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| Emergency Economic Rescue Plan in Limbo as Democrats Block Action | Emergency Economic Rescue Plan in Limbo as Democrats Block Action |
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| WASHINGTON — Senate Democrats on Sunday blocked action on an emerging deal to prop up an economy devastated by the coronavirus pandemic, paralyzing the progress of a nearly $2 trillion government rescue package they said failed to adequately protect workers or impose strict enough restrictions on bailed-out businesses. | WASHINGTON — Senate Democrats on Sunday blocked action on an emerging deal to prop up an economy devastated by the coronavirus pandemic, paralyzing the progress of a nearly $2 trillion government rescue package they said failed to adequately protect workers or impose strict enough restrictions on bailed-out businesses. |
| The party-line vote was a stunning setback after three days of fast-paced negotiations between senators and administration officials to reach a bipartisan compromise on legislation that is expected to be the largest economic stimulus package in American history — now expected to cost $1.8 trillion or more. In a 47-to-47 vote, the Senate fell short of the 60 votes that would have been needed to advance the measure, even as talks continued behind the scenes between Democrats and the White House to salvage a compromise. | |
| The failure to move forward shook financial markets and threatened an ambitious timeline set by the Trump administration and leading Republicans to move the rescue package through the Senate on Monday and enact it within days. | The failure to move forward shook financial markets and threatened an ambitious timeline set by the Trump administration and leading Republicans to move the rescue package through the Senate on Monday and enact it within days. |
| In voting to block action, Democrats risked a political backlash if they are seen as obstructing progress on a measure that is widely regarded as crucial to aid desperate Americans and prop up a flagging economy. But they argued the vote on Sunday was premature until legislative text reflected the tone of negotiations, while Republicans heaped criticism on them for creating uncertainty for both the public and the markets. | In voting to block action, Democrats risked a political backlash if they are seen as obstructing progress on a measure that is widely regarded as crucial to aid desperate Americans and prop up a flagging economy. But they argued the vote on Sunday was premature until legislative text reflected the tone of negotiations, while Republicans heaped criticism on them for creating uncertainty for both the public and the markets. |
| “This is irresponsible and unwise,” said Senator Susan Collins, Republican of Maine. “They are playing with fire.” | “This is irresponsible and unwise,” said Senator Susan Collins, Republican of Maine. “They are playing with fire.” |
| The move enraged Republicans, whose numbers were dwindling after Senator Rand Paul of Kentucky announced on Sunday that he had contracted the coronavirus and prompted two other senators to self-isolate and miss the vote that evening. The Democratic maneuver, they argued, contravened days of bipartisan negotiations and jeopardized faith that Congress was capable of mustering a legislative salve for a shuddering economy. | |
| “This obstruction achieves nothing,” said Senator Mitch McConnell, Republican of Kentucky and the majority leader, visibly upset as he delivered a scathing speech on the Senate floor. “Hopefully, some adults will show up on the other side of the room and understand the gravity of the situation.” | “This obstruction achieves nothing,” said Senator Mitch McConnell, Republican of Kentucky and the majority leader, visibly upset as he delivered a scathing speech on the Senate floor. “Hopefully, some adults will show up on the other side of the room and understand the gravity of the situation.” |
| The mood in the Capitol was grim as the vote proceeded, in an eerie echo of the spectacle that unfolded in 2008 when the House initially defeated a $700 billion Wall Street bailout that aimed to stabilize the financial system amid a global meltdown, sending the Dow Jones industrials plunging. Sunday evening’s vote was a procedural one, but it shook markets all the same. Dow futures fell 5 percent, triggering a “limit down,” meaning they could not fall any further. | The mood in the Capitol was grim as the vote proceeded, in an eerie echo of the spectacle that unfolded in 2008 when the House initially defeated a $700 billion Wall Street bailout that aimed to stabilize the financial system amid a global meltdown, sending the Dow Jones industrials plunging. Sunday evening’s vote was a procedural one, but it shook markets all the same. Dow futures fell 5 percent, triggering a “limit down,” meaning they could not fall any further. |
| Senators and aides said they still hoped to reach a compromise on the legislation in the coming hours, with Senator Chuck Schumer of New York, the minority leader, declaring after the vote that “we’re closer than we’ve been at any time over the past 48 hours to an agreement.” | Senators and aides said they still hoped to reach a compromise on the legislation in the coming hours, with Senator Chuck Schumer of New York, the minority leader, declaring after the vote that “we’re closer than we’ve been at any time over the past 48 hours to an agreement.” |
| “Can we overcome the remaining disagreements in the next 24 hours?” said Mr. Schumer, who met with Treasury Secretary Steven Mnuchin for a fourth time late Sunday evening, according to a spokesman. “Yes, we can and we should. The nation demands it.” | |
| But even as negotiations resumed in private, Mr. McConnell laid blame for the delay at the feet of both Mr. Schumer and Speaker Nancy Pelosi of California, who returned to Washington on Saturday to partake in a leadership meeting in his office on Sunday. | But even as negotiations resumed in private, Mr. McConnell laid blame for the delay at the feet of both Mr. Schumer and Speaker Nancy Pelosi of California, who returned to Washington on Saturday to partake in a leadership meeting in his office on Sunday. |
| Republicans and Democrats, as well as President Trump, have agreed that the plan is crucial to cushioning the economic blow of the rapidly spreading disease, which has shuttered entire industries, forced workers to stay at home and wreaked havoc in the global markets. It would send $1,200 direct payments to millions of Americans and additional jobless benefits and aid to states, and provide hundreds of billions of dollars for loans to businesses. | |
| But as its outlines emerged on Sunday, Democrats denounced the package as a corporate giveaway that favored big business over workers and failed to ensure that bailed-out companies would not enrich themselves after receiving government aid. They were particularly incensed at the inclusion of a provision to give the Federal Reserve access to $425 billion that could be leveraged for loans to broad groups of flailing companies, and Congress would have little or no say in which businesses could receive it or how it could be used. | But as its outlines emerged on Sunday, Democrats denounced the package as a corporate giveaway that favored big business over workers and failed to ensure that bailed-out companies would not enrich themselves after receiving government aid. They were particularly incensed at the inclusion of a provision to give the Federal Reserve access to $425 billion that could be leveraged for loans to broad groups of flailing companies, and Congress would have little or no say in which businesses could receive it or how it could be used. |
| “In the midst of an unprecedented national crisis, Republicans can’t seriously expect us to tell people in our communities who are suffering that we shortchanged hospitals, students, workers and small businesses, but gave big corporations hundreds of billions of dollars in a secretive slush fund,” said Senator Patty Murray, Democrat of Washington, who has largely negotiated over the phone in part as a precaution. | “In the midst of an unprecedented national crisis, Republicans can’t seriously expect us to tell people in our communities who are suffering that we shortchanged hospitals, students, workers and small businesses, but gave big corporations hundreds of billions of dollars in a secretive slush fund,” said Senator Patty Murray, Democrat of Washington, who has largely negotiated over the phone in part as a precaution. |
| Democrats also said the measure provided insufficient unemployment aid — offering only three months while they have insisted on at least four — and lacked adequate funding for state and local governments, emergency food assistance and relief from student loans. | Democrats also said the measure provided insufficient unemployment aid — offering only three months while they have insisted on at least four — and lacked adequate funding for state and local governments, emergency food assistance and relief from student loans. |
| Earlier in the day, the top four congressional leaders met with Mr. Mnuchin, to hash out differences over the package. But far from emerging with news of an agreement, Ms. Pelosi said the House would pursue its own legislation. | |
| “We’ll be introducing our own bill and hopefully, it will be compatible with what they discussed in the Senate,” she told reporters as she left a meeting in Mr. McConnell’s office. | “We’ll be introducing our own bill and hopefully, it will be compatible with what they discussed in the Senate,” she told reporters as she left a meeting in Mr. McConnell’s office. |
| Having missed a self-imposed deadline at 5 p.m. Saturday to strike an agreement with Democrats, Republicans began drafting and circulating their own text on Sunday, which was obtained by The New York Times. | Having missed a self-imposed deadline at 5 p.m. Saturday to strike an agreement with Democrats, Republicans began drafting and circulating their own text on Sunday, which was obtained by The New York Times. |
| Democrats said they were deeply concerned about how the government would go about bailing out distressed companies, complaining that the measure would give far too much discretion to Mr. Mnuchin and his lieutenants to decide who received funds, and would allow too much time before he would have to disclose the recipients. The measure gives the Treasury secretary six months to reveal them. | Democrats said they were deeply concerned about how the government would go about bailing out distressed companies, complaining that the measure would give far too much discretion to Mr. Mnuchin and his lieutenants to decide who received funds, and would allow too much time before he would have to disclose the recipients. The measure gives the Treasury secretary six months to reveal them. |
| The draft bill being circulated by Republicans on Sunday would provide a total of $500 billion in loans and other support for distressed cities, states and industries, including up to $50 billion for passenger airlines and $8 billion for cargo carriers. | The draft bill being circulated by Republicans on Sunday would provide a total of $500 billion in loans and other support for distressed cities, states and industries, including up to $50 billion for passenger airlines and $8 billion for cargo carriers. |
| Democrats complained that the Treasury secretary would have too much discretion on how to allocate the industry-specific funds loans, and that it would not outright require that recipients hang on to their employees. And they were concerned that the bulk of the money — $425 billion to guarantee potential losses on Federal Reserve programs — would be available to prop up companies with few restrictions. | Democrats complained that the Treasury secretary would have too much discretion on how to allocate the industry-specific funds loans, and that it would not outright require that recipients hang on to their employees. And they were concerned that the bulk of the money — $425 billion to guarantee potential losses on Federal Reserve programs — would be available to prop up companies with few restrictions. |
| With lawmakers in both parties reluctant to embrace a bailout with no strings attached that could anger voters, the measure includes a prohibition against stock buybacks by corporations that receive federal dollars and imposes a two-year limit on executive compensation. But Democrats balked at a provision that would allow the Treasury secretary to waive the ban on buybacks, and were insisting that the curbs on executive compensation last longer, according to a senior House Democratic aide familiar with the discussions, who spoke on the condition of anonymity to describe the remaining sticking points. | |
| They were also pressing for additional safeguards to prevent companies from taking federal funds and then laying off workers. Democrats have proposed restricting eligibility for the government aid to companies that promise to maintain 90 percent of their staff. | They were also pressing for additional safeguards to prevent companies from taking federal funds and then laying off workers. Democrats have proposed restricting eligibility for the government aid to companies that promise to maintain 90 percent of their staff. |
| Democrats were also balking at imposing limits on paid-leave benefits that were part of a program enacted last week to respond to the coronavirus crisis. | Democrats were also balking at imposing limits on paid-leave benefits that were part of a program enacted last week to respond to the coronavirus crisis. |
| “It’s not big enough, it’s not bold enough,” said Senator Doug Jones, Democrat of Alabama. “It doesn’t get to the cities, into the communities. It doesn’t get to individuals. It’s a start, but it is not there — it’s not even half a loaf, it’s a couple of slices.” | |
| Mr. Jones, who is facing a difficult re-election race in a conservative state, said he was not concerned with the political consequences of voting against moving forward on the plan. | Mr. Jones, who is facing a difficult re-election race in a conservative state, said he was not concerned with the political consequences of voting against moving forward on the plan. |
| “There’s more political risk if we don’t get the message to Senator McConnell that we need to get this done,” Mr. Jones said. “That’s where the political risks are.” | “There’s more political risk if we don’t get the message to Senator McConnell that we need to get this done,” Mr. Jones said. “That’s where the political risks are.” |
| Under the Republicans’ draft bill, the federal government would be allowed to take stock shares or other equity in any business that accepts loans under the program, a provision that administration officials had floated publicly over the past several days. | |
| Mr. Mnuchin estimated that the total economic impact of the aid to Americans and distressed industries would ultimately be more than $4 trillion, with the Federal Reserve helping amplify the effects. Speaking on “Fox News Sunday,” he said the federal government hoped the stabilization effort could buttress the economy for 90 to 120 days so that when the virus was contained businesses could quickly reopen and the economy could rapidly rebound. | Mr. Mnuchin estimated that the total economic impact of the aid to Americans and distressed industries would ultimately be more than $4 trillion, with the Federal Reserve helping amplify the effects. Speaking on “Fox News Sunday,” he said the federal government hoped the stabilization effort could buttress the economy for 90 to 120 days so that when the virus was contained businesses could quickly reopen and the economy could rapidly rebound. |
| Negotiators have taken to calling it the “Phase 3” plan, since Congress this month has already passed and Mr. Trump has signed two other rounds of emergency aid to respond to the coronavirus crisis: an $8.3 billion package of funding for federal health agencies and a second measure to provide paid leave, jobless aid, and food and health care assistance. Despite the remaining disputes, the emerging deal reflected several substantial compromises that underscored the urgency of the moment. | |
| Republicans agreed to a significant expansion of jobless benefits insisted on by Democrats that would extend unemployment insurance by 13 weeks and include a three-month enhancement of benefits. Democrats say it would ensure that typical workers came close to maintaining their full salaries if they were forced off the job during the crisis. The expansion would end once the economy stabilized. | Republicans agreed to a significant expansion of jobless benefits insisted on by Democrats that would extend unemployment insurance by 13 weeks and include a three-month enhancement of benefits. Democrats say it would ensure that typical workers came close to maintaining their full salaries if they were forced off the job during the crisis. The expansion would end once the economy stabilized. |
| The two sides also reached agreement to provide $1,200 direct payments that would apply equally to workers with incomes up to $75,000 per year before phasing out and ending altogether for those earning more than $99,000. Families would receive an additional $500 per child. | The two sides also reached agreement to provide $1,200 direct payments that would apply equally to workers with incomes up to $75,000 per year before phasing out and ending altogether for those earning more than $99,000. Families would receive an additional $500 per child. |
| The current plan would include one such payment, but Mr. Mnuchin said another one would be considered if the crisis persisted. | The current plan would include one such payment, but Mr. Mnuchin said another one would be considered if the crisis persisted. |
| The agreement would also provide $350 billion to establish lending programs for small businesses, $50 billion more than the Trump administration had initially proposed. But the money would apply only to those who keep their payrolls steady through the crisis — which means hundreds or thousands of firms that have already laid off workers would not be eligible for assistance. | |
| Small businesses that pledged not to lay off their workers would receive cash-flow assistance structured as federally guaranteed loans — potentially as much as they needed to stay in business for six weeks without layoffs. Those loans would be forgiven if the employer continued to pay its workers for the duration of the crisis. | Small businesses that pledged not to lay off their workers would receive cash-flow assistance structured as federally guaranteed loans — potentially as much as they needed to stay in business for six weeks without layoffs. Those loans would be forgiven if the employer continued to pay its workers for the duration of the crisis. |
| Reporting was contributed by Sheryl Gay Stolberg, Alan Rappeport, Nicholas Fandos, Carl Hulse and Catie Edmondson. | Reporting was contributed by Sheryl Gay Stolberg, Alan Rappeport, Nicholas Fandos, Carl Hulse and Catie Edmondson. |