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How the $2 trillion deal came together — and nearly fell apart

POLITICO logo POLITICO 2 days ago By John Bresnahan, Marianne LeVine and Andrew Desiderio
Chuck Schumer, Mitch McConnell are posing for a picture: Senate Minority Leader Chuck Schumer (left) and Senate Majority Leader Mitch McConnell managed to get a unanimous vote. © J. Scott Applewhite/AP Photo Senate Minority Leader Chuck Schumer (left) and Senate Majority Leader Mitch McConnell managed to get a unanimous vote.

It was going to cost $1 trillion.

Late on March 16, five days after the World Health Organization declared the novel coronavirus a pandemic, Larry Kudlow — the one-time cable news talker turned top economic advisor to President Donald Trump — was in the Senate’s historic Mansfield room, telling a group of senior GOP senators something they didn’t want to hear.

The U.S. economy was going to need a lot of help — and fast. Americans faced dire consequences if Congress didn’t act quickly, warned Kudlow, alongside Treasury Secretary Steven Mnuchin, acting Office of Management and Budget Director Russ Vought and White House Legislative Affairs Director Eric Ueland. The senators were stunned and dismayed.

Ten days later, the price tag for the Senate’s coronavirus economic rescue package has ballooned to more than $2 trillion, twice what Kudlow initially suggested, making it by far the most expensive spending bill in history.

The legislation — which passed the Senate by a unanimous, 96-0 vote late Wednesday and is expected to be easily approved by the House — provides direct payments to millions of individual Americans, dramatically expands unemployment insurance for workers forced out of their jobs by the crisis, and allocates hundreds of billions of dollars to distressed industries, hospitals and small businesses, as well as dozens of other provisions.

Senators in both parties hailed the passage of the Coronavirus Aid, Relief, and Economic Security, or CARES Act, as a major achievement, especially considering the extraordinary circumstances — a largely deserted Capitol, senators huddled in self-quarantine and a country slowly shutting down to save itself from even more suffering.

“It's a proud moment for the Senate,” Senate Majority Leader Mitch McConnell (R-Ky.) said in an interview with POLITICO. “We responded to the way the American people are acting among themselves by helping each other and putting whatever past grievances they have behind and trying to work together to get this behind us.”

But the process wasn’t always pretty.

At one point, the “Big 4” congressional leaders — McConnell, Speaker Nancy Pelosi (D-Calif.), Senate Minority Leader Chuck Schumer (D-N.Y.), and House Minority Leader Kevin McCarthy (R-Calif.) — squabbled with each other during a meeting in McConnell’s office, and there remains resentment among the quartet.

Senators attacked each other in surprisingly personal terms on the floor, accusing one another of playing politics while the country suffered. Senate Republicans complained bitterly in private when Sen. Rand Paul of Kentucky revealed that he was tested for the coronavirus but had spent several days huddling with his colleagues, even swimming in the Senate’s pool the morning he received his positive diagnosis.

There were several setbacks and reversals in the “Phase 3” stimulus talks, interminably long late-night meetings that ended with little visible progress, and tedious reviews of legislative language in order to make sure one side wasn’t trying to slip something past the other — all of which dragged out a final vote days after many expected it to take place.

Schumer played a central role in the drama, serving as the lead Democratic negotiator and huddling for hours in his office with Mnuchin. And Mnuchin once again emerged as the go-to official for the Trump White House when it comes to negotiating with congressional Democrats. By the end of their discussions, the two referred to each other as “Chuck and Steven.”

“It’s one of the most major pieces of legislation we’ve done,” Schumer said in an interview. “I guess there are only a few other moments, I suppose. Obamacare. But otherwise you can’t think of something so major since the Great Society, Lyndon Johnson …”

How the typically-slow-moving Senate went from nothing to a $2 trillion-plus emergency rescue package in just 10 days is a reflection of what senators described as a “snowball effect,” set into motion by the rapid spread of the virus and the cascading economic effect of business and school closures, dwindling airline traffic, and “stay-at-home” orders issued by officials in some of the nation’s largest cities and states. Plus, it took a whole lot of cash to make everyone happy.

“We have been totally inoperational for the last several years,” Sen. Chris Murphy (D-Conn.) said. “And I’m very glad that we were able to step up and pass several major pieces of legislation that may end up saving the country from catastrophe.”

Who got what

a group of people sitting at a desk: Treasury Secretary Steven Mnuchin and President Donald Trump take part in the daily coronavirus briefing Wednesday at the White House. © Alex Brandon/AP Photo Treasury Secretary Steven Mnuchin and President Donald Trump take part in the daily coronavirus briefing Wednesday at the White House. In a sign that the agreement may actually be a true compromise, both sides are claiming they got what they wanted all along.

McConnell described the final product as a “Republican-leaning bill” that meets his “four pillars”: aid to small businesses, direct cash payments, loans to companies in distressed industries, and money to fund the medical response to the coronavirus crisis. McConnell also kept Pelosi out of the early round of negotiations, despite pressure from her and Schumer to be involved in the talks. McConnell had been unhappy about how Mnuchin and Pelosi collaborated on the previous coronavirus response bill (known as “Phase 2” on the Hill), and he wasn’t going to repeat that process.

Schumer, for his part, boasts that Democrats negotiated key provisions to implement unemployment insurance “on steroids” and provide necessary oversight over federal loans to corporations, as well as securing tens of billions of dollars for hospitals as part of a so-called “Marshall Plan” for the health-care system.

“If this is a Republican bill, then I welcome the big-government, government-must-help-people, the big-government Republican Party,” Schumer quipped. “When you have a major crisis like this, the Republican mantra of ‘Let the private sector solve everything’ just won’t work, and you need large government involvement. And that’s what gave us an intrinsic advantage.”

Schumer and Democrats also pushed to create a separate fund for beleaguered state governments that have seen their revenue plummet. Democrats won $150 billion for the state fund, though they initially sought a whopping $750 billion.

Another concession for Democrats was a provision that prohibits businesses controlled by the president, vice president, members of Congress and heads of executive branch departments from receiving loans from the Treasury Department. It also bars their children, spouses and in-laws from receiving such benefits. Some Senate insiders referred to this as the “Kushner Amendment,” after senior White House adviser — and presidential son-in-law — Jared Kushner.

Republicans, though, said the final bill largely reflects the proposed legislation they introduced on Saturday, despite the ensuing several days of partisan battles. GOP aides noted the final package retains largely the same unemployment insurance and direct payments schemes originally outlined. The section on small-business loans is intact, and the GOP won fights barring Medicaid funds from going to Planned Parenthood and other non-profits. There’s more than $23 billion in aid for farmers that Republicans sought. They also spurned Democratic efforts to cut ICE funding.

However, Democrats secured language establishing an inspector general and a congressional panel to oversee the $500 billion “Exchange Stabilization Fund” run by the Treasury Department, which will make loans to corporations and municipalities. But Republicans blocked subpoena power from being granted to the oversight board of what critics on the left and right are calling a “slush fund.”

“Certainly the Democrats were not ignored. They can't be, you can’t pass things one party only here,” McConnell said, alluding to the Senate’s 60-vote threshold. “But this is a bill that was largely, not entirely but largely, produced by Republicans in consultation with the Democratic minority. “

But the debate over the massive stimulus package blurred ideological lines from the start. For example, it was Republicans, not Democrats, who first proposed sending checks directly to millions of Americans, an anathema to conservative doctrine. As lawmakers saw the death toll rise and witnessed confirmed coronavirus cases and unemployment claims skyrocket, it was clear that they had to take drastic action soon, meaning political pragmatism overwhelmed ideological concerns.

That meant Congress ended up doing what Congress does best: spending money.

McConnell's task forces

Even as the Senate was finishing work on a $100 billion “Phase 2” coronavirus bill, Mnuchin warned Republicans at the March 17 meeting that unemployment rates could spike to 20 percent or more unless the Senate passed an even bigger bill to aid the economy. Mnuchin later walked the comments back when the frightening estimates became public, but Trump was pushing McConnell and Mnuchin for quick action.

Yet the Senate as an institution has perhaps never been so poorly equipped to handle a crisis of this magnitude quickly. The chamber has largely abdicated much of its authority, be it on oversight or foreign policy, in the Trump era. And the bitterness over Trump’s impeachment trial — which ended on Feb. 5 — remains very fresh. That the Senate was able to rise above those circumstances is a reflection of the seriousness of the crisis itself.

“What’s this country going to look like two weeks from now? Just look how much it has changed in 10 days. Imagine another five,” said Sen. Marco Rubio (R-Fla.). “What we’re dealing with here is not some ordinary ideological debate during ordinary times or even during an economic downturn. It is a catastrophic collapse of the economy via government fiat.”

On March 17, Schumer proposed a “big and bold” $750 billion plan to “fight the coronavirus epidemic and economic crisis,” although the proposal contained more broad strokes than policy details. Schumer was aiming to stake out a position before McConnell and the Republicans announced their own proposal, seeking a way to increase his bargaining power. Much of the Democratic thrust would go toward beefing up the unemployment system, which already existed on the ground in all 50 states and could target those Americans who had recently lost jobs.

But McConnell and Senate Republicans had their own vision for what a coronavirus proposal would look like. The effort largely centered on hundreds of billions in direct payments to individual Americans, with checks being cut by the IRS. A one-time $1,200 payment would go out in weeks.

On March 19, McConnell rolled out his $1 trillion economic proposal that featured the direct-payments provision favored by Senate GOP leaders and the White House. But some Republicans objected to that effort, seeing beefed-up unemployment payments as a better option. Other GOP senators said the proposal unfairly cut out lower-income taxpayers. Democrats rejected the proposal as well.

In order to negotiate with the Democrats — and to help him control the process — McConnell created four bipartisan “task forces” to hash out issues and begin drafting language. McConnell told senators to work at “warp speed” and vowed to keep the Senate in session until a bill was passed. He called for passage of a completed package by Monday, setting up procedural votes for the weekend. It was a hugely ambitious schedule, and Republicans praised McConnell's accelerated timetable.

The task force roster included Rubio and Republican Sens. Lamar Alexander (Tenn.), Chuck Grassley (Iowa), Richard Shelby (Ala.), Mike Crapo (Idaho), Roger Wicker (Miss.), Susan Collins (Maine), Rob Portman (Ohio) and Pat Toomey (Pa). By Thursday, they had a $1 trillion GOP proposal in hand and were ready to meet with their Democratic counterparts.

On the Democratic side were Sens. Ron Wyden (Ore.), Ben Cardin (Md.), Jeanne Shaheen (N.H.), Dick Durbin (Ill.), Bob Menendez (N.J.), Maria Cantwell (Wash.), Debbie Stabenow (Mich.), Jack Reed (R.I.) and Patty Murray (Wash.)

Starting on March 20, Republicans and Democrats proceeded to huddle in the Senate Finance Committee offices in the Dirksen Office Building, trying to hammer out language on several fronts, including small business loans, unemployment insurance, hospital assistance and money for distressed industries.

"The bottom line was Democrats were going to insist on four months and the $600 more per week on top of existing benefits," said Wyden, who stayed in close touch with Schumer.

A key portion of the final bill, a $377 billion fund to provide loans to small businesses, started out at just a fraction of that amount when senators began negotiating — around $40 billion. Rubio, who chairs the Senate Small Business Committee, said it became clear over time that in order for it to be effective, the package would have to cost “multiples of that,” especially if the Senate was unable to convene as a whole for a long period of time.

“We’re now one day, one hour, one diagnosis away from a significant percentage of the Senate being quarantined and being unable to act,” Rubio said. “What happens if 20 people get knocked out into a quarantine, or 30? Suddenly you have problems bringing people together to actually pass something, to function, given our current rules.”

Paul and Sens. Mike Lee (R-Utah) and Mitt Romney (R-Utah) were in self-quarantine and missed the vote, while Senate Majority Whip John Thune (R-S.D.) was "under the weather" with a cold.

One idea that got little play was Trump’s call for a payroll tax cut, a potentially hugely expensive move. Democrats were uniformly against it, and several Republicans expressed reservations about the plan, questioning whether it would help workers who needed federal assistance the most.

Sen. Steve Daines (R-Mont.), who initially proposed the idea to Trump, said the payroll tax cut quickly fell through the cracks because it became clear that such a proposal couldn’t muster bipartisan support.

“The bottom line is it didn’t have enough Republicans and Democrats to put that on the table as something that both sides would agree to. Because we needed to move quickly,” Daines said. “Every hour mattered.”

No deal was reached on Friday despite what both sides agreed was considerable progress. After meeting again on Saturday — with Mnuchin shuttling between groups of senators while talking to Trump in between — McConnell convened a GOP leadership meeting. When it was clear no deal was going to happen that day, McConnell called a halt in the negotiations late that afternoon. Republicans would draft a new bill, incorporating ideas raised in the task-force sessions plus the original GOP proposal. That new “compromise” legislation would be released Sunday, ahead of a scheduled cloture vote to move forward on the measure.

Pelosi joins the fray

On Saturday night, Pelosi returned to Washington after a week in San Francisco. She and Schumer were upset that McConnell had cut off bipartisan negotiations the previous day and introduced a GOP-drafted package. While the legislation reflected much of the bipartisan talks senators had held, it was clear McConnell counted on Democrats feeling pressure to vote “yes” on the motion and continue negotiating until they could reach a final agreement.

But during the “Big 4” meeting, Pelosi told McConnell that the House Democrats were writing their own bill and it was incompatible with the Senate GOP plan.

“The two animals couldn’t mate,” Pelosi told the Republicans.

Schumer also objected to the GOP proposal, saying it wasn’t going to win Democratic support.

McConnell was furious with Pelosi, but Senate Democrats easily filibustered the attempt to advance the bill. They did the same on Monday as well. GOP leaders lashed out at Pelosi for the delay, but Schumer insisted he didn't have to do much lobbying to keep his members in line.

“I think the Senate was ready to go. And Pelosi threw a wrench in the machine,” said Sen. John Barrasso (R-Wyo.), a member of GOP leadership. “I really got the impression that the Democrats in the Senate had the sense of urgency. But Nancy had a different view and Schumer connected with her, and that kind of took it off the rails.”

Democrats vehemently disagree with that characterization, and they argue McConnell got ahead of himself by announcing Saturday night there was a bipartisan agreement.

“The Republicans kind of pulled back from the working groups. They started writing language that wasn’t broadly shared with Democrats and by Saturday night there was real alarm about where is this all going,” recalled Sen. Chris Coons (D-Del.), who helped negotiate the bill’s small business provisions.

The impasse led to several hours of bitter sniping on the Senate floor on Monday, with normally low-key senators exploding in anger toward each other. Both sides accused the other of trying to include provisions that had nothing to do with fighting the coronavirus outbreak or rescuing the economy. Republicans sought money for a sexual abstinence program, for instance, while Democrats pushed for limits on greenhouse gas emissions and more collective bargaining power for unions.

Mnuchin’s moment

Trump had tapped Mnuchin along with Ueland to lead the negotiations with congressional Democrats and Republicans. The Treasury chief spent marathon sessions at the Capitol, day and night, shuttling between meetings with McConnell and Schumer and spending time in his own makeshift hideaway off the Senate floor.

“Look, this was non-stop work for five days. Every night we thought we’d get it done, starting with Sunday night. But that’s not really how the Senate works,” said an official close to Mnuchin. “So he’d stay till midnight and the junior lawyers and staffers would keep working on language on what had been agreed to and hadn’t till 3 or 4 in the morning.”

Mnuchin was perhaps the only senior Trump administration official who could have spearheaded the talks.

Trump hasn’t spoken with Pelosi in more than five months, and their relationship is more frayed than ever, especially after Pelosi led the effort to impeach the president. Acting White House Chief of Staff Mick Mulvaney, who is leaving soon, has been largely sidelined, while Vice President Mike Pence is running the coronavirus task force.

Slideshow by photo services

Sen. Patrick Leahy (Vt.), ranking Democrat on the Appropriations Committee, has been engaged in direct talks with Mnuchin over the past week. Leahy recalled a recent meeting he had with Mnuchin and Mulvaney.

“Very good discussions with Secretary Mnuchin,” Leahy recalled. “And then they asked me about Mulvaney and I said, ‘Very good discussions with Secretary Mnuchin.’ And that’s what it’s been now.”

So it fell to Mnuchin, who cut deals with Pelosi over a year-long budget agreement, as well as the previous $100 billion coronavirus response bill, to close the deal.

A person close to Mnuchin also noted that the secretary benefited from sharing Trump’s general disdain for hardline ideological positions. Mnuchin learned during the highly partisan tax reform debate in 2017 that building relationships with congressional Democrats really mattered — as did being viewed as speaking directly for Trump, to the limited extent that anyone but Trump himself can do that.

After the Monday cloture vote failed, Mnuchin and Ueland once again began going back-and-forth between McConnell and Schumer’s office on the second floor of the Capitol. A deal was possible, but McConnell and Mnuchin knew that Schumer had shown twice he could keep Democrats in line. They had to make some concessions.

Mnuchin and Schumer worked late into the night on Monday, with Mnuchin agreeing to an oversight board for the $500 billion fund to help distressed corporations. Mnuchin also agreed to tens of billions of dollars for hospitals, another key issue. Democrats were upset that the unemployment payments for coronavirus-related layoffs only covered three months, not four. Republicans gave ground on that as well, although they privately had said that was their intention all along.

Mnuchin and Schumer ended the night saying they were “very, very close,” and both predicted a deal on Tuesday.

The following day, Wall Street soared, with the Dow Jones Industrial Average rising 11 percent, its second biggest day ever. The mood in the Capitol changed dramatically.

Tuesday brought another long round of talks between Mnuchin, Schumer and McConnell, with aid to states a key battleground. Republicans agreed to $150 billion for the “State Stabilization Fund” fund, above where they started but far under what Democrats sought.

At 1:37 a.m. on Wednesday, Mnuchin and Schumer announced they had a deal.

“The president said I got to live in the LBJ room for the last five days, and we couldn’t be more pleased with the unprecedented response from the Senate to protect American workers and American business in this situation,” Mnuchin said at the White House on Wednesday.

Of course, it wouldn’t be that easy. A handful of Republican senators initially balked at the expanded unemployment provisions in the agreement, and then Sen. Bernie Sanders (I-Vt.) threatened to retaliate. The final bill text wasn’t unveiled until after 10:00 p.m. on Wednesday, a half-hour before the vote.

But after another long, stop-and-start day, a few minutes before midnight, the Senate voted unanimously to pass the bill. "We packed months of legislative process into five days," Schumer declared beforehand.

"We pivoted from impeachment to 100 to nothing on this rescue package," McConnell added. "This is about as flawless as you could possibly be."

Ben White, Heather Caygle, Nancy Cook and Betsy Woodruff contributed to this report.

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