COVID-19 stimulus talks hit an unexpected setback when a GOP senator insisted on additional rules to restrict Federal Reserve lending

Mitch McConnell
Senate Majority Leader Mitch McConnell in the U.S. Chapter on Tuesday. Rod Lamkey-Pool / Getty Images
  • Negotiations on Capitol Hill for a new COVID-19 aid package were delayed on Thursday, dampening hopes for a speedy conclusion.

  • A key sticking point is a condition introduced Thursday by Republican Sen. Pat Toomey, who calls for strict restrictions on Federal Reserve emergency funds.

  • Democrats say the move would hamper the Biden administration’s ability to stimulate the troubled economy.

  • Senate Majority Leader Mitch McConnell said talks would likely continue over the weekend.

  • Go to the Business Insider homepage for more stories.

Last-minute differences between Democrats and Republicans over a COVID-19 bill have probably pushed the calendar back to at least the weekend.

It came after Republican Sen. Pat Toomey argued that an additional condition would be added to the package, limiting the Federal Reserve’s ability to borrow money through emergency programs.

Democrats are strongly opposed to the move, which they say will force the new Biden administration. The disagreement made a shock absorber hope that a deal would be imminent.

Senate Majority Leader Mitch McConnell said Thursday that it is “very likely” that lawmakers will continue to negotiate over the weekend.

“We will stay right here until we finish, even if that means working on the weekend, which is very likely and if we have to extend the funding deadline from Friday before the final legislation can be passed in both chambers, I hope that we will extend it for a very, very short time, “McConnell told the Senate on Thursday.

His reference to a deadline on Friday was the imminent expiration of measures to prevent the partial closure of the federal government. Congress could propose extending the deadline again and removing some pressure.

Congress leaders hoped to link the pandemic stimulus law and the federal government funding law.

There are several obstacles to an agreement. Lawmakers in both houses of Congress are working against the clock to resolve them, pass the bill and give a vital rescue to the fragile American economy.

Toomey, a Pennsylvania GOP senator, on Thursday raised objections to Federal Reserve loans, which he said would be supported by party leaders.

He proposed an additional condition to restrict the Federal Reserve’s emergency lending programs, which Republicans say are a temporary measure that is no longer needed.

Toomey said allowing the Federal Reserve’s program to continue after Dec. 31, when it should end, would mean he would become a first-rate borrower, violating the key function of a central bank.

“It’s not the role of our central bank, the Fed, to engage in fiscal policy, social policy or credit allocation,” he said, according to Bloomberg.

Democrats say the move could restrict the Biden administration’s ability to provide aid to troubled sectors of the economy.

“Tying the hands of the Fed and the Treasury to fight not only the rest of the current crisis, but also future crises, would be a terrible mistake,” Sen. Mark Warner of Virginia said in a statement to the Financial Times.

“It would undermine confidence in our ability to respond to economic shocks and set a disturbing precedent that erodes our central bank’s independence.”

There are many other issues that Republicans and Democrats are still negotiating, The New York Times reported.

  • Eligibility for single payments to most Americans, most likely for about $ 600.

  • Allocation of funds for theaters in difficulty, music venues and other spaces for live performances, a sector that has been severely affected by the pandemic.

  • A democratic request for emergency funding provided through the Federal Emergency Management Agency, which Republicans oppose.

CNN also reported that lawmakers were still debating how long a federal moratorium on evictions would be extended.

Democratic Rep. Josh Gottheimer of New Jersey and GOP Rep. Tom Reed of New York, co-chairs of the Caucus for Troubleshooting, gave an optimistic tone in a Thursday night appearance on CNN.

“We have an agreement in principle. Everyone on Capitol Hill knows we have to do this,” Gottheimer said. “We’ve been working in a bipartisan way for months, but we have to succeed.”

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