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.
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.
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.”
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.
(Updates with Schumer comment, in 17th paragraph)
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