US lawmakers edge towards deal over $900bn stimulus package - Financial Times

US lawmakers moved closer to a deal on a $900bn economic relief package ahead of a Sunday night funding deadline, after striking a late-night compromise over Republican demands to curb the Federal Reserve’s crisis lending powers.

A deal would be the second-largest economic relief package in US history, trailing only the $2.2tn Cares Act, which was passed in March at the onset of the coronavirus pandemic in the US.

Members of Congress had originally set themselves a limit of the end of the working week to strike a deal to continue funding the federal government and provide much-needed stimulus to a US economy battered by the Covid-19 pandemic.

But a stop-gap measure extended the deadline to Sunday night after talks stalled over proposals from Pat Toomey, a Republican senator from Pennsylvania. Mr Toomey sought to insert language into the legislation that would prevent the Fed from reviving emergency credit facilities due to expire at the end of the year.

Democrats rejected the efforts, accusing Republicans of trying to “tie the hands” of a Joe Biden White House at the last minute, and leading to several days of intense sparring between the two sides.

But an agreement on the Fed issue was reached just before midnight on Saturday, which Democrats said brought a final agreement on economic stimulus “significantly closer”.

Steve Kelly, Mr Toomey’s communications director, said the “tentative agreement”, which would end the coronavirus-related lending facilities at the end of the year and stop them from being restarted or duplicated without congressional approval, was an “unqualified victory for taxpayers”.

“This agreement will preserve Fed independence and prevent Democrats from hijacking these programmes for political and social policy purposes,” he said.

Mr Toomey’s initial proposals sparked outrage among Democrats and prompted a rare rebuke from Ben Bernanke, the former Fed chair, earlier on Saturday.

“I strongly support the passage of new aid for families and businesses suffering from the effects of the pandemic,” Mr Bernanke wrote in a statement.

“However, it is also vital that the Federal Reserve’s ability to respond promptly to damaging disruptions in credit markets not be circumscribed.

“The relief act should ensure, at least, that the Federal Reserve’s emergency lending authorities, as they stood before the passage of the Cares Act, remain fully intact and available to respond to future crises,” Mr Bernanke added.

Mr Biden will be inaugurated as the 46th US president on January 20, and while Democrats will control the House of Representatives, it remains unclear whether Republicans will hold the Senate. Control of the upper chamber of Congress will be decided by two Senate run-offs to be held in Georgia on January 5.

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2020-12-20 14:02:00Z
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