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Mnuchin Pitches $916 Billion Relief Plan Including State Aid

Bloomberg logo Bloomberg 12/9/2020 Erik Wasson and Laura Litvan
Steven Mnuchin wearing glasses and looking at the camera: Steven Mnuchin, U.S. Treasury secretary, speaks during a House Financial Services Committee hearing in Washington, D.C., U.S., on Wednesday, Dec. 2 2020. © Bloomberg Steven Mnuchin, U.S. Treasury secretary, speaks during a House Financial Services Committee hearing in Washington, D.C., U.S., on Wednesday, Dec. 2 2020.

(Bloomberg) -- Treasury Secretary Steven Mnuchin presented a new $916 billion Covid-19 relief proposal to House Speaker Nancy Pelosi, in the first move by the Trump administration since Election Day to break a months-long standoff.

Pelosi and Senate Democratic leader Chuck Schumer called it progress, but said it shouldn’t be used to obstruct the bipartisan negotiations already underway on a proposal from a group of Democratic and Republican lawmakers.

The Mnuchin offer, which was made to Pelosi in a 5 p.m. phone call on Tuesday, was essentially a joint proposal from the White House, Senate Majority Leader Mitch McConnell and House Republican leader Kevin McCarthy. Mnuchin said he conferred with President Donald Trump, whose support will be needed to gather GOP votes.

“This proposal includes money for state and local governments and robust liability protections for businesses, schools and universities,” Mnuchin said in his statement. Those issues have been the two key roadblocks in bipartisan talks on a $908 billion proposal put forth last week.

“It’s a much better product” than the $908 billion option, McCarthy said in an interview.

Pelosi and Schumer said in a joint statement that getting McConnell to go along with a $916 billion proposal was progress, but that the focal point should be the talks still going on in Congress on the bipartisan plan. They faulted the White House plan for leaving out enhanced unemployment benefits.

“Members of the House and Senate have been engaged in good-faith negotiations and continue to make progress,” they said. “The bipartisan talks are the best hope for a bipartisan solution.”

Along with a widely supported renewal of aid for small businesses, the Mnuchin plan includes stimulus checks, something that members of both sides of the aisle have favored -- including President-elect Joe Biden and Trump. There’s $600 per qualifying adult, with another $600 per child, according to McCarthy.

Unemployment Benefits

Those checks would be in place of the $300 per week temporary supplementary unemployment benefits included in the bipartisan proposal. The proposal does extend two other expiring unemployment insurance programs -- one for gig workers and the other for workers who have exhausted their 13 weeks of standard benefits.

The administration’s new approach also has $160 billion for aid to state and local authorities, according to a person familiar with the matter. That’s on the face of it the same scale of help as in the $908 billion bipartisan plan. Another $100 billion goes for education funding, the person said.

McConnell earlier Tuesday had floated the idea of setting aside the two toughest elements in a final 2020 aid package -- the liability protections and state and local aid -- but Democratic leaders quickly rejected that approach. Mnuchin’s plan ties state and local aid together with liability protections so they can either be removed or stay in together, according to McCarthy.

Read More: Democrats Scale Back on Stimulus to Prod McConnell to Talk

Asked about Mnuchin’s plan, a spokesman for McConnell said the leader has no further remarks beyond his statement earlier Tuesday. The plan put forward by Mnuchin represents a joint proposal supported by him, McCarthy and McConnell, said a person familiar with the matter.

Liability protections have been a key priority for McConnell, but opposed by Democrats. Republicans, meantime, have criticized helping states as an improper bailout.

House Majority Leader Steny Hoyer said removing unemployment benefits to pay for stimulus checks for people with jobs makes little sense.

“We know that unemployed people are stressed,” Hoyer said. “Targeting relief to them is a much more efficient getting aid to people.”

Schumer said earlier Tuesday that Democrats viewed stimulus checks as something that needed to be added to the $908 billion bipartisan package, not used to replace other elements -- in the way the Mnuchin plan has done.

Schumer Criticism

Schumer in his earlier comments said that leaving out state and local aid would hurt essential workers across the nation, including police officers and firefighters, who face job losses. He accused McConnell of “pulling the rug out” from under the bipartisan group of lawmakers working on the $908 billion plan. Schumer and Pelosi had backed that framework as a basis for negotiations.

While Mnuchin had led talks for weeks with Pelosi on a stimulus deal before Election Day, the administration thereafter largely left it to McConnell to deal with Democrats on the matter. The Senate majority leader has repeatedly called for support for his own, smaller and more targeted proposal, while many Senate Republicans have told him they won’t vote in favor of more pandemic relief this year. McConnell also refrained from endorsing the bipartisan pitch as a base for talks even as some GOP members warmed to the idea.

In his statement on Tuesday, Mnuchin said the $916 billion proposal would be funded using unspent appropriations from earlier stimulus bills. That includes $429 billion that is left over from the March stimulus, which provided for direct loans to companies and emergency lending programs through the Federal Reserve. Another $140 billion is left from the Paycheck Protection Program of small-business aid.

Read More: Mnuchin Says Congress Must Redirect $455 Billion, Not Biden

Democratic lawmakers in recent weeks criticized Mnuchin’s move to place the unused money for Fed programs in the Treasury Department’s general account, saying it was an attempt to hamstring the incoming Biden administration. Mnuchin argued that he was following the letter and spirit of the law. The bipartisan plan also uses the funds to pay for its spending.

(Updates with Pelosi, Schumer reaction in second, sixth paragraphs)

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