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Mnuchin, McConnell want to leverage unused federal funds to stimulate
(Bloomberg) – Treasury Secretary Steven Mnuchin has offered to revive stimulus talks with Congressional Democrats, proposing the use of untapped Federal Reserve relief funds as part of a new aid package, but the plan of Mnuchin to block a series of Fed emergency loans facilities ran into immediate opposition from the Democrats. President-elect Joe Biden’s transition team called him “deeply irresponsible,” and House Speaker Nancy Pelosi accused the Secretary of the Treasury of attempting to obstruct the incoming administration. Mnuchin and Senate Majority Leader Mitch McConnell have discussed the strategy on Friday, in the first sign after weeks of possible stimulus movements in the waning days of the Trump administration. Democrats and Republicans have so far had very different views on the amount of new funding needed for Covid-19 relief. McConnell backed Mnuchin’s proposal to use $ 580 billion that was earmarked for Fed loan guarantees, small business aid, and other remaining coronavirus relief programs. “Congress should reuse this money for the kind of urgent, important, and targeted relief measures that Republicans have been trying to pass for months but that Democrats have repeatedly blocked with all-or-nothing demands,” McConnell said in a statement. The Fed said Friday it would comply with the Treasury Department’s request to return unused funds that would have had to support five expiring emergency loan programs. Transition spokesperson Kate Bedingfield said ending the programs would remove support for small businesses just as the virus is spreading across the country and the economy continues to falter. “We should strengthen the government’s ability to respond and support the economy – not undermining it,” Bedingfield said in a statement. “This follows a disturbing pattern of this administration that puts the little complaints before the health and safety of the American people.” In a press conference last Friday, Pelosi cited the Fed’s “very unusual” public dispute with Mnuchin over letting emergency loan programs expire. “Again, why? Why? – Because they want to prevent the administration’s ability to have it all. available? ”Pelosi said talks between Republicans and Democrats on stimulus have been stalled for months. Mnuchin said on Friday that he and McConnell wanted to “come up with a plan to sit down with Pelosi and Schumer and try to get a targeted bill for the people who really need it, and hopefully the Democrats will work with us and hopefully. that will be done. “Pelosi and Democratic Senate leader Chuck Schumer wrote to McConnell earlier this week asking him to return to the negotiating table on a stimulus bill, but have so far given no indication that they are willing to lower their demands. for a $ 2.4 trillion bill McConnell has repeatedly said that the starting point of the talks should be the $ 500 billion measure advocated by Senate Republicans, which would not provide direct stimulus payments of $ 1,200 to individuals or aid to state and local governments. One problem with Mnuchin’s approach is that the recovered Fed funds cannot be used to pay for other programs under congressional budget scoring conventions. The Congressional Budget Office assumes that the loans will be repaid, so not offering the loans in the first place does not produce measurable savings.After three months of talks, Mnuchin and White House Chief of Staff Mark Meadows before the election offered to support a $ 1.9 trillion in stimulus bill, which included direct payments, renewal of supplementary unemployment insurance payments, and some state and local aid. Pelosi and Schumer dismissed the plan as insufficient and said there was no way to combat the spread of the coronavirus, which has only gotten worse since then.President Donald Trump said he would support a major post-election stimulus no matter who won, but aside from a single tweet last weekend she has not yet engaged with Congress to push the issue Thursday, aides to Pelosi, McConnell, Schumer, and House Minority Leader Kevin McCarthy met to discuss a project. The separate $ 1.4 trillion funding bill that is required to keep the federal government opens after December 11th. Some lawmakers have suggested that virus reduction could be added to that bill as time runs out before the Congressional Christmas break. Congress will return to work from Thanksgiving break on November 30 and is expected to update no later than December 18. Thursday McCarthy complained to reporters that small businesses across the country are struggling and facing further blockages “without help. of Washington.. “He called on Democrats in the House to join Republicans in freeing up $ 138 billion for the Payroll Protection Program, which could help small businesses keep staff on payroll. Biden has urged Congress to come together for a stimulus effort in 2020 rather than wait for it to take. Biden and Vice President-elect Kamala Harris met in person on Friday with Pelosi and Schumer. Mnuchin’s latest move against Powell Mnuchin in stimulus talks comes the day after he split with Fed Chairman Jerome Powell over whether to extend a series of emergency loan lines through 2021, the secretary posted Thursday. to Powell a letter demanding the return of the money the government provides to the central bank so that it can lend to certain markets in times of stress. A few minutes later, the Fed released a statement urging that “the full suite” of measures be maintained until 2021. The 2020 Cares Act economic bailout package passed in March earmarked money for the government to fund backstops. Fed for everything from municipal to corporate finance after the markets caved when the pandemic hit. Mnuchin wants some money back, arguing that many markets are no longer at risk of crashing and therefore need no further help beyond next month.Read more: Congress splits along party lines over move Fed-Facilities by Mnuchin (Updates with Biden answered in second, sixth paragraph) For more articles like this, visit bloomberg.com Sign up now to stay on top of the most trusted business news source. © 2020 Bloomberg LP
