Democrats, Trump set to battle over implementing $2T relief bill

The $2 trillion coronavirus relief package is setting up a new battle over implementation between the Trump administration and congressional Democrats likely to reverberate into the election.

President Trump and Democratic leaders are already jockeying over the management of a massive direct lending and credit facility program that Treasury Secretary Steven Mnuchin will run with the Federal Reserve. It will have more than $4 trillion at its disposal.

Democrats on Monday hailed the appointment of Department of Defense acting Inspector General Glenn Fine to oversee lending under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Senate Minority Leader Charles Schumer (D-N.Y.) praised Fine’s “good reputation as a tough federal prosecutor” and former Department of Justice inspector general.

He urged Fine to “exercise his full oversight authority to ensure that the Trump administration implements the CARES Act as intended.”

Democrats insisted on creating an inspector general for the fund as well as a congressional oversight board made up of five members picked by Congress’s top four leaders.

Fine will head the Pandemic Response Accountability Committee (PRAC), which will provide a third layer of oversight, made up of 10 inspectors general tasked with detecting and preventing fraud, waste, abuse and mismanagement. It will have authority over the three coronavirus response bills signed into law in March.

Trump on Friday pushed back, declaring in a signing statement that he would not allow the special inspector general for pandemic recovery to report to Congress on lending decisions without “presidential supervision.”

Speaker Nancy Pelosi (D-Calif.) later contradicted Trump, telling MSNBC: “Congress will exercise its oversight and we will have our panel appointed by the House, in real time, to make sure we know where those funds are being expended.”

Pelosi called on Fine to ensure the administration distributes economic aid “to help workers, not to pad the pockets of corporations and the wealthiest few with taxpayer dollars at the expense of those in need.”

“Unfortunately, the president has made clear that he intends to disregard critical oversight provisions that hold the administration accountable to the law,” she said in a statement Monday.

Sen. Richard Blumenthal (D-Conn.) on Monday warned the corporate liquidity program “was specifically designated to help American families and workers — not to personally enrich corporate CEOs or the Trump family business.”

He urged Fine to “utilize his full authority to ensure the robust transparency measures we fought to include in the CARES Act are used.”

“The Trump administration must be held accountable as they implement this relief package,” he said.

The relief law includes a provision that specifically prohibits businesses controlled by Trump, Vice President Pence, members of Congress or senior executive branch officials or their immediate families from receiving loans or investments from the Treasury program. The language bars businesses connected with their children, spouses or in-laws from federal aid.

White House legislative affairs director Eric Ueland told reporters last week that Trump was supportive of the prohibition against aiding businesses connected to him or his family as long as it also applied to members of Congress.  

The administration and congressional Democrats are likely to spar over other key elements of implementation, such as how long it takes to send out rebate checks, set up a generous expansion of unemployment benefits and provide forgivable loans to small business.

“I do expect there will be friction,” said Jim Kessler, a former aide to Schumer who serves as executive vice president for policy at Third Way, a centrist Democratic think tank.

“The package was necessary. It’s not perfect and nothing that takes 96 hours and costs over $2 trillion is going to be perfect. There will definitely be abuse in there. It’s the price we have to pay to rescue people,” he said.

At the same time, he said the administration “is going to have to do a far more vigilant job of policing this fund and seeing that it is used to benefit the broad population” than normal.

The president has repeatedly been accused during his first three years in office of making decisions to benefit his own real estate and hotel empire.

Trump has come under fire for visiting his own properties on more than 350 days during his presidency, charging the Secret Service at times as much as $650 a night to stay at his Mar-a-Lago resort.

Lawmakers in both parties are predicting that there will be allegations of fraud, but argued the priority was to get federal aid out the door as quickly as possible.

Republican lawmakers say they support strong oversight as much as the Democrats do.

“I don’t think any corporation would really want to come to the Fed window or get one of these loans and have it come back on them there was some kind of favoritism in the process,” said Sen. Mike Braun (R-Ind.).

The first partisan shots fired over how that fund is managed have evoked the battles between former President Obama and congressional Republicans over spending in the American Recovery and Reinvestment Act of 2009, when Congress hastily passed a $787 billion bill in the midst of the last financial crisis.

During last week’s acrimonious Senate negotiations over the relief package, Democrats seized on the GOP proposal to appropriate $500 billion to the Treasury Department to maximize the Fed’s leverage to make loans and loan guarantees, blasting the proposal as a corporate “slush fund.”

The program was eventually funded with $454 billion after $46 billion was carved out for airlines, air cargo carriers and industries deemed critical to national security — giving Mnuchin broad authority to dole out liquidity as he sees fit.

“The first thing you think of is favoritism. While $454 billion sounds like a lot of a money, you’re talking about a $21 trillion economy so in that respect are we picking winners and losers? Are we rewarding certain types of companies or certain regions of the country over others?” said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan budget watchdog group.

The Obama administration and Republican lawmakers battled in 2010 and 2011 over the administration’s preference for funding renewable energy projects, which were part of the president’s vision of a clean energy revolution.

A flashpoint in that fight was a $535 million loan guarantee that Obama’s Energy Department extended to Solyndra, a California-based solar energy company, which later filed for bankruptcy. The administration gave the company the ill-fated loan under authorities created by the 2005 Energy Policy Act and the 2009 stimulus law.

An investigation by The Washington Post in 2011 found that Obama’s green-technology program was “infused with politics at every level.”

The Obama administration forged ahead with its decision to support Solyndra despite warnings that it was a financial disaster in the making.

There were other controversies created by the influx of federal money into the economy in the 2008-2009 crisis, such as a decision to provide a $12 million capital infusion to OneUnited Bank in Boston.

The bank didn’t appear a good candidate for the Troubled Asset Relief Program, which was supposed to focus on healthy banks, but got the money anyway because of the intervention of then-House Financial Services Committee Chairman Barney Frank (D-Mass.).

The House Ethics Committee also investigated Financial Services Committee Chairwoman Maxine Waters (D-Calif.) for helping to arrange a 2008 meeting with then-Treasury Secretary Hank Paulson and the National Bankers Association to discuss OneUnited, although the committee concluded Waters didn’t violate any rules.

Updated: 10:18 p.m.