Talks between Democrats and Republicans over a massive stimulus package to combat the economic impact of the coronavirus could stretch into Wednesday despite earlier assurances by lawmakers that a deal could be announced Tuesday.
Leaders in both parties had said earlier Tuesday that they were closing in on an agreement. Multiple people familiar with the situation told CNBC that they were still close to a deal, although talks continued as they worked through the text and hashed out final details. Two of the people cautioned that talks could spill into Wednesday morning.
One of the key issues yet to be resolved is the terms of the airline aid and oversight that comes with it, two of the people said. Democrats have pushed for a number of stipulations along with aid to the industry, including longterm bans on stock buybacks, limits on executive compensation, commitments not to furlough workers and board representation.
Meantime, President Donald Trump stressed in a press conference Tuesday that the money the U.S. lends “will be coming back” to it. The airlines have pushed for half of their aid in grants, arguing debt from loans would be too onerous.
One of the sources said there continued to be questions around oversight of the $500 billion fund that Republicans have proposed to support distressed companies. Treasury Secretary Steven Mnuchin has said the Federal Reserve could leverage the loans in the fund to offer up to $4 trillion in financing. The mechanics, though, are still in question, said a source familiar with the situation.
Democrats, still angry over the leeway banks got in the 2008 bank bailout, have argued the fund gives the Treasury too much discretion. One option being considered is a weekly check-in with companies borrowing from the fund, a source familiar told CNBC.
Still, House Speaker Nancy Pelosi, D-Calif., Senate Minority Leader Chuck Schumer and National Economic Council Director Larry Kudlow all spoke optimistically about the fund Tuesday. They said there are plans to add more oversight to that fund, with the addition of an oversight board and an inspector general.
“It will be completely transparent,” Kudlow said at a coronavirus task force briefing Tuesday at the White House.
Schumer had earlier in the day indicated in a speech on the Senate floor the fund was a key focus for Democrats.
Still, the two parties have worked already worked through a number of disagreements.
For the Democrats, that includes securing more funding for hospitals, and a state and local stimulus fund as part of their “Marshall Plan.” Schumer touted on the Senate floor unemployment insurance on steroids, which promised beneficiaries insurance for four months.
A draft bill from early Tuesday afternoon has had language stipulating a $350 billion fund for small businesses to mitigate layoffs and support payroll.
It also offered cash payments of up to $1,200 for individuals, $2,400 for married couples and $500 per child. Those amounts are reduced if an individual makes more than $75,000 or a couple makes more than $150,000.
President Donald Trump, describing the proposal as a $2 trillion package, said Tuesday that “we are working to pass the biggest and boldest financial relief package in American history.”
Friendlier tone
The day started, for the large part, on an optimistic note that stood in contrast to the bitter partisanship the took up the Senate floor the day before.
The Senate GOP’s bill failed to clear a key procedural hurdle Monday after a similar result Sunday.
Democrats had accused Republicans of favoring Big Business over workers and healthcare. Republicans said Democrats were causing unnecessary delay by focusing on issues outside the economic crisis facing the country, like giving more bargaining power to unions, increasing fuel emissions standards for airlines, and wind and solar tax credits.
Pelosi rolled out her own House proposal Monday which, though unlikely to become law, further rankled Republicans.
Trump started the day pushing for a deal on Twitter. “Congress must approve the deal, without all of the nonsense, today,” he tweeted Tuesday morning. “The longer it takes, the harder it will be to start up our economy.”
Uncertainty over the deal has rattled markets. Hospitals, workers and individuals have all said they need money now.
Mnuchin and Schumer met six times on Monday, ending on a positive note around midnight. The two picked up negotiations again at 9 a.m. Tuesday.
A bit later in the day, House Speaker Nancy Pelosi, D-Calif., told CNBC that there was “real optimism” Congress can clinch a pact within a few hours. Senate Majority Leader Mitch McConnell, R-Ky., said the bill is at the “five-yard line.”
Just before 11:00 a.m., Mnuchin, Schumer and Rep. Mark Meadows, Trump’s incoming chief of staff, held a meeting in Schumer’s office.
After the meeting, Schumer said on the Senate floor that negotiators were on the “two-yard line.” Issues can be resolved within hours, he added.
While negotiations carried on longer than Schumer forecasted, Kudlow said early Tuesday evening the parties were making “great progress.”
“They’re getting close and closer, they expect a vote as soon as possible,” Kudlow said.
Optimism over the potential deal helped drive the Dow Jones Industrial Average up more than 11% Tuesday, notching its biggest one-day percentage gain since 1933.
Bailout fund
Still, questions around the $500 billion fund remained.
Schumer said Tuesday Democrats were making “very good progress” in their efforts to add “incentive or mandate” for companies receiving federal loans or grants to keep their employees.
It remains unclear whether the government will demand equity of any of the companies it offers aid to, although lawmakers said the government has considered demanding warrants as part of its airline aid. There has been resistance to equity stakes, which dilute shareholders and give the government stronger oversight, lobbyists have told CNBC.
Boeing CEO David Calhoun told Fox News Tuesday that if Boeing “forces” an equity stake, then “we just look at all the other options. And we’ve got plenty of them.”
“It’s just not ideal for us, our suppliers, and all of those companies spread throughout the United States,” he added.
Trump has previously offered his support of the aerospace company, saying “we have to protect Boeing.” He has also said he would consider urging the government to take an equity stake in companies that have bought back stock.
U.S. Secretary of the Treasury Steven Mnuchin walks in a hallway at the U.S. Capitol March 23, 2020 in Washington, DC.
Alex Wong | Getty Images
Airline aid
Lawmakers are now considering providing at least some of the aid to airlines, among the hardest hit companies from the crisis, in the form of cash grants, according to a person familiar with the matter. A Senate aide cautioned, though, the terms are still being negotiated and could change.
Cash grants would be a victory for airline executives who were pleading with lawmakers to have half of the aid come in the form of cash grants, not just loans, which Republican senators had originally proposed. Labor leaders and executives have argued that saddling companies in debt through loans would make recovery even harder. U.S. airlines employ some 750,000 people.
Carriers have been racing to cut costs, grounding hundreds of planes and asking thousands of workers to take unpaid leave. Airlines are also tapping credit lines to shore up cash to weather the crisis, the impact of which they say is worse than 9/11.
U.S. airlines’ lobbying group, Airlines for America, said the industry would commit to not furlough employees through Aug. 31 if they received grants.
Hurdles remain
Any deal the GOP-controlled Senate comes to ultimately needs to be passed by the Democratic-led House. It is possible Pelosi, who has been talking with Schumer, could push for more changes to the Senate bill before giving it the go-ahead.
Pelosi said Tuesday morning if the parties can compromise and have “unanimous consent” the bill can move quickly.
“If we don’t have unanimous consent,” she said, “my two options with my members is: we can call them back to vote to amend this bill, or to pass our own bill and then go to conference with that.”
She added: “The easiest way to do that is to put aside some of our concerns for day and get this done … but if it has poison pills in it, and they know certain things are a poison pill, then they don’t want unanimous consent.”
CNBC’s Eamon Javers and Jacob Pramuk contributed to this report
This is a developing story. Check back for updates.
