Congress finally reached a bipartisan agreement early Wednesday morning to deliver nearly $2 trillion in government relief to a struggling economy.
This massive package is unprecedented but necessary. Indeed, it affected the markets almost immediately. World stocks rebounded nearly 11% on Wednesday morning after the Dow Jones Industrial Average soared well above 11% on Tuesday in its biggest one-day percentage gain since 1933. Market direction can, of course, change very quickly. But Congress’s relief package, which President Trump is expected to sign, has restored some confidence that the economy would be able to withstand the current coronavirus-related downturn and rebound.
The text of the legislation has not yet been released, but based on early reports it appears Senate Majority Leader Mitch McConnell successfully killed the Democrats’ ideological wish list. Republicans conceded on a few marks: They agreed to include additional oversight over the $500 billion aimed toward “distressed businesses,” since the Democrats argued the proposal gave Treasury Secretary Steven Mnuchin too much discretionary authority. Under the new bipartisan agreement, the White House will create an oversight board and an inspector general position to review how the money is spent.
The Democrats also successfully inserted a provision that would block Trump, his family, and their businesses, as well as other top government officials and members of Congress, from getting loans or investments provided by the relief package.
However, the substance of the legislation remained largely intact. Congress will allocate $250 billion for direct payments to individuals and families. Some of these payments will take the form of rebates which will be based on 2020 income. There will also be advanced payments made to individuals with a 2018 income of $75,000 or less in the form of a one-time $1,200 check, or a $2,400 check for couples.
The legislation also provides $350 billion in small business loans, $250 billion in unemployment insurance benefits, which the Democrats were able to significantly expand, and $500 billion in loans for distressed companies, such as the airlines.
The bill could have been better, but McConnell kept it from becoming much worse. Nancy Pelosi and Chuck Schumer tried to stuff completely unrelated, purely ideological policies into the relief package, such as student loan debt forgiveness, early voting requirements, carbon emission standards, “corporate board diversity” rules, and additional funding for Planned Parenthood. Even Schumer admitted that most of this wish list had to go by the wayside: “This is not a moment of celebration,” he said in a statement Wednesday morning, “but one of necessity.”
Congress is expected to vote on the relief package Wednesday afternoon, and Mnuchin assured the public that Trump would sign it, and it should help cushion the blow to businesses and individuals whose incomes were eviscerated by government-imposed closures and social distancing recommendations.
