Coronavirus: Treasury’s Mnuchin calls for US Congress to pass more stimulus this month

WASHINGTON (NYTIMES) – US Treasury Secretary Steven Mnuchin called on Congress on Friday (July 17) to work with the Trump administration to pass additional stimulus legislation by the end of the month as the coronavirus pandemic continued to inject uncertainty into how quickly the economy would recover.

The request comes as the virus continues to surge in certain areas and as millions of Americans are about to see their expanded unemployment insurance benefits expire. Lawmakers are expected to soon embark on an intense stretch of negotiations over what would be the fourth significant bailout package since the virus shuttered large sections of the US economy this year.

Mr Mnuchin said that a rise in coronavirus cases needed to be taken into consideration.
Mr Mnuchin said that a rise in coronavirus cases needed to be taken into consideration.PHOTO: EPA-EFE

In testimony before the House Committee on Small Business, Mr Mnuchin said that the next round of money to support the economy should be targeted to help industries that have been hardest hit by the pandemic, as well as smaller businesses and low- to middle-income families.

Mr Mnuchin also said that the Paycheck Protection Programme, which provides forgivable small-business loans, should be extended but with a focus on helping the restaurant, hotel, travel and hospitality sectors.

“We are monitoring economic conditions closely,” Mr Mnuchin said in his remarks. “Certain industries, such as construction, are recovering quickly; while others, such as retail and travel, are facing longer-term impacts and will require additional relief.”

Mr Mnuchin added that a rise in virus cases needed to be taken into consideration: “We are also sensitive to the fact that certain areas of the country are experiencing increased numbers of cases of the virus.”

Cases are rising in 39 states, according to a New York Times database.

Almost four months after Congress unanimously passed US$2 trillion (S$2.78 trillion) in relief funding, Mr Mnuchin may find that coming to terms on a package is far more difficult than it was in March.

With the two parties split over several key policy areas, finding bipartisan agreement on how to help schools safely reopen, continue to prop up businesses and support the unemployed may require significant concessions from both sides and intraparty splits.

Democrats have already started accusing Republicans of refusing to come to the negotiating table, even as they insist they will accept nothing less than the US$3 trillion proposal House Democrats passed in May. Republicans, who plan to introduce their own plan as soon as next week, have indicated they want to spend closer to US$1 trillion and will focus on “kids, jobs, healthcare and liability protection” for businesses, schools and medical workers.

“Instead of working with the Democrats to get something done, McConnell’s office is running a partisan process,” Senator Chuck Schumer of New York, the Democratic leader, said during a call with reporters Friday, referring to Senator Mitch McConnell, the majority leader.

One big sticking point is whether to send billions in additional money to state and local governments, as Democrats have insisted and Republicans have resisted.

White House officials have been debating how to structure another round of economic impact payments that would be sent directly to American taxpayers. They are also weighing whether to continue the enhanced unemployment benefit payment that Democrats say is providing a vital financial cushion and that many Republicans say is encouraging people not to return to work.

President Donald Trump has publicly called for a payroll tax cut and tax deductions for dining and entertainment expenses, but these proposals have received little support in Congress from either party.

Lawmakers agree that Congress needs to allocate more money for schools trying to reopen their doors this fall, but the White House has shown interest in trying to require schools that take money to bring students back in person. And it also wants to extend funds to private and religious schools. Democrats have balked at those proposals, while Senate Republicans are weighing possible approaches to prod or incentivise schools to open their campuses.

“We can’t have a normal country unless kids are in school,” Mr McConnell said this week.

A proposal by Mr McConnell that circulated Friday would also convey sweeping liability protections on businesses, schools, hospitals, charities, government agencies and front-line medical workers trying to navigate the coronavirus pandemic.

Mr McConnell said he would not put any Bill on the Senate floor that did not include liability protections, but Democrats have taken the opposite approach, proposing new protections for workers facing increased health and safety risks, rather than for employers.

Mr Mnuchin was joined at the hearing by Ms Jovita Carranza, administrator of the Small Business Administration, whose agency has been responsible for deploying the US$660 billion Paycheck Protection Programme.

Lawmakers questioned both Mr Mnuchin and Ms Carranza over how well the small-business programme was working, including whether money was getting to businesses that needed funds and if companies faced too many hurdles to getting their loans forgiven.

Asked about simplifying the loan forgiveness process, Mr Mnuchin said that automatically forgiving all small loans was “something we should consider.” He suggested that some measures would be needed to prevent fraud and to make sure that the money was used appropriately.

In the next legislative package, Mr Mnuchin said he would like to see the small-business lending programme extended so that businesses that already received loans could apply a second time. Businesses that have been hit the hardest – based on a combination of lost revenue and size – should be prioritised for approval.

Mr Mnuchin and Ms Carranza also reiterated that the government would review large loans to ensure that they were appropriate and within the government’s guidelines.

Data released on loans exceeding US$150,000 showed that while much of the money had gone to restaurants, medical offices and car dealerships, Washington lobbying shops, high-priced law firms and special-interest groups also received big loans.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s