to deal with the public health crisis could be phase one of the plan.

Second, according to the American Society of Civil Engineers, the United States will need $4.5 trillion for deferred maintenance of basic public infrastructure by 2025 — roads, bridges, water and sewer systems, power grids, rail lines, tunnels and public buildings.

* * *

Third is the need for massive investment to slow down global climate change and prepare for expected storm surges and coastal flooding. We need to replace carbon-based energy sources with clean and renewable ones. We need to upgrade commercial buildings and homes to make them far more energy efficient.

“Smart” power grids can save costs and make the economy more resilient to climate change. We will need to spend a lot of money on flood barriers. With fossil fuel companies devastated by crashing prices and the toll on fracking and shale, this is a particularly good time to invest in green energy alternatives. If government is going to spend huge sums to keep the economy afloat, we should get something tangible beyond mere survival.

* * *

Much of this sweeping proposal is on the drawing boards and has not been done for lack of funding. Some of it will take some advance planning. The time to start is now.

All of this will add up to several trillion dollars. But do the arithmetic. Total output in 2019 was about $21.4 trillion. If G.D.P. falls by 20 percent — less than the 30 percent that it fell between 1929 and 1933 — that’s an annual loss of over $4 trillion of economic activity. This time, with government deliberately shutting down commerce, it could well fall faster. Only a World War II-scale response can make up that difference.

Where will government get the money? At a time when inflation is close to zero and the government can borrow for 30 years at less than 2 percent, this is precisely the moment to borrow to underwrite a recovery that also modernizes the economy.

The worst thing Congress and the Trump administration could do would be to chase a collapsing economy downward, with aid packages that are too modest at each step of the way, as Herbert Hoover did. We need to get ahead of this collapse now, and we have a superb model in the World War II mobilization.

Kuttner is not being hyperbolic. The coronavirus pandemic “shutdown” of the global economy genuinely risks an economic depression.

Bloomberg News reports, Top Economists See Echoes of Depression in U.S. Sudden Stop. Paul Romer and Alan Garber write in an op-ed at the New York Times, How to Prevent a Coronavirus Depression: If we keep up our current strategy, our economy will die.

“Moscow Mitch” McConnell’s singular focus on partisan Republican politics is the last thing this country, or the world, needs right now. We need to get this right.