- A new proposal from GOP Senator
Pat Toomey threatens to gum upstimulus talks and further delay the rollout of critical economic relief. - The senator said Thursday afternoon that the deal should include a condition that limits the Federal Reserve's ability to lend through various emergency facilities.
- Democrats balked at the request, calling it a last-minute demand that wasn't mentioned in previous talks.
- The move follows other Republican actions that have slowed efforts to pass new fiscal support, from Treasury Secretary Steven Mnuchin calling on the Fed to return funds allocated to lending programs to
Senate Republicans citing record government debt when blocking Democratic proposals.
Congress is reportedly close to agreeing on a $900 billion stimulus package, but a new proposal from Republican Sen. Pat Toomey threatens to derail talks ahead of a midnight deadline.
The senator argued on Thursday that a new condition should be added to the deal that limits the Federal Reserve's ability to lend through emergency aid programs. Democrats quickly balked at the measure and accused Toomey of standing in the way of a near-term agreement.
"We almost have a bipartisan COVID package, but at the last minute
Republican Senator John Cornyn responded to criticisms of Toomey's move later Friday, saying it would "force accountability and consensus" on the Fed's lending actions.
"The authority given in the #caresact went largely unused. Shouldn't leave it lying around so it could be used for unapproved purposes, like a backdoor to more state and local aid," he tweeted.
The move comes alongside other GOP actions that have hampered efforts to pass new aid. Those delays have pushed Congress to the brink of a shutdown, as government funding is set to lapse at midnight. While lawmakers can pass another one-week funding extension, doing so would push negotiations into Christmas week.
The two parties clashed earlier this month over state and local government aid and a pandemic-related liability shield for employers. Democrats argued that the former is necessary to keep governments from laying off more public workers and cutting aid programs. Yet the party adamantly opposes the liability protections that McConnell and other Republicans demand be included.
A bipartisan group of senators eventually split off the two contentious measures into a separate bill and proposed a $748 billion package that included more popular elements like small-business aid, boosted unemployment benefits, and rental assistance funds. The $900 billion measure being discussed today is said to reflect that package and include $600 direct payments.
Toomey's proposal isn't the first time the party has targeted the Fed and its emergency lending. Treasury Secretary Steven Mnuchin moved to curb the Fed's emergency lending powers in November by calling for the central bank to return unused funds that had been allocated for its lending programs. The Fed quickly responded in a rate rebuttal, saying the Treasury should extend "the full suite of emergency facilities" past their December 31 deadlines.
Mnuchin later said he hoped Congress would reallocate the $580 billion in unused relief funds for fiscal stimulus. Still, pulling the cash from the Fed's programs can leave the
Republicans have also countered Democrats' past bills with vastly smaller stimulus packages, citing the government's record debt pile as a top concern. The GOP unveiled a $500 billion plan in September that included aid for small businesses and halved the federal supplement to unemployment benefits. The package stood in contrast to the party's previous $1 trillion measure and the $3.4 trillion proposal passed by House Democrats in May.
Democrats ended up passing a $2.2 trillion bill in early October, but Senate Majority Leader Mitch McConnell refused to bring the deal to a vote. When Senate Republicans voted on their $500 billion measure on October 21, Democrats blocked the bill and placed Congress back in legislative gridlock.
Negotiations on the bipartisan $900 billion measure continue as indicators point to a weakening economic recovery. With Fed lending programs and unemployment insurance programs on the verge of expiring, Republicans' various holdups have culminated in a last-minute push for fresh fiscal support.
"We made the mistake of not enough fiscal stimulus in the aftermath of the Great Recession, and we should not be making it again," Heidi Shierholz, director of policy at the Economic Policy Institute, told Business Insider. "It appears we are on the cusp of making it again."