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Republican Coronavirus Rescue Package Fails to Pass in Senate

Senate Democrats blocked a rescue package designed to blunt the economic impact of the coronavirus pandemic, after a dispute with Republicans over corporate bailout provisions and aid to dislocated workers.

Lawmakers and administration officials still hope to reach an agreement on a deal worth as much as $1.3 trillion to allow both chambers of Congress to approve it as the week opened Monday. Negotiations stretched late into the night.

Shortly after the procedural vote failed, Dow futures fell 5%, hitting the trigger that halts trading.

The number of confirmed cases in the U.S. surpassed 32,000 on Sunday, a 10-fold increase from a week earlier, and for senators, the virus hit home, with Sen. Rand Paul, a Kentucky Republican, becoming the first to announce a positive test for Covid-19.

Two other GOP senators who had closely interacted with Mr. Paul said they would quarantine, narrowing the Republican majority in the Senate.

Democrats said they blocked the procedural vote because the package designed by Republicans with Democratic input favored corporations and didn’t go far enough to aid individuals facing unemployment and loss of income. The motion to advance the legislation failed on a 47-47 vote, short of the 60 votes needed.

Following the vote, Senate Republican and Democratic leaders blamed one another for the impasse, but vowed to continue working on the plan. Senate Majority Leader Mitch McConnell said later Sunday that a second procedural vote would be held at 9:45 a.m. Monday, but Senate Minority Leader Chuck Schumer (D., N.Y.) objected, effectively blocking it until noon.

Mr. McConnell accused Mr. Schumer of rattling the markets further. Mr. Schumer said he wanted to give both sides time to reach a deal.

House Speaker Nancy Pelosi said House Democrats planned to introduce their own legislation, saying there were big differences between what her caucus wanted and what Republican were proposing. Should the two chambers each attempt to pass their own legislation first and then negotiate, it could significantly lengthen the time it takes Congress to pass a bill.

Democrats objected to Republicans’ plan to provide $500 billion for the Treasury secretary to make loans, loan guarantees or investments to support businesses, possibly along with states or municipalities. The sum is more than twice as much as Treasury had requested.

Democrats also want to add protections for workers, to expand unemployment insurance to four months at 100% pay and increase aid to hospitals, state and local governments.

“They’re trying to advance a proposal that would be great for giant corporations and leave everyone else behind,” said Sen. Elizabeth Warren (D., Mass.).

A big portion of the funds — currently estimated at $75 billion — would go to distressed companies, including in the areas of travel and critical infrastructure, according to a draft of the legislation reviewed by The Wall Street Journal. In addition, air carriers, air cargo providers and major aviation suppliers would be eligible to receive funds, potentially benefiting corporations such as Boeing Co., Delta Air Lines Inc., United Airlines Holdings Inc. and General Electric Co.

The other $425 billion could be used to make loans directly or to backstop any losses in lending facilities launched or expanded by the Federal Reserve.

The Fed launched two facilities last week, each with $10 billion of support from the Treasury, using broad authority the central bank can invoke to lend during emergencies, sometimes referred to as 13(3) powers — so named for the section of its charter that authorizes this activity. Treasury Secretary Steven Mnuchin said Sunday on Fox News that the new funding could support $4 trillion in lending programs.

The bill would also provide billions in additional funding for government agencies and programs facing increased demand because of the pandemic, including $75 billion to reimburse health-care providers for costs or lost revenues directly associated with coronavirus, according to the draft legislation.

Lawmakers also are aiming to include several months’ of appropriations in the bill, designed to keep the government running, according to a Trump administration official, which would allow Congress to adjourn for the coming weeks. Many lawmakers are concerned that traveling back and forth to Washington, D.C., poses health risks and some have called for remote voting.

The draft legislation also includes $15.6 billion for the Supplemental Nutrition Assistance Program, $14.4 billion for the Department of Veterans Affairs for medical services, $4.5 billion for the Centers for Disease Control and Prevention and an additional $12.7 billion for the public-health emergency fund to help develop vaccines and other treatments for the virus.

The most recent version of the bill seeks to ensure that those without any income can receive $1,200 per adult and $500 per child in one-time payments from the government, according to the draft and several congressional aides. Money-losing businesses would get tax cuts designed to improve cash flow.

Sen. Pat Toomey (R., Pa.) said Sunday on NBC’s “Meet the Press” that aid for larger businesses in the Senate bill would come from a “big credit facility” rather than direct grants to businesses.

“None of this is going to be grant money,” Mr. Toomey said. Airlines and hotels have said that only grants would help them avoid layoffs.

But some provisions in the bill affecting small businesses would represent direct aid to businesses, like loans that would be forgiven if businesses meet requirements for keeping workers on the payroll. White House staff have jokingly referred to such aid as “groans,” or grants that the administration is calling loans, according to one person involved in the talks.
Source: Dow Jones

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