Talks between Democrats and Republicans above a massive stimulus package to combat the economic impact of the coronavirus could stretch into Wednesday despite earlier pledges by lawmakers that a deal could be announced Tuesday.
Leaders in both parties had said earlier Tuesday that they were about in on an agreement. Multiple people familiar with the situation told CNBC that they were still privy to a deal, although talks continued as they worked through the text and hashed out final details. Two of the people warned 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 pronounced. Democrats have pushed for a number of stipulations along with aid to the industry, including longterm bans on stock buybacks, limits on overseer compensation, commitments not to furlough workers and board representation.
Meantime, President Donald Trump stressed in a press talk Tuesday that the money the U.S. lends “will be coming back” to it. The airlines have pushed for half of their aid in confers, arguing debt from loans would be too onerous.
One of the sources said there continued to be questions around error of the $500 billion fund that Republicans have proposed to support distressed companies. Treasury Secretary Steven Mnuchin has said the Federal Aplomb could leverage the loans in the fund to offer up to $4 trillion in financing. The mechanics, though, are still in question, imparted the source.
Democrats, still angry over the leeway banks got in the 2008 bank bailout, have argued the assets gives the Treasury too much discretion. One option being considered is a weekly check-in with companies borrowing from the nest egg, the source said.
Still, House Speaker Nancy Pelosi, D-Calif., Senate Minority Leader Chuck Schumer and Resident Economic Council Director Larry Kudlow all spoke optimistically about the fund Tuesday. They said there are arrangements to add more oversight to that fund, with the addition of an oversight board and an inspector general.
“It will be completely plain,” Kudlow said at a coronavirus task force briefing Tuesday at the White House.
Schumer had earlier in the day indicated in a parlance on the Senate floor the fund was a key focus for Democrats.
Still, the two parties have worked already worked through a platoon of disagreements.
For the Democrats, that includes securing more funding for hospitals, and a state and local stimulus fund as to some extent of their “Marshall Plan.” Schumer touted on the Senate floor unemployment insurance on steroids, which promised beneficiaries bond for four months.
A draft bill from early Tuesday afternoon has had language stipulating a $350 billion loot for small businesses to mitigate layoffs and support payroll.
It also offered cash payments of up to $1,200 for individuals, $2,400 for match up couples and $500 per child. Those amounts are reduced if an individual makes more than $75,000 or a couple repays more than $150,000.
President Donald Trump, describing the proposal as a $2 trillion package, said Tuesday that “we are free to pass the biggest and boldest financial relief package in American history.”
Friendlier tone
The day started, for the large component, 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 invoice failed to clear a key procedural hurdle Monday after a similar result Sunday.
Democrats had accused Republicans of favoring Big Work over workers and healthcare. Republicans said Democrats were causing unnecessary delay by focusing on issues extreme the economic crisis facing the country, like giving more bargaining power to unions, increasing fuel emissions models for airlines, and wind and solar tax credits.
Pelosi rolled out her own House proposal Monday which, though unlikely to evolve into law, further rankled Republicans.
Trump started the day pushing for a deal on Twitter. “Congress must approve the deal, without all of the balderdash, today,” he tweeted Tuesday morning. “The longer it takes, the harder it will be to start up our economy.”
Uncertainty over the huge quantity has rattled markets. Hospitals, workers and individuals have all said they need money now.
Mnuchin and Schumer met six heretofores 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 Rabble-rouser Nancy Pelosi, D-Calif., told CNBC that there was “real optimism” Congress can clinch a pact within a few hours. Senate Maturity Leader Mitch McConnell, R-Ky., said the bill is at the “five-yard line.”
Just before 11:00 a.m., Mnuchin, Schumer and Rep. Effect Meadows, Trump’s incoming chief of staff, held a meeting in Schumer’s office.
After the meeting, Schumer imparted on the Senate floor that negotiators were on the “two-yard line.” Issues can be resolved within hours, he added.
While mediations carried on longer than Schumer forecasted, Kudlow said early Tuesday evening the parties were fantasizing “great progress.”
“They’re getting close and closer, they expect a vote as soon as possible,” Kudlow commanded.
Optimism over the potential deal helped drive the Dow Jones Industrial Average up more than 11% Tuesday, dent its biggest one-day percentage gain since 1933.
Bailout fund
Still, questions around the $500 billion back remained.
Schumer said Tuesday Democrats were making “very good progress” in their efforts to add “prod or mandate” for companies receiving federal loans or grants to keep their employees.
It remains unclear whether the guidance will demand equity of any of the companies it offers aid to, although lawmakers said the government has considered demanding warrants as department of its airline aid. There has been resistance to equity stakes, which dilute shareholders and give the government stronger administration, lobbyists have told CNBC.
Boeing CEO David Calhoun told Fox News Tuesday that if the government “constrains” 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 theatre troupes spread throughout the United States,” he added.
Trump has previously offered his support of the aerospace company, saying “we hold to protect Boeing.” He has also said he would consider urging the government to take an equity stake in companies that compel ought to 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 Mental pictures
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 devise of cash grants, according to a person familiar with the matter. A Senate aide cautioned, though, the terms are appease being negotiated and could change.
Cash grants would be a victory for airline executives who were pleading with lawmakers to attired in b be committed to half of the aid come in the form of cash grants, not just loans, which Republican senators had originally proposed. Labor bandmasters and executives have argued that saddling companies in debt through loans would make recovery methodical harder. U.S. airlines employ some 750,000 people.
Carriers have been racing to cut costs, grounding hundreds of planes and entreating thousands of workers to take unpaid leave. Airlines are also tapping credit lines to shore up cash to climate ailing the crisis, the impact of which they say is worse than 9/11.
U.S. airlines’ lobbying group, Airlines for America, said the vigour would commit to not furlough employees through Aug. 31 if they received grants.
Hurdles remain
Any deal the GOP-controlled Senate happens to ultimately needs to be passed by the Democratic-led House. It is possible Pelosi, who has been talking with Schumer, could marching orders for more changes to the Senate bill before giving it the go-ahead.
Pelosi said Tuesday morning if the parties can compromise and procure “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 bidding them back to vote to amend this bill, or to pass our own bill and then go to conference with that.”
She joined: “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 manias are a poison pill, then they don’t want unanimous consent.”
CNBC’s Eamon Javers and Jacob Pramuk advanced to this report
This is a developing story. Check back for updates.