Congress fights over $2 trillion stimulus package as coronavirus endangers economy

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Numbers are displayed above the floor of the New York Stock Exchange (NYSE), which stands empty as the building prepares to close indefinitely due to the COVID-19 outbreak in New York, U.S., March 20, 2020. Credit: REUTERS/Lucas Jackson.

For the second time in 24 hours, Senate Democrats prevented a $2 trillion stimulus package from moving forward. The bill includes billions for struggling businesses, and sending more than $1000 directly to each American. 

Senate Majority Leader Mitch McConnell said this morning, “This is not a juicy political opportunity. This is a national emergency. We had days of productive bipartisan talks to get to this point. Senate Democrats sat down with Senate Republicans and negotiated furiously to get to this point. The bill now contains a huge number of changes that our Democratic colleagues requested, including major changes. We were this close.”  

Democrats say the bill doesn’t adequately protect workers. Senate minority leader Chuck Schumer: “We’ve been guided by one plan: workers first. … Now we’re working on all these items in good faith as we speak, and we hope and expect to conclude negotiations today.” 

The big sticking point is apparently the $500 billion fund that would presumably go to large businesses. Treasury Secretary Steven Mnuchin would oversee it. He wouldn’t have to disclose the funding recipients for six months.

We talk about this with Catherine Rampell, Washington Post opinion columnist covering economics, public policy, politics, and culture.

How would the $500 billion fund be allocated, and why is it so contentious? 

Rampell says portions would go to airlines, air cargo carriers, and undefined businesses that are critical to national security. 

“The most controversial piece of this has to do with whatever firms the treasury secretary essentially decides should be eligible for this money. And there are relatively few checks on what that means. He has very wide latitude. I think there's relatively broad bipartisan consensus on helping small businesses and on helping households,” she says.

Still up in the air: “What condition should be placed on the money that goes to big businesses; and what should be disclosed; how to hold all of that accountable; how to make sure that the money goes to workers of those businesses rather than being pocketed by shareholders.” 

President Trump said he doesn't want stock buybacks to be possible. He wants the money to go to workers. Why hasn't that been ironed out with Republicans? 

“There is language in there saying that the money can't be used for share buybacks. But there's nothing about dividends, for example. And the language within the legislation says something to the effect of ‘firms that received this money should try to maintain people on their payroll to the extent practicable.’ But it doesn't define what that means,” says Rampell. 

She notes the real challenge: “You want the money to be spent quickly because the need is so dire, right? We've essentially all gone into this collective economic coma. And firms and businesses both still need to pay their bills. We need money out fast. But we also want the money to be spent wisely. And to some extent, those objectives are in tension.” 

What if the $500 billion fund is overseen by someone not associated with the White House? Would that please Democrats?

Rampell says a potential middle ground is to give Treasury Secretary Mnuchin expansive authority to spend the money as he sees fit, then have Senate-confirmed outside experts weigh in. 

She says those experts would decide: “How to balance these trade-offs, what conditions (if any) should be placed on the money, what kinds of disclosures should be made upfront.”

Rampell doesn’t know if this idea would get traction, however. “It seems like, if anything, Democrats are moving in a very different direction.”

Could the Senate come to an agreement, then the House would torpedo it? 

“I don't know how much of this is posturing, how much of this is real at this point, and how wedded House Democrats are to some of the demands that they have put in that legislation,” says Rampell. “I think everybody is starting to realize the seriousness of the economic crisis, in addition to the public health crisis that we face. And I only have to hope that lawmakers get their act together, and at the very least decide to pass something where there is broad bipartisan consensus.” 

--Written by Amy Ta, produced by Alex Tryggvadottir