© Bloomberg. The U.S. Capitol building stands at dawn in Washington, D.C., U.S., on Saturday, Nov. 30, 2019. The House Intelligence Committee is preparing to release a scathing report alleging President Donald Trump engaged in a months-long effort to seek foreign interference in the 2020 election and obstruct a congressional investigation. Photographer: Stefani Reynolds/Bloomberg
(Bloomberg) — The Trump administration struck a deal with Senate Democrats and Republicans on an historic rescue package with more than $2 trillion in spending and tax breaks to bolster the hobbled U.S. economy and fund a nationwide effort to stem the coronavirus.
“At last we have a deal,” Senate Majority Leader Mitch McConnell said early Wednesday on the chamber’s floor. “I’m thrilled that we’re finally going to deliver to the country.”
Senate Democratic leader Chuck Schumer, who engaged in marathon negotiations with Treasury Secretary Steven Mnuchin, called it an “outstanding agreement.”
The legislation was still being drafted and there were few details on all the provisions agreed to, especially related to the specific terms of the bailout and loan terms for companies.
Lawmakers are awaiting a final text of the bill ahead of a vote that McConnell promised would be held later Wednesday.
It would still have to pass in the House before it gets to President Donald Trump’s desk. House Speaker Nancy Pelosi, who had consulted with Schumer throughout the negotiations, has previously indicated she would act to move the bill quickly.
“This bipartisan legislation takes us a long way down the road in meeting the needs of the American people,” Pelosi said in a statement Wednesday. “House Democrats will now review the final provisions and legislative text of the agreement to determine a course of action.”
The outline of the plan includes about $500 billion that can be used to back loans and assistance to companies, including $50 billion for loans to U.S. airlines, as well as state and local governments. It also has more than $350 billion to aid small businesses. Then there is $150 billion for hospitals and other health-care providers for equipment and supplies.
For individuals the package provides direct payments to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child. Unemployment insurance would be extended to four months, the benefits would be bolstered by $600 weekly and eligibility would be expanded to cover more workers.
The bill provides a tax credit for companies who retain employees even if they’ve been mandated to close or seen a significant drop-off in business. Student loan borrowers who get assistance from their employers on paying those back don’t have to pay income tax on the aid.
Democrats demanded and won a series of restraints on corporations that would benefit from loans or investments from the Treasury Department, as well as an oversight mechanism for who gets money.
Any company receiving a government loan would be subject to a ban on stock buybacks through the term of the loan plus one additional year. They also would have to limit executive bonuses and take steps to protect workers. The Treasury Department would have to disclose the terms of loans or other aid to companies and a new Treasury inspector general would oversee the lending program.
Notably, Democrats won language that would bar any business owned by Trump or his family from getting loans from Treasury. Businesses owned by members of Congress, heads of executive departments and Vice President Mike Pence also would be blocked.
With the prospect that Congress was closing in on a deal Tuesday, the Dow Jones Industrial Average rose more than 11% in its biggest advance since 1933, and the S&P 500 rebounded with the biggest one-day gain since October 2008 after starting the week with a rout. In Asia markets, U.S. futures pared early losses after news of the deal.
In a letter to his fellow Democrats, Schumer highlighted a series of transparency measures that would prevent keeping loans secret and create a new inspector general to oversee the program.
Schumer also said that hundreds of billions would be spent on Democratic priorities, including the expansion of unemployment benefits, money for hospitals as well as more funding for cities and transportation.
Democrats also rejected the $3 billion sought by the Trump administration to buy oil to fill the Strategic Petroleum Reserve.
Pelosi said on Tuesday that the House could quickly approve a Senate-passed coronavirus stimulus with a voice vote that doesn’t require members to travel to Washington — as long as the bill does not have any “poison pills” Democrats object to.
That would also require the unanimous consent of all House Republicans. The second-ranking House Republican, Representative Steve Scalise of Louisiana, told his vote-counting team during a conference call Tuesday night that the best option is to accept a Senate-passed economic stimulus bill, according to Scalise spokeswoman Lauren Fine.
Eric Ueland, the White House legislative affairs director, said after the agreement was reached that the “the president and his team look forward to swift action for urgently needed assistance to the American people and powerful aid to the nation’s economy as we work through this crisis.”
The size of the stimulus package is unprecedented, dwarfing the approximately $800 billion Obama stimulus that passed five months after the 2008 financial crash.
Together with Fed intervention, the proposed legislation amounted to a $6 trillion stimulus, according to White House economic adviser Larry Ludlow, or about 30% of annual GDP.
The package will likely more than double a U.S budget deficit that was already set to hit $1 trillion this year before the outbreak. It also may not be the last infusion of government spending in response to the spread of the virus.
Lawmakers universally expressed a sense of urgency as the nation’s economy deteriorates and the health outlook grows more dire. The World Health Organization said the U.S. has the potential to become the new epicenter of the global pandemic as the number of known infections soars.
The proposal is the third — and biggest — plan by Congress to confront the coronavirus crisis as the disease spreads.
An initial $8 billion plan passed by Congress March 5 is funding emergency health care needs stemming from the coronavirus, and a second plan enacted last week will provide many Americans with paid sick leave, food assistance and free coronavirus testing. It also will send tens of billions in fresh aid to states.
(Updates with text still being drafted, statement from Pelosi in fourth through seventh paragraphs)
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