WASHINGTON — The federal government is moving to inject upward of $2 trillion into the U.S. economy in the coming weeks, a top White House economic official said Saturday, as congressional negotiators raced to finalize a sweeping stimulus package meant to blunt the devastating impact of the coronavirus pandemic.
Larry Kudlow, director of the National Economic Council, made the $2 trillion estimate as he joined negotiations on Capitol Hill over how to structure an ambitious rescue plan that congressional leaders are hoping to pass into law by early next week.
At the White House, President Donald Trump offered an optimistic take on the talks. "I think we're getting very close," the president said.
Underscoring the urgency and rapid pace of the negotiations, House Speaker Nancy Pelosi, D-Calif., boarded a flight back to Washington Saturday after spending the past week at home in San Francisco, according to a senior Democratic aide - indicating she plans to plan a central role in negotiating the plan with Republicans.
Kudlow estimated direct cost of the legislation - which is likely to encompass direct payments to Americans, unemployment insurance funding, rescue funds for businesses and health care appropriations - at about $1.4 trillion. A portion of that, he said, would capitalize on Federal Reserve emergency lending that could support hundreds of billions of dollars in additional loans.
The package appears likely to become the single most expensive fiscal stimulus in American history.
Senate Majority Leader Mitch McConnell, R-Ky., said Saturday afternoon that they were pressing ahead, with a vote possible Monday on "a hopefully very significant bipartisan package to help rescue the economy and to get greater funding for all of the health care aspects of this pandemic."
The ballooning size of the federal coronavirus response has mirrored the escalation of the global health crisis. The legislative response began last month with a $2.5 billion White House request last month, which ultimately grew into a $8.3 billion appropriation directed mainly at public health needs. A follow-up package signed into law Wednesday spent more than $100 billion in initial economic relief, providing free covid-19 testing and an emergency boost to the federal safety net.
The U.S. Bureau of Economic Analysis currently estimates 2019's gross domestic product at $21.4 trillion. Ten percent of that would be $2.1 trillion, and even a bill of $1.4 trillion would amount to nearly double the cost of the American Recovery and Reinvestment Act - the fiscal stimulus passed during the 2008-2009 global financial crisis.
"This is going to be the largest relief package in history," said Sen. Robert Menendez, D-N.Y., a Senate Finance Committee member involved in the talks.
It is likely to include hundreds of billions of dollars in direct cash payments to American taxpayers, a boost to state unemployment insurance benefits, loans and grants to businesses large and small, and emergency funding to support hospitals and health care infrastructure under massive strain from the pandemic.
"The American people need Congress to put partisan politics aside and provide the American people relief as quickly as possible to get the economy turned around, and we must demand this of ourselves, as well," Senate Finance Committee Chairman Charles Grassley, R-Iowa, said on the Senate floor Saturday.
The thorniest issues have surrounded balancing direct aid to Americans through tax rebates with enhanced unemployment benefits directed through the state unemployment insurance systems. Democrats have argued for a significant boost to the latter, but Republicans have expressed doubts about whether the states could handle an influx of the dimensions that Democrats have proposed.
Democrats have also pushed for more direct cash aid to states to backfill certain budget shortfalls that could lead to drastic cuts to front line services. Republicans have instead advocated for boosting aid to existing programs such as Medicaid and encouraging states to tap rainy-day funds, White House legislative affairs director Eric Ueland said late Friday.
Senate Minority Leader Charles Schumer, D-N.Y., who is leading negotiations for Democrats in concert with Pelosi, sounded an upbeat note in noontime remarks on the Senate floor, citing a "very good, very detailed" morning phone call with Treasury Secretary Steven Mnuchin - a key White House negotiator.
"We discussed many of the outstanding issues, and we are making very good progress," Schumer said. "I have every expectation that this progress will continue throughout the day. Democratic negotiators will meet with their Republican counterparts throughout the day to continuing hammering out the details. The Senate is here. We are working. And we are all eager to come to a bipartisan agreement as soon as humanly possible."
The hopeful note stood in contrast to a missive that Pelosi sent to House Democrats Friday evening, calling an initial Senate GOP measure introduced late Wednesday a "nonstarter." Any bipartisan agreement, she said, must "greatly increase unemployment insurance and Medicaid, help small businesses survive, expand paid sick and family leave and put money directly into the hands of those who need it most."
Senators worked late into the night Friday in search of a deal, with principal negotiators leaving the Capitol around 10:30 p.m. reporting some progress but also a number of issues still unresolved.
McConnell had hoped to clinch an agreement Friday night to ensure a vote Monday on the massive legislation. House members would have to be called back to vote on the bill, a complication unto itself, given the spread of the virus and with two House members already announcing they've tested positive for it.
Agreement appeared near on one major issue - how to structure direct payments to individuals in a way that would effectively flood the economy with hundreds of billions of dollars in cash. The bill McConnell originally released Thursday drew bipartisan criticism because many people would have gotten one-time payments of $1,200 but the poorest Americans - those without federal tax liability - would have gotten as little as $600.
Throughout the day Friday, lawmakers of both parties and administration officials voiced objections to that structure, and as the talks broke up late Friday, White House legislative affairs director Eric Ueland told reporters they were near agreement on ensuring that the poorest Americans didn't get less money.
"I think we are headed in a very good direction to make sure that aid flows directly to lower-income Americans as well," Ueland said.
Overall, Ueland said late Friday, "Differences have been narrowed. Ideas and alternatives have been put on the table. Members are directly engaged with each other. And as a result, policy proposals that might ultimately find bipartisan endorsement here in the Senate are clearer tonight than they were this morning."
Remaining unresolved included a push by Democrats to add many tens of billions of dollars to unemployment insurance programs, something they have argued is necessary to catch the tidal wave of people bracing for layoffs.
Schumer and Democrats were pushing for expanding unemployment benefits to provide six weeks of full pay, while waiving waiting periods and job-search requirements. That would amount to a sea change for the nation's unemployment insurance system, which is meant deliver much smaller checks not meant to wholly replace a worker's lost wages.
But some Republicans were voicing concerns about the ability of states to administer large-scale increases in the unemployment program, and Labor Secretary Eugene Scalia joined a meeting of senators Friday to issue a warning on that front.
Paul Winfree, a former White House policy aide who now serves as a Heritage Foundation fellow, said conservatives are reluctant to funnel too much money through the unemployment insurance system. An Office of Management and Budget review early in the Trump administration, he said, found states had unspent unemployment insurance balances from the 2009 economic stimulus because they didn't have the systems in place to easily disperse the money to people who qualified.
But Democrats insisted the system, at least in many states, could handle the influx.