US congressional leaders close in on near-$2tn stimulus deal

Via Financial Times

Top Republicans and Democrats insisted they were close to agreeing a nearly $2tn economic stimulus package, but a deal was still out of reach Tuesday evening as lawmakers disagreed over how to provide economic relief to taxpayers and businesses amid the coronavirus crisis.

Nancy Pelosi, Democratic speaker of the House of Representatives, told CNBC when markets opened on Tuesday morning that there was “real optimism” that an agreement would be reached “in the next few hours”.

Less than an hour later, Mitch McConnell, the Senate’s top Republican, said negotiators were “very close” to a deal.

“It has taken a lot of noise and a lot of rhetoric to get us here,” Mr McConnell said on the Senate floor. “In spite of all of that, we are very close. We are close to a bill that takes our bold Republican framework and integrates further ideas from both parties.

“The clock has run out. The buzzer is sounding,” he added. “The hour for bargaining as though this were business as usual has expired.”

Six hours later, the US benchmark S&P 500 closed up 9.4 per cent, at its high for the day, as investors anticipated a congressional deal. The Nasdaq closed up 8.1 per cent.

But when President Donald Trump held his daily press conference on Tuesday evening, an agreement remained illusive. Larry Kudlow, director of the White House’s National Economic Council, said at the press conference that negotiators were “gaining great progress” on the legislation as negotiations continued.

“[Lawmakers] expect to vote as soon as possible,” Mr Kudlow said, adding the stimulus would “position” the US economy for an “economic rebound later this year”.

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“We are heading for a rough period, but it is only going to be weeks we think, weeks and months. It’s not going to be years, that’s for sure,” he added.

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Mr McConnell has been wrangling with Chuck Schumer, the Senate’s most senior Democrat, since Saturday over Republicans’ proposals for a huge stimulus, which would include bailouts for large companies hit by the spread of coronavirus and means-tested “helicopter money” for US taxpayers.

Mr Schumer told senators just before midday on Tuesday that he had a “very productive” meeting with US Treasury secretary Steven Mnuchin, White House legislative director Eric Ueland, and incoming White House chief of staff Mark Meadows.

“Last night, I thought we were on the five-yard line. Right now we are on the two,” Mr Schumer said. “Of the few outstanding issues, I don’t see any that can’t be overcome within the next few hours.”

Mr Mnuchin has negotiated on behalf of Mr Trump and the White House, and Ms Pelosi has also been involved in talks. The speaker of the House introduced a separate $2.5tn stimulus proposal, drafted by House Democrats, on Monday afternoon.

In a two-hour call with House Democrats on Tuesday afternoon, Ms Pelosi told colleagues that negotiators were in the “red zone”, in another reference to US football players being close to scoring, according to someone familiar with the call.

Democrats have argued that the Republicans’ proposals are too generous to big business, and called for limits on share buybacks and executive compensation at bailed-out corporations, among other measures.

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Ms Pelosi said on CNBC on Tuesday that Senate Democrats had done a “great job” of demanding protections for workers and increased oversight of corporations that would receive bailout money.

She added Republicans had accepted Democrats’ demands for an inspector-general and a five-person congressional panel to oversee a $500bn fund that would award loans to businesses, cities and states as part of the stimulus package, including $50bn for commercial airlines.

Oversight of the fund had become a key sticking point in bipartisan negotiations at the weekend. When asked about the issue at a press conference on Monday evening, Mr Trump replied: “I’ll be the oversight.”