Accord on Fed removes obstacle to agreement on COVID-19 relief

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.

A Democratic aide said in an email that an agreement had been reached late Saturday and that compromise language was being finalized to seal a deal to be unveiled on Sunday.

The breakthrough involved a fight over Federal Reserve emergency powers that was defused by an odd couple: the Senate’s top Democrat and a senior conservative Republican.

“We’re getting very close, very close,” Minority Leader Chuck Schumer, D-N.Y., said earlier Saturday as he 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 that Democrats and the White House said was too broadly worded and would have tied the hands of the incoming Biden administration.

The COVID-19 legislation has been held up after months of disfunction, posturing and bad faith, but talks turned serious in December as lawmakers on both sides finally faced the deadline of acting before exiting Washington for Christmas.

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

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 Christmas.

Toomey defended his controversial provision in a floor speech, saying the emergency powers were designed to stabilize capital markets at the height of the COVID panic 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 to clear the way for the $900 billion-plus COVID-19 relief measure, which was being attached to a $1.4 trillion government-wide spending bill and a host of other bills that compiled much of Capitol Hill’s remaining legislative output of the Trump era.

At issue were Fed emergency programs, launched amid the pandemic this spring, that 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.

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 reform law passed after the Great Recession, the Fed can only set up emergency programs with the support of the treasury secretary.

Democrats in Congress 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 charge, saying his proposal “is emphatically not a broad overhaul of the Federal Reserve’s emergency lending authority.”

The massive package would wrap much of Capitol Hill’s unfinished 2020 business into a take-it-or-leave-it measure that promised to be a foot thick or more. House lawmakers would probably have only a few hours to study it before voting as early as Sunday night.

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 non-essential agencies would start on Monday.

The $900 billion package was being finished as the pandemic delivered its most fearsome surge yet, killing more than 3,000 victims per day and straining the health care system. While vaccines were on the way, most people wouldn’t get them for months. Jobless claims were on the rise.

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 US-Mexico border wall as a condition of winning his signature.