Senate moving at ‘warp speed’ in coronavirus response
The Senate is planning to pass a $1 trillion-plus proposal to address the coronavirus pandemic, and the chamber won’t leave town until it does.
That’s a staggering amount of money, particularly to turn around and shovel out in a matter of days. That, more than anything else, underscores just how bad lawmakers, based on what they’ve been told by US economic officials, believe this is about to get economically for the country as the spread of the coronavirus accelerates.
Bottom line
This won’t be clean or easy. But lawmakers do want it to be done fast — “warp speed,” according to Senate Majority Leader Mitch McConnell, a Kentucky Republican. That means legislative language could start circulating as soon as Wednesday. Two GOP sources told CNN’s Manu Raju that Republican senators are close to reaching an agreement among themselves on the details of Mnuchin’s plan. The conference plans to meet later on Wednesday to discuss where they stand, with one of the sources expecting an agreement by lunchtime.
The idea is to cut a deal among themselves, and then try to hammer out a bipartisan agreement with Democrats on a massive package that could pass Congress in a matter of days. But Democrats have their own plans, so there are hard-fought negotiations ahead.
But keep this in mind: the number of industries now banging down the doors of Congress asking for help is growing by the hour. Senators who represent the states and districts those industries call home will go to mat to protect their interests. Republicans and Democrats will almost certainly split, and maybe even fracture, on the shape and priorities of the package at various points. And the markets will react every single step of the way.
Buckle up.
About the price tag
People involved in the talks with the administration expect it to grow to closer to $1.3 trillion at this point. “We’ve basically been told ‘whatever it takes,'” one person involved said of the message from the White House.
The stakes
If the price tag isn’t enough to underscore how urgent this crisis is now viewed on Capitol Hill, maybe the schedule will do the trick.
McConnell, on Tuesday to reporters: “The Senate will not leave town until we have processed yet another bill to address this emergency.”
It’s also strategic
Things happen in the Senate when senators want to go home. To put it bluntly, senators really want to go home. Several have spoken publicly about how they are uncomfortable being in a place that openly defies Centers for Disease Control and Prevention recommendations for gatherings to stop the spread of coronavirus. More feel that way privately. Yet another senator, Sen. Cory Gardner, a Colorado Republican, announced he would self-quarantine due to an interacting with someone who tested positive for the virus.
Senators are on edge right now. But the combination of growing economic urgency, the schedule and the fears in the Capitol of the virus itself are all aligned to kick the chamber into gear, and quickly.
What to watch Wednesday
- The Senate should, at some point, vote on the House-passed coronavirus economic relief package, though timing is still fluid.
- Any sense of concrete proposals for the “phase-three” relief package
What to read
Manu, Ted Barrett and Clare Foran have you covered, with great detail, on all that transpired on a day when the Senate snapped into action to respond urgently to the pending economic crisis.
Breaking overnight
The Office of Management and Budget submitted a sweeping $45.8 billion emergency funding request to Congress. The scale of it — it ranges across federal agencies — and the time — less than two weeks after Congress passed a separate $8.3 billion emergency funding package — underscores just how fast this is moving, and perhaps more importantly, how stretched thin the government is as it tries to confront it. Aides tell me this request will be included, in some form, in the “phase-three” stimulus package.
Your guide to the phases
Since this is about to become permanent lexicon:
Phase One: The $8.3 billion emergency funding supplemental. This has been signed into law.
Phase Two: The House coronavirus relief package. This has been passed by the House and is awaiting Senate passage.
Phase Three: The $1 trillion-plus stimulus package currently under discussion.
About that ‘warp speed’ thing
McConnell, after discussions about combining the House-passed “phase-two” package with the “phase three” package, made the decision to move forward, quickly, with the House-passed bill in the Senate as a standalone measure. But a final agreement to actually get that voted on and passed still hasn’t been announced.
Sen. Rand Paul, a Kentucky Republican, is pushing for a vote on his amendment in order to clear the way for final consideration. He’ll get it, and aides expect that amendment, and the final vote on the House measure will occur Wednesday. But that an agreement still hadn’t been reached on Tuesday to move forward underscores a key point: things can move fast in the Senate, but only if all 100 senators agree to let things move fast. Keep that in mind as the chamber attempts to urgently move the third stimulus package in the days ahead.
‘This is surreal’
Those were the words of a GOP aide describing the presentation by Mnuchin that pegged the price tag for the Administration’s economic stimulus proposals at north of $1 trillion.
“This is surreal,” the aide texted me. “He’s talking about ONE TRILLION and our guys … are mostly okay with it.”
Here’s a flashback. In 2009, President Barack Obama’s team deliberately chose to shoot under $1 trillion for their economic stimulus package to respond to the financial crisis out of fear that big of a topline number would cause Republicans to reject it in mass. (Republicans, almost across the board, rejected the lower number anyway.)
Under appreciated factor
One of the driving factors of the remarkable shift from small-bore emergency funding to massive trillion-dollar stimulus, according to several GOP aides CNN spoke with, is what lawmakers are hearing from business owners back home. “It’s sheer terror,” one senior GOP aide told me, adding that several have brought ad hoc presentations about how bad things could get for their individual companies or industries. “The message, across the board, is these businesses are days away from falling off a cliff.”
The big-sector aid, which is definitely coming, will get the headlines. But lawmakers hearing from their states and districts matters. A lot.
How you know things are blinking red
House Speaker Nancy Pelosi doesn’t get on the phone with the Federal Reserve chairman very often.
Speakers and fed chairs occasionally meet, but it’s not a regular thing and it’s usually in person when and if it happens. So Pelosi having a nearly 30-minute conversation with Fed Chair Jerome Powell — the kind of call that harkens back to the fall of 2008 (except insert Ben Bernanke in the Fed Chair position) tells you all you need to know about how serious this is — and how important the legislative response from Congress is considered by economic policy-makers.
A note, and quote, related to that call stood out to me. Pelosi, in a letter to her colleagues Tuesday night, said this: “I was encouraged by the Chairman’s perspective that with interest rates at nearly zero, Congress is enabled to think big fiscally as we craft a robust response.”
There’s a reason Pelosi read that part out to her colleagues (and the media). This package is about to get a lot bigger than $1 trillion.
About Mnuchin’s unemployment projection
Speaking of blinking red, the word out of the closed-door meeting between Mnuchin and Senate Republicans that Mnuchin projected the possibility of 20% unemployment due to the coronavirus economic fallout is jaw dropping. Bloomberg News first reported the comments, which CNN’s Jeremy Diamond confirmed.
But context here is important: according to people in the meeting, Mnuchin was ticking through models of how bad things could get economically if there’s inaction. Worst case scenarios are often good drivers for lawmakers who may be hesitant to pull the trigger on massive stimulus. That’s what happened here. The 20% scenario was a worst-case projection should the Federal Reserve and federal government not take action. Both are, and plan to continue to do so. That’s not to minimize the projection — that it’s viewed as even possible underscores just how bad US economic officials think it can get.
So don’t take that as sign of where things are headed. But do take it as a warning to lawmakers who are, in the days ahead, about to move through some huge, complicated and politically treacherous waters as they attempt to pass a $1 trillion-plus package.
The components of ‘phase three’
Republicans view the components of this stimulus package in three buckets: stimulus for individuals, industry assistance and mechanisms to mitigate the credit crunch on small business.
On the individual front, sending checks to individuals under a certain income threshold has clearly resonated with Republicans — and has the support of Democrats as well. Expansion and enhancements to unemployment insurance is expected. Several senators are pitching their own proposals to expand assistance to workers, which will be something to watch.
On the small business side, expect a heavy dose of loan guarantees and forgiveness. Also keep an eye on cash flow assistance, something discussed by Senate Small Business Committee Chairman Marco Rubio, a Florida Republican and Sen. Susan Collins, a Maine Republican.
On the industry front, that is very much a moving target. Airlines will certainly get support, but over the course of the last two days, more than a dozen industries have asked lawmakers for help in some form or fashion. The industry piece will also likely be the most controversial — Democrats have already signaled they want tight restrictions on any money given to large companies.
Senate Democratic Leader Chuck Schumer of New York drew this line in the sand on Tuesday, telling reporters: “The vast majority of the aid should go to the workers, not to increasing executives’ salaries, not to doing the kinds of things that the companies have done, like buybacks.”
The details of the direct payments
This won’t just be $1,000 checks to all Americans. The exact details are still being formulated, but CNN’s congressional team got a sense of where things are headed based on their reporting Tuesday.
They reported the payments would go out in two tranches — each ball-parked at $250 billion in total cost. The first could go out by the end of April if lawmakers move quickly, and Mnuchin told Republicans he’s already working to set up the payment mechanism inside Treasury. A second tranche of $250 billion may be deployed later, if necessary, they reported.
They also reported the income threshold would be below $100,000 for individuals, though the exact number seemed fluid.
It goes without saying these details are extremely important, and will likely be subject to significant negotiation in the days ahead.
McConnell’s strategy
McConnell was largely hands off on the House-passed bill, at least publicly. He made clear early on that it was a negotiation between Pelosi and the White House. This time is different. McConnell made clear Tuesday that Senate Republicans will work with the White House to draft “phase-three,” then move to consulting Senate Democrats and Pelosi. It’s a risky play — nothing can get done without Democrats in both chambers. But it’s one that also underscores the ask
McConnell is making on the “phase-two” package — in his words, “gag and vote for it anyway.”
McConnell’s pitch to his conference has been that “phase-three” is where they can push for specific proposals, or even changes to “phase-two,” so long as they let the House-passed bill move through the Senate.
It’s a partisan start to a negotiation on a package that quite literally has to be bipartisan to make it into law. But it’s one done intentionally — to keep Senate Republicans unified, to give them all buy-in and, in McConnell’s view, give the package a better chance at getting across the finish line in the GOP-controlled Senate.
Schumer’s proposal
Let this be an important reminder: what Republicans want, and draft, won’t be the final package. Senate Democrats have a say in any final package. Pelosi and her House colleagues have perhaps the biggest say in the shape of things. So while all focus the last 24 hours has been on the White House and the Senate GOP, that will have to shift soon.
With that in mind, Schumer has crafted a $750 billion proposal, laid out in detail to his colleagues in a 15-slide PowerPoint on Tuesday.
It would include a medical supply and care surge, an injection of money toward child care, and loans and loan forgiveness for small businesses.
It would also direct funds for seniors, those in public housing and toward students who, due to school closings, are lacking things like housing, care and meals. There would also be provisions to increase Medicaid funding to states, expand Supplemental Nutrition Assistance Program benefits and cancel student debt payments.
The most important relationship in the country
Pelosi and Mnuchin. Period. In this time, in this administration, the speaker and the treasury secretary have formed a genuine, and genuinely successful, working relationship. There’s a level of trust borne out over intense budget, debt ceiling, spending and stimulus negotiations.
The final product doesn’t always make both sides happy — Republican staffers often refer to Mnuchin as “the Democrat” (Mnuchin donated to Democratic candidates in the past) when they don’t like the direction talks between the two principals are going, and Democrats have at times been frustrated by some of the concessions Pelosi has had to make in order to get deals across the finish line.
But there’s nobody else in town — save for McConnell and, to some degree, Schumer — who has a resume of results like Pelosi and Mnuchin. They’ll need to make it work again, at a much more urgent and critical time, in the days and weeks ahead.
This moment isn’t directly analogous to the 2008 financial crisis, but Pelosi had an extremely good working relationship with then-Treasury Secretary Hank Paulson. That paid dividends in those trying months. Her relationship with Mnuchin will likely have to play out in a similar fashion now. They spoke dozens of times in crafting the “phase-two” package. They spoke on Tuesday.
