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Yellen, Small Business Owners Discuss Pandemic: Stimulus Update

Bloomberg logo Bloomberg 1/29/2021 Bloomberg News
a large clock tower on a cloudy day: The White House in Washington, D.C. © Bloomberg The White House in Washington, D.C.

(Bloomberg) -- Treasury Secretary Janet Yellen met with small business owners on Thursday. Senate Republicans criticized moves by Democrats to fast-track President Joe Biden’s $1.9 trillion Covid-19 relief plan without their backing.

House Speaker Nancy Pelosi said the chamber will meet next week to take the first step toward proceeding with a Democrat-only Covid-19 relief bill. Republicans have voiced support for vaccine funding, but remain opposed to other elements of Biden’s proposal.

Related Developments:
Biden Calls Republican Senators as Stimulus Hits RoadblocksU.S. Economic Growth Moderates to 4% in Final Quarter of 2020Biden Builds Up Speed Before Rough Road Ahead: Balance of PowerDemocrats Seek $466 Billion to Help Schools Crippled by Virus

Yellen Meets With Owners of Small Businesses (8 p.m.)

Yellen on Thursday took part in a virtual session with owners of small businesses to talk about the public health and economic consequences of the coronavirus pandemic.

The secretary, who was confirmed by the Senate on Monday, “listened to the individual stories and painful concerns of these leaders,” the Treasury Department said in a statement.

Yellen underscored the importance of Biden’s relief proposal in the meeting with the seven business people, who came from the Midwest, the South and the West.

She also “emphasized how investing in institutions like Community Development Financial Institutions and Minority Depository Institutions can help small businesses left behind during this crisis -- and traditionally excluded from access to capital -- get the resources they need,” according to the statement. -- Saleha Mohsin

GOP Says Stimulus Threatened by Democratic Budget Move (5:11 p.m.)

Senate Republicans said Thursday that Democrats are putting any attempt to forge a bipartisan stimulus bill at risk by moving forward with passing a budget plan next week, which is the first step in an attempt to make an end-run around the GOP.

House Speaker Nancy Pelosi said Thursday the House will vote on the budget next week, a move that could eventually set up a fast-track process to pass parts of President Joe Biden’s $1.9 trillion stimulus plan with just 50 Democratic votes in the Senate. She said that the threat of going it alone will give her “leverage” to get cooperation from the GOP on a bipartisan plan.

That had Republicans crying foul later in the day Thursday.

“It certainly isn’t helpful,” said Maine Republican Senator Susan Collins, part of a group of 16 senators seeking a bipartisan bill. Indiana’s Todd Young, another member, said he wouldn’t be cowed by a “sword of Damocles” being put over his head -- a reference to the Greek parable.

Missouri Senator Roy Blunt, the top Republican on the Senate Appropriations subcommittee on health, said he would be open to a health care spending measure but the Democratic budget moves work against that.

“It’s confrontational. It’s certainly not collaborative,” he said, adding Democrats would regret using reconciliation since many types of provisions are excluded. Reconciliation refers to the tool that allows the Senate to proceed with a simple majority rather than 60 votes to cut off debate. -- Erik Wasson

Goldman Still Expects at Least $1.1 Trillion in Stimulus (3:27 p.m.)

Goldman Sachs Group Inc. economists reiterated their forecast for Congress to approve $1.1 trillion in near-term stimulus and said a larger plan is more likely than a smaller one, even as Republicans increasingly voiced their opposition to an expansive package.

“There is a wide range of potential outcomes on both sides of our $1.1 trillion (5% of GDP) assumption for additional fiscal stimulus, though we think the risks skew to the upside,” analyst Alec Phillips wrote in a note Thursday.

The higher outcome could be reached if Democrats scrap a bipartisan approach -- a move looking increasingly likely -- or if they split the package into two pieces, Phillips said. New strains of the coronavirus or slow progress on vaccinations could also spur a bigger stimulus, he wrote.

Republican Senator Pat Toomey of Pennsylvania said earlier Thursday that “anything we do now should be narrowly targeted to the people who actually need the help rather than universal spending programs that inevitably will spend a huge amount of money on people who never experienced any economic hardship.”

Economic Slowdown Fails to Shift Stimulus Debate (12:50 p.m.)

U.S. gross domestic product rose 4% in the fourth quarter from the previous three months at an annualized pace, below the 4.2% forecast and well down from the 33.4% pop in the third quarter, data showed on Thursday. The level of U.S. GDP remains below its peak from the final months of 2019.

While the economy capped its worst annual performance since the aftermath of World War II, other figures Thursday showed that fewer Americans filed jobless claims last week than economists forecast. Republican lawmakers have argued it’s better to wait and see the impact of last month’s $900 billion relief package before going ahead with another giant bill, as Biden is proposing.

“I don’t think this is going to convince anybody one way or the other,” said Jay Bryson, chief economist at Wells Fargo & Co. “People who are skeptical about more fiscal relief are going to say ‘well, the economy’s growing.’ People who want to see more fiscal relief will say ‘yeah, but it only grew 4% at an annualized rate.’ It’s not a game changer.”

Incoming Senate Banking Committee Chair Sherrod Brown, an Ohio Democrat, said the morning’s data showed the “recovery is clearly off track” and that “much more needs to be done.” -- Katia Dmitrieva, Julia Fanzeres

Pelosi Says House to Vote on Budget Next Week (11:58 a.m.)

Pelosi told reporters that the House will vote next week on a budget resolution, the first step in setting up a fast-track process to pass Biden’s $1.9 trillion stimulus bill without Republican support.

“We have to act,” Pelosi said, adding that Democrats would not “surrender” if Republicans decide not to cooperate on proceeding with a stimulus bill.

After the House and Senate pass a fiscal 2021 budget resolution, a special reconciliation bill adhering to that budget can subsequently pass the Senate with just 50 Democratic votes, bypassing the need to find 10 Republicans to shut off unlimited Senate debate.

The speaker said she remains hopeful that Republicans will be persuaded to support at least more vaccine money, direct payments and state and local aid.

“I do think that we have more leverage getting cooperation on the other side if they know we have an alternative, as well,” she said. -- Erik Wasson.

Republican Senator Warns on Minimum-Wage Push (11:51 a.m.)

Republican Senator John Cornyn of Texas warned Democrats against any move to permanently change Senate rules to push a minimum wage hike through via a reconciliation bill -- which only requires a simple majority of senators, rather than the 60 of 100 needed for most legislation.

Because reconciliation bills require measures to have a budgetary impact, Biden’s proposed phase-in of a $15-an-hour minimum wage, up from the current $7.25, wouldn’t on the face of it qualify. But some lawmakers have said the legislation could be written in a way that it could go ahead. Incoming Senate Budget Committee Chair Bernie Sanders said earlier this week “we think that can be done by reconciliation and I think I can get that done.” Sanders did not specifically threaten to change Senate rules to enable that.

Republicans, led by Senator Mitch McConnell, have battled to maintain the filibuster rule that requires 60 votes for most legislation. Cornyn said if Democrats were try to use the “nuclear option” to permanently alter the rules for reconciliation, such a move would similarly be seen as an affront to the minority. The nuclear option allows Senate rules to be changed with just 51 votes rather than the 67 usually required.

“We’re hearing rumors about trying to use trying to break the reconciliation rules to pass things like a $15 minimum wage,” Cornyn told reporters Thursday. That would be “clearly in violation of the reconciliation rules,” he said. “They could try to use the nuclear option here. That would destroy the Senate as an institution just as bad as eliminating the filibuster.” -- Laura Litvan

IMF Sees Space for ‘Very Large’ Stimulus Effort (10:04 a.m.)

The U.S. has ample room for additional fiscal stimulus and “a very large capacity to act,” according to Vitor Gaspar, the International Monetary Fund’s fiscal affairs department director.

President Joe Biden’s $1.9 trillion stimulus proposal and plans for additional spending to promote longer-term development “would have considerable impacts” on economic growth through 2023 and also likely aid the Federal Reserve in its objective of boosting inflation past its 2% target for a time, Gaspar said.

“This Biden relief plan is a first stage of a broader strategy that includes medium- to long-term growth priorities, and public investment in infrastructure that will come later,” Gaspar said. “We do believe that this sequencing is exactly appropriate.” -- Jeff Kearns

White House Says It Can’t Do a ‘Piecemeal’ Plan (8:50 a.m.)

The White House said it’s not looking to split up the stimulus plan despite opposition from Republicans to parts of it, amid pressure from progressive Democrats to keep the full package intact.

“The needs of the American people aren’t partial; we can’t do this piecemeal,” Brian Deese, the White House’s chief economic adviser, tweeted Thursday.

His comment followed a Politico report saying Biden administration aides are in talks with bipartisan groups to bring Republicans on board for part of the stimulus package initially, then moving the rest with potentially Democrats only. White House press secretary Jen Psaki also tweeted that “we aren’t looking to split a package in two.”

Progressives Push Democratic Leaders for Full $1.9 Trillion

The heads of the progressive Democratic caucus wrote a letter to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer calling for no watering down of Biden’s $1.9 trillion Covid-19 relief proposal.

“President Biden’s rescue package, which comes in at $1.9 trillion, is a critical first step meeting the economic need, but if anything, it doesn’t go far enough,” Pramila Jayapal and Katie Porter, the chair and deputy chair of the Congressional Progressive Caucus, wrote in a letter Wednesday. “Congress should be building off of this opening offer, not weakening it.”

Biden earlier in the week said he was open to negotiating on his proposal, as he seeks GOP support. Congressional aides said Wednesday that they’re preparing two separate tracks for legislation -- for a bipartisan bill and a Democrat-only one.

House and Senate budget committees are preparing to move on fiscal 2021 budget resolutions, the first step toward a so-called reconciliation bill, which allows the Senate to proceed on a simple-majority vote basis -- avoiding the need for 60 votes to cut off the filibuster. It makes all the difference given the chamber’s partisan 50-50 split.

Not all of Biden’s $1.9 trillion plan is likely to qualify for that route. The $160 billion for Covid-19 vaccines and testing would likely be out because discretionary spending is excluded from the process, while the proposed minimum-wage hike may also be disqualified for having insufficient budget impact.

Stimulus checks and jobless benefits, two major components, would be in. Aid for state and local governments would face a high hurdle. -- Erik Wasson

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