US Congress averts government shutdown but fight over pandemic aid

Senate Majority Leader Mitch McConnell says both sides are committed to agreeing to a deal. Photo / AP

The US Congress passed a stopgap spending bill Friday night (US time), averting a partial government shutdown and buying themselves another two days for frustratingly slow negotiations on an almost US$1 trillion (NZ$1.4t) Covid-19 economic relief package.

The virus aid talks remained on track, both sides said, but closing out final disagreements was proving difficult. Weekend sessions were on tap, and House leaders hoped for a vote on Sunday on the massive package.

The House passed the temporary funding bill by a 320-60 vote. The Senate approved it by voice vote almost immediately afterward, sending it to President Donald Trump.

Senate Majority Leader Mitch McConnell said both sides remain intent on closing the deal. Negotiations continued into Friday night but an agreement wasn't likely before Saturday, lawmakers and aides said.

The US$900 billion package comes as the pandemic is delivering its most fearsome surge yet, killing more than 3000 victims per day and straining the nation's healthcare system. While vaccines are on the way, most people won't get them for months. Jobless claims are on the rise.

Sen. Mitch McConnell: "Our bipartisan discussions are continuing to make significant headway toward another relief package for the American people." pic.twitter.com/r4KpFUG8ri

— The Hill (@thehill) December 18, 2020

The emerging agreement would deliver more than US$300b in aid to businesses and provide the jobless a US$300-per-week bonus federal unemployment benefit and renewal of state benefits that would otherwise expire right after Christmas. It also includes vaccine distribution funds and money for renters, schools, the Postal Service and people needing food aid.

Some parts of the bill are being fiercely contested, however, with direct payments to individuals a key sticking point. Democrats have sought another round of US$1200 direct payments but Republican Senator Ron Johnson blocked the move, keeping the proposed direct payment amount at US$600.

Sen. Bernie Sanders (I-VT) attempts to force the Senate to consider $1,200 stimulus checks. He is again blocked by Sen. Ron Johnson (R-WI). pic.twitter.com/gaScm3dANN

— The Recount (@therecount) December 18, 2020

Rep. @AOC: "We want $1200 at least. And Republicans are fighting it back down to $600, which is really unfortunate. $600 is not enough.

We need to really make sure that we hold the Republican Party accountable for cutting people's stimulus checks in half." pic.twitter.com/sdviLELzJc

— The Hill (@thehill) December 18, 2020

Democrats on Friday came out swinging at another key obstacle in the bill: a provision by conservative Senator Pat Toomey that would close down Federal Reserve lending powers. Toomey's provision bars the Fed from restarting lending programmes next year, and Democrats say such a law would tie Biden's hands and put the economy at risk.

"As we navigate through an unprecedented economic crisis, it is in the interests of the American people to maintain the Fed's ability to respond quickly and forcefully," said Biden economic adviser Brian Deese.

"Undermining that authority could mean less lending to Main Street businesses, higher unemployment and greater economic pain across the nation."

For Republicans, the most important provision was a long-sought second round of "paycheque protection" payments to especially hard-hit businesses and renewal of soon-to-expire state jobless benefits for the long-term unemployed.

I opened my first small business when I was 20. I know what it's like to have a dream. But I can't imagine what it's like to have that dream shattered by government lockdowns.

The least Democrats in Congress can do is to stop blocking funding for the Paycheck Protection Program. pic.twitter.com/60nUopraic

— Kevin McCarthy (@GOPLeader) December 15, 2020

Biden is promising an additional stimulus bill next year, but if Democrats lose Georgia Senate runoff elections next month and fail to win the Senate majority, they may have little leverage.

Most economists, including Federal Reserve Board chairman Jerome Powell, strongly support additional economic stimulus as necessary to keep businesses and households afloat through what is widely anticipated to be a tough winter.

Many forecast the economy could shrink in the first three months of 2021 without more help. Standard & Poor's said in a report Tuesday that the economy would be 1.5 percentage points smaller in 2021 without more aid.