WASHINGTON - Congressional negotiators neared agreement Saturday, March 21, on a sweeping stimulus package meant to blunt the devastating impact of the coronavirus pandemic, a deal that is expected to inject upward of $2 trillion into a reeling U.S. economy over the coming months.
Senate Republicans failed to meet a self-imposed 5 p.m. deadline to reach a deal with their Democratic counterparts, but GOP leaders said an accord was within reach - citing key concessions to Democrats on the expansion of unemployment insurance benefits, emergency health-care funding and other matters.
"Generally speaking, the building blocks of this thing are pretty much in place, and you know now some of the differences come down to the finer points of how some of this stuff gets done," said Sen. John Thune of South Dakota, the No. 2 Republican leader, following a meeting of key GOP negotiators.
Senate Minority Leader Charles Schumer, D-N.Y., was also upbeat.
"I'm optimistic we can get a deal. We'll continue working through the night," he said.
The package appears likely to become the single most expensive fiscal stimulus in American history, with the nation in the grip of a pandemic that has upended daily life, shuttered businesses, left an untold number out of work and sent stocks plummeting.
Republicans and Democrats have stressed the imperative to move quickly on what would be the third emergency aid package in less than three weeks. At the White House, President Trump said the legislation is "going to keep companies together, keep workers paid, so they can live and sustain."
Lawmakers signaled progress on key fronts.
Sen. Charles Grassley, R-Iowa, the Finance Committee chairman, said there was "a good bipartisan agreement" to expand unemployment insurance - a top Democratic priority - while Sen. Marco Rubio, R-Fla., said a deal to provide some $350 billion for small businesses, giving them financial lifeblood during the health crisis, was all but finalized.
The bill under negotiation is likely to include hundreds of billions of dollars in direct cash payments to American taxpayers, a boost to state unemployment insurance benefits, loans and grants to businesses large and small, and emergency funding to support hospitals and health-care infrastructure under massive strain from the pandemic.
Underscoring the urgency and rapid pace of the negotiations, House Speaker Nancy Pelosi, D-Calif., boarded a flight back to Washington on Saturday after spending the past week at home in San Francisco, according to a senior Democratic aide - indicating she plans to play a central role in negotiating the final plan with Republicans.
Larry Kudlow, director of the National Economic Council, offered the $2 trillion economic impact estimate as he joined Senate negotiations Saturday morning. He put the direct cost of the legislation at about $1.4 trillion. A portion of that, he said, would capitalize Federal Reserve emergency lending that could support hundreds of billions of dollars in additional loans.
The U.S. Bureau of Economic Analysis estimates 2019's gross domestic product at $21.4 trillion. Ten percent of that would be $2.1 trillion, and even a bill of $1.4 trillion would amount to nearly double the cost of the American Recovery and Reinvestment Act - the fiscal stimulus passed during the 2008-2009 global financial crisis.
The ballooning size of the federal coronavirus response has mirrored the escalation of the global health crisis. The legislative response began earlier this month with a $2.5 billion White House request, which grew into an $8.3 billion appropriation directed mainly at public health needs. A follow-up package signed into law Wednesday spent more than $100 billion in initial economic relief, providing free testing for covid-19, the disease the virus causes, and an emergency boost to the federal safety net.
"I expect we'll have a bill by tomorrow that will have significant Democratic priorities, significant Republican priorities, and, hopefully, we can pass a bill Monday morning and send a strong message to the American people that we're going to get through this," said Sen. Lamar Alexander, R-Tenn., chairman of the Health, Education, Labor and Pensions Committee.
The thorniest issues involve balancing direct aid to Americans through tax rebates with enhanced unemployment benefits directed through the state unemployment insurance systems. Democrats have argued for a significant boost to the latter, but Republicans have expressed doubts about whether the states could handle an influx of the dimensions that Democrats have proposed.
Democrats have also pushed for more direct cash aid to states to backfill certain budget shortfalls that could lead to drastic cuts to front-line services. Republicans have instead advocated for boosting aid to existing programs such as Medicaid and encouraging states to tap rainy-day funds, White House legislative affairs director Eric Ueland said late Friday.
One area where negotiators appear to have made progress is on the structure of a small-business lending program, which would use existing Small Business Administration credit programs to inject as much as $350 billion into struggling firms.
Rubio told reporters that level of funding could help sustain small businesses for six to seven weeks, allowing them to meet payroll and potentially rehire workers who have been laid off because of the pandemic. Eligible businesses would be those employing fewer than 500 people or those otherwise eligible for SBA lending.
"A large, enormous majority of businesses that qualify will be able to get one of these quickly and really provide some certainty for over a month and a half, maybe longer," he said.
Schumer, who is leading negotiations for Democrats in concert with Pelosi, sounded an upbeat note in noontime remarks on the Senate floor, citing a "very good, very detailed" morning phone call with Treasury Secretary Steven Mnuchin - a key White House negotiator.
"The Senate is here. We are working. And we are all eager to come to a bipartisan agreement as soon as humanly possible," Schumer said.
The hopeful note stood in contrast to a missive that Pelosi sent to House Democrats on Friday evening, calling an initial Senate GOP measure introduced late Wednesday a "nonstarter." Any bipartisan agreement, she said, must "greatly increase unemployment insurance and Medicaid, help small businesses survive, expand paid sick and family leave and put money directly into the hands of those who need it most."
Should the Senate reach a deal and pass it, House members would have to be called back to vote on the bill, a complication unto itself, given the spread of the virus and with two House members already announcing they've tested positive for it.
Agreement also appeared near on one major issue - how to structure direct payments to people in a way that would effectively flood the economy with hundreds of billions of dollars in cash. The bill Senate Majority Leader Mitch McConnell, R-Ky., released Thursday drew bipartisan criticism because many people would have gotten one-time payments of $1,200, but the poorest Americans - those without federal tax liability - would have gotten as little as $600.
Throughout the day Friday, lawmakers of both parties and administration officials voiced objections to that structure, and as the talks broke up late Friday, Ueland told reporters they were near agreement on ensuring that the poorest Americans didn't get less money.
"I think we are headed in a very good direction to make sure that aid flows directly to lower-income Americans as well," he said.
Schumer and Democrats were pushing for expanding unemployment benefits to provide six weeks of full pay, while waiving waiting periods and job-search requirements. That would amount to a sea change for the nation's unemployment insurance system, which is meant to deliver much smaller checks, not to wholly replace a worker's lost wages.
But some Republicans were voicing concerns about the ability of states to administer large-scale increases in the unemployment program, and Labor Secretary Eugene Scalia joined a meeting of senators Friday to issue a warning on that front.
Paul Winfree, a former White House policy aide who now serves as a Heritage Foundation fellow, said conservatives are reluctant to funnel too much money through the unemployment insurance system. An Office of Management and Budget review early in the Trump administration, he said, found states had unspent unemployment insurance balances from the 2009 economic stimulus because they didn't have the systems in place to easily disburse the money to people who qualified.
Republicans submitted a counteroffer Saturday morning, and Democrats said it moved the parties closer to an agreement, but not entirely.
Democrats warned that even small disagreements about discrete but closely linked pieces of the legislation could inhibit an accord.
"There's still a lot more to agree on until we agree on everything," said Sen. Robert Menendez, D-N.J., a Finance Committee member closely involved in the talks about expanding unemployment insurance funding. "This is going to be the largest, when it's all concluded, relief package in history. So, yes, speed is necessary, but getting this done right so that it actually has the effect that we want is equally as important."
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The Washington Post's Seung Min Kim and Jeff Stein contributed to this report.
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This article was written by Mike DeBonis and Karoun Demirjian, a reporter for The Washington Post.
The Washington Post's Seung Min Kim and Jeff Stein contributed to this report.