House Speaker Nancy Pelosi unveiled a $2.5
trillion virus economic stimulus plan in a bid
to shape negotiations on a Senate measure that stalled on Monday, triggering a
sell-off in U.S. equities markets.
Pelosi’s 1,400-page bill would
have broad implications for the financial sector. It would force lenders to
grant a temporary reprieve from mortgage and car payments and credit card
bills. It would order the Federal Reserve to provide loan servicers with
liquidity to allow borrowers to stop paying their mortgages for up to 360 days. Public housing residents would get a
temporary reprieve from paying rent, and student loan borrowers would
have $10,000 of debt forgiven.
Negative consumer credit reporting would be halted. Foreclosures
and evictions would be banned.
There are currently no plans for House members to return to
Washington to vote on the bill, and the proposal appears
to be a list of demands Democrats want to see included in the Senate bill.
Treasury Secretary Steven Mnuchin and Senate Democratic leader Chuck Schumer
spent much of Monday negotiating behind closed doors on the Senate proposal,
initially introduced last week.
“Secretary Mnuchin just left my office,” Schumer said on the
Senate floor shortly after House Democrats introduced their bill. “We are going
to work on into the night.”
Democrats on Monday blocked Senate Majority Leader Mitch
McConnell‘s second attempt at a procedural vote to advance his $1.8 trillion plan, saying its loan program for
companies lacks transparency and oversight.
Investors and Americans are looking to policymakers to provide concrete action to respond to the
health risks of the global health crisis and the economic fallout. Democrats
say they still aren’t satisfied with changes to the Senate’s Republican-written
bill. The House’s decision to introduce a counterproposal -- even as a
messaging bill -- risks slowing the process further.
The House and Senate would have to pass the same version of the
bill before sending it to President Donald Trump for his signature.
Individual Payments
The House bill would require corporations receiving any federal
assistance to restrict executive pay, ban so-called golden parachute payments
for departing executives, halt stock buybacks and dividend payments, pay
a $15 minimum wage, and maintain their workforce and any
labor union agreements.
Under the House bill, all individuals with a Social Security
number, including retirees and the unemployed, would receive $1,500, compared with $1,200 for
taxpayers in the Senate bill.
But households with 2020 income over $150,000 for
a joint filer, $112,500 for a head of household
filer, and $75,000 for a single filer will be required to pay
back part or all of the assistance payment over three years. For these
households, the payment is a zero-interest loan.
Both bills would boost unemployment checks by $600 per week and expand the pool of people who
qualify.
The legislation would authorize the Federal Reserve to purchase
state and local government bonds to bolster resources needed to fight the
coronavirus outbreak. The House bill would also send $60 billion to schools and universities.
GOP Rebuffs
Republicans denounced House Democrats’ bill as a wish list, noting
it includes provisions on federal elections, minimum wages, union regulations
and climate change that Democrats have long advocated.
“Republicans had a deal until Nancy Pelosi rode into town from her
extended vacation,” Trump said in a Twitter post late Monday night. “The
Democrats want the Virus to win? They are asking for things that have nothing
to do with our great workers or companies.”
Earlier, McConnell said on the Senate floor that “The bazaar is
apparently open on the other side.”
But Schumer, speaking to reporters at the Capitol late Monday
night, said “we expect to have an agreement tomorrow morning,” and that Mnuchin
had called the president.
The bill would create a national requirement for states to allow
early voting and voting by mail in cases of national emergency, and it would
stop Trump from issuing any new financial regulations during the coronavirus
emergency.
The House plan would direct airlines that receive assistance to
offset their carbon emissions and reduce them by 50% by 2050. It would provide
grants for the development of sustainable aviation fuels and allow the
Department of Transportation to purchase inefficient airplanes if airlines
commit to purchasing newer, more fuel efficient versions.
The Democrats’ proposal would allocate $37 billion in grants to airlines and $3 billion to airline contractors to keep workers on
the job, while the GOP bill offers only loans. Airlines for America, a lobby
group for the largest U.S. carriers, pushed for at least $29 billion in grants to save jobs.
Airlines would also be eligible for up to $21 billion in loans under the House plan. The
Senate’s rescue would provide $50 billion in
loans for passenger carriers plus another $8 billion for
cargo haulers, but would not offer grants.
For small businesses, the Pelosi plan would unlock loans, grants
and payroll tax suspensions to help keep workers employed.
While the Senate Republican bill gives the Energy Department $3 billion to buy crude for the U.S. emergency
stockpile, the House Democrats include no such funding.
The House’s draft includes legislation passed by the House in July
on a mostly party-line vote to shore up financially troubled union pension
funds that serve more than 1 million workers and retirees. Senate Republicans
have resisted the measure.
“People are sick, families are frightened, our economy has ground
to a halt, and workers face unprecedented job loss,” House Republican leader
Kevin McCarthy said in a statement. “Democrats are using this national crisis
to hold relief hostage unless Congress mandates corporate board diversity
requirements and major components of the Green New Deal which will kill
American jobs.”
Senate Bill
The Senate version includes aid for middle class taxpayers, the
unemployed and distressed companies and local governments, although the details
are different from the House plan.
The Senate would give direct payments of $1,200 to most middle class individuals, with $500 per child. After negotiations with Senate
Democrats, the most recent version boosts unemployment payments and makes them
available for longer periods, although Democrats continue to push for more
generous funding.
The Senate plan includes $500 billion to
loan to struggling corporations and state and local governments. That has been
a source of tension with Democrats, who are seeking more stringent rules for
companies that get federal aid.
Stocks sank Monday as lawmakers fought over the third and largest
bill to address the coronavirus crisis. The S&P 500 Index fell 2.9% as of 4
p.m. in New York and the Dow Jones Industrial Average lost 3%. The S&P is
down almost 35% from its Feb. 19 record and the Dow Jones Industrial Average
has lost almost all its gains since Trump was elected on Nov. 8, 2016.
— With assistance by Billy House, James Rowley, Ryan Beene, Mike
Dorning, and Steven T. Dennis
(Updates with Schumer comment, in 17th paragraph)
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