WASHINGTON – Competing proposals for coronavirus relief failed in the Senate Thursday morning, as Democrats objected to a proposed $250 billion increase in a small business program, and Republicans shot down the counter-offer. The clash left the path forward for additional federal intervention uncertain as the virus continues to tear through the economy.
In a brief floor session, Senate Majority Leader Mitch McConnell accused Democrats of treating “working Americans as political hostages” by refusing to add more money to the “Paycheck Protection Program,” a new $350 billion small business loan program that is being overwhelmed by demand.
“I am literally talking about deleting the number 350 and writing 600 in its place. . . . That’s all we’re suggesting here today,” McConnell told Sens. Ben Cardin, D-Md., and Chris Van Hollen, D-Md., who represented the Democratic side in the “pro forma” floor proceedings. “Please do not block emergency aid you do not even oppose just because you want something more.”
Van Hollen retorted that McConnell was performing “a complete political stunt” by offering a “go-it-alone, take-it-or-leave-it” proposal that was designed to fail. Cardin and Van Hollen said other small business emergency and disaster loan programs also needed to be replenished. They also sought major funding increases for hospitals, cities and states and food stamp recipients. Van Hollen displayed newspaper headlines documenting problems with the Paycheck Protection Program rollout that Democrats want to address.
“What we’re saying here today is ‘yes, we know we need more money for this program,’ many of us predicted this before we passed the Cares Act,” Van Hollen said, referring to the massive $2 trillion rescue bill enacted only two weeks ago. “But for goodness sakes, let’s take the opportunity to make some bipartisan fixes to allow this program to work better for the very people it’s designed to help.”
The impasse came amid signs that the economy is continuing to deteriorate.
New figures Thursday morning showed 6.6 million Americans filed for unemployment benefits last week, on top of nearly 10 million Americans who had already applied for unemployment the two previous weeks. Economists say the collapse in jobs signals an unemployment rate of 12% or more, which would be the highest since the Great Depression.
Congress has tried to respond swiftly to the disaster, approving a record $2 trillion relief package less than two weeks ago that contained $349 billion for the new Small Business Administration’s lending program. The law also contained huge spending increases for unemployment insurance, individual payments to Americans and corporate bailout funds.
But the enormity of the coronavirus crisis and its impact on all parts of the economy is forcing Congress and the administration to scramble for additional rescue measures.
The small business program in the law is being swiftly tapped, with $100 billion already committed in forgivable loans despite a rocky rollout. Earlier this week Treasury Secretary Steven Mnuchin asked Congress to immediately approve $250 billion more for the program. So far, officials said more than 400,000 companies have filed applications for these taxpayer-backed loans, but it’s unclear how many of the country’s 30 million small businesses will be able to secure assistance.
Democrats disputed that the program was in immediate need of more funds, saying they wanted changes to ensure fairness and transparency. They are also seeking major funding increases for hospitals and health systems and cities and states, along with a 15% increase in food stamp benefits. But McConnell objected when they proposed their counter-offer Thursday on the floor.
The Democrats’ proposals for $150 billion more for cities and states and an additional $100 billion for hospitals would double spending for those areas since similar amounts were contained in the Cares Act. McConnell argued that money for those purposes was only beginning to be spent and needs should be assessed before agreeing to more, while the small business program needs money now.
From here, it is uncertain where the standoff will go. With both the House and Senate out of session, and lawmakers unwilling to return to Washington en masse because of health concerns, nothing can pass either Chamber without bipartisan agreement that has the unanimous support of all lawmakers. Any one lawmaker of either party has the ability to object and block any legislation from moving forward.
After Democrats blocked his unanimous consent request Thursday, McConnell told reporters lawmakers would “have to continue the discussion” in the days ahead. The events took place with the Capitol eerily empty, a small group of reporters standing feet away from McConnell and stretching out recording devices to capture his words, some wearing face masks as they did so.
House Speaker Nancy Pelosi, D-Calif., told reporters Thursday that Mnuchin had called her Tuesday and “asked for a quarter of a trillion dollars in 48 hours with no data.”
“Will we eventually need more for PPP? OK, but let’s see the data. … We have time to negotiate to see how and where and when we should have more money there,” Pelosi said.
Democrats’ proposal would allocate the additional $250 billion for small businesses, but specify that only half of that would go to the Paycheck Protection Program. The other half would include $60 billion for community-based lenders, and $65 billion for disaster loans and disaster grants, among other items.
“There is a disparity in access to capital in our country. We do not want this tragedy of the coronavirus to exacerbate that disparity,” Pelosi said. She added that “everything is an opportunity” and Democrats hoped to use negotiations to diminish disparities in society.
Pelosi said she had not spoken with Mnuchin on Thursday but reiterated that his proposed $250 billion increase for the Paycheck Protection Program “would never pass the House by unanimous consent. It is the basis for some negotiation but it would never pass the House by unanimous consent.”
Mnuchin told CNBC Thursday that President Trump was willing to accept some additional demands as part of the administration’s request to Congress for the additional $250 billion for the small business program.
“We need more money for small business. The president has been very clear – he’s happy to talk about other issues such as hospitals and states in the next bill, but we wanted to go and get money for the small business program, which has enormous bipartisan support,” Mnuchin said.
The standoff contains echoes of the days of partisan bickering that preceded ultimate agreement on the $2 trillion rescue bill, so despite Thursday’s theatrics it is likely congressional leaders will find a way to make a deal. How quickly that will happen, though, is uncertain, and the contours of any final proposal also remain to be determined.
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The Washington Post’s Robert Costa and Jeff Stein contributed to this report