Happy Thursday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL—Fight over Federal Reserve powers holding up year-end deal: A partisan fight over language that would terminate the Federal Reserve’s power to set up credit lending programs to backstop the fragile U.S. economy has emerged as a significant obstacle to getting a deal on a year-end COVID-19 relief package.
- Republicans say the Fed’s authority to set up special purpose vehicles to keep money flowing through the United States economy is no longer needed and that Congress always intended to eventually end the special authority created by the CARES Act in March.
- But Democrats worry that limiting the Fed’s power could be an attempt to sabotage the incoming Biden administration’s ability to respond to an economic downturn.
Senate Republican Whip John Thune (S.D.) on Thursday identified language backed by Sen. Pat Toomey (R-Pa.) to wind down Fed authority to set up credit lending facilities as a high priority for Republicans.
“I think the Federal Reserve authority — there’s a really strong interest in making sure that door is shut. That’s a big priority for a lot of our members,” Thune said.
The Hill’s Alexander Bolton explains here.
The idea: Toomey’s proposal would rescind unused funding allocated in March to backstop Fed lending programs, would reiterate that the lending facilities will expire at the end of the year and ensure that the Treasury Department and Fed couldn’t create future clones of the program.
The backlash: But the plan has alarmed Democrats and some Fed experts, who say the proposal could tie the banks’ hands long after the pandemic passes.
“The proposal also directly contradicts Secretary Mnuchin’s past assurances. Just weeks ago, when Secretary Mnuchin cut off trillions in relief to the economy by terminating the CARES Act lending programs, he said that if market conditions worsened, the emergency lending facilities could always be reopened using non-CARES Act funds. Now Senate Republicans are trying to slash even that final safety net for the economy,” said Bharat Ramamurti and Rep. Donna Shalala (D-Fla.), the two Democratic commissioners on the CARES Act Congressional Oversight Commission.
The Congressional Research Service also said in a Thursday analysis that a court “would likely conclude” that the Treasury would be allowed under the CARES Act to extend CARES Act lending facilities and permit the Fed to make new loans from them.
LEADING THE DAY
Congress set to blow past shutdown deadline amid coronavirus talks: Congress is barreling toward a rare weekend session as lawmakers race to wrap up a sweeping agreement to fund the government and provide badly needed coronavirus relief.
- Leadership is homing in on a deal that would attach roughly $900 billion in coronavirus relief to a $1.4 trillion bill to fund the government until Oct. 1, 2021, in what is the last major piece of legislation Congress needs to pass before it wraps up its work for the year.
- But lawmakers appear poised to drive over Friday night’s funding cliff, when the government will shut down at least temporarily without new legislation. Even if talks wrap by Friday night it’s expected to take days for Congress to pass it.
“There’s still just a lot of loose ends we’re trying to tie down. …It’s a little bit of whack of mole, whack it here and something else pops up. There’s a lot of interaction between the moving parts of all this,” said Sen. John Thune (R-S.D.). The Hill’s Jordain Carney brings us up to speed here.
The snags: The hang-ups appear to be centered solely on the coronavirus relief negotiations, not the larger government funding bill.
- Negotiators are still haggling over how to structure a second round of stimulus checks amid concerns about the overall cost of the bill.
- Leadership is still trying to work out funding for FEMA, which some Republicans worry could be used as a backdoor for more money for state and local governments, a top Democratic priority.
- They are also still ironing out language on small business aid and help for hard-hit industries like entertainment venues, a big priority for Senate Minority Leader Charles Schumer (D-N.Y.)
Experts say stimulus deal could head off double-dip recession: Some economists believe the stimulus deal congressional leaders are crafting could avert a double-dip recession, but argue more will likely be needed to ensure the recovery is robust.
- The emerging deal largely builds off the $908 billion proposal that a bipartisan group of legislators put out two weeks ago to revive negotiations on a fifth COVID-19 package.
- Economists were worried that congressional gridlock would lead to a slew of safety net programs expiring, dropping the floor out from people grappling with unemployment and potential evictions at a time when a surge in COVID-19 cases has led to renewed restrictions on businesses.
“It’s enough to avert a double-dip recession, but just enough,” said Mark Zandi, chief economist at Moody’s Analytics. “It doesn’t forestall a few bad months,” he added. The Hill’s Niv Elis explains why.
GOOD TO KNOW
- The leaders of the Senate Finance Committee on Thursday asked the IRS for a briefing about whether sensitive taxpayer information was stolen as part of the SolarWinds hack.
- Sen. Josh Hawley (R-Mo.) said he will go to the floor on Friday to ask for a vote on his proposal to provide a second round of $1,200 stimulus checks.
- The first report from an independent body set up to monitor compliance with the United States, Mexico, Canada Agreement (USMCA) raised “serious concerns” about Mexico implementing its new labor laws.
- A bipartisan group of senators is urging the IRS to provide relief for taxpayers who had difficulties filing and paying on time because of the coronavirus pandemic.
- Weekly jobless claims rose for the second week in a row according to a report released Thursday, reaching a seasonally adjusted 885,000 in the second week of December, according to the Labor Department.
ODDS AND ENDS
- A pandemic-driven drop in real estate deals cost New York City $1.6 billion in lost revenue so far this year, a sign of the staggering economic fallout of the coronavirus outbreak.
- A bipartisan group of state attorneys general filed another antitrust lawsuit against Google on Thursday focused on its online search market power, adding to the growing legal battles facing the tech giant.