Political News

Congress' negotiations on emergency relief funds stall as lawmakers hear from constituents

Posted April 14, 2020 10:44 a.m. EDT

— The Capitol Hill impasse over additional emergency relief funds shows no signs of easing, with both sides digging further into their positions.

But that doesn't mean lawmakers from both parties, in both chambers, aren't busy. The implementation of the $2.2 trillion emergency economic rescue law -- what's going right, what's going wrong, what needs to be fixed, has become the dominant issue in the lives of the lawmakers scattered around the country.

"From 7 a.m. to 10 p.m. each day, every day, all I'm doing is trying to hear concerns, fix concerns, sign on to letters, call agencies, call back my small business owners or local groups," one House Republican told CNN. "This is the job in this moment."

Bottom line: Lawmakers are pressing for these programs to work probably more than anyone else in the system right now. They drafted them, they voted for them, they own them. But more importantly, their days are spent inundated with calls from constituents asking for answers or raising concerns, according to more than a dozen CNN has spoken to over the last few weeks.

Scheduling note

House Majority Leader Steny Hoyer, a Maryland Democrat, notified members the House would not return before May 4, barring an emergency. Expect the Senate to make a similar announcement as soon as Tuesday, aides tell CNN. The caveat here is there is an ongoing emergency, obviously. Leaders hope to address any immediate funding concerns by unanimous consent, but as is currently being shown, that's not always easy.

What matters is this: Leaders don't want their members back in Washington in April. If they're being candid, they don't want their members back until the country starts to open up. Members don't want to be back either. Whether the economic situation allows that to hold remains to be seen.

The Capitol Hill impasse

The chances of a breakthrough on the stalled Congressional effort to approve more emergency coronavirus response funding have dissipated for the moment.

Democrats have held firm that any additional small business funds must be accompanied by additional funds for hospitals and states, as well as conditions on how that small business funding can be used. Mostly, however, they want negotiations over this interim package -- and they thought they could get them through Treasury Secretary Steven Mnuchin.

Mnuchin has become the go-to for both Speaker Nancy Pelosi and Democratic Leader Chuck Schumer, striking deals with both. Both have said in recent days Mnuchin seemed amenable to bipartisan talks -- something Senate Majority Leader Mitch McConnell and House Republican Leader Kevin McCarthy have rejected out of hand.

Mnuchin made clear during the White House news conference on Monday he was firmly on the side of McConnell and McCarthy (this may seem obvious, but multiple GOP aides legitimately weren't sure where Mnuchin was on this). The President joined him in that position.

So where does that leave things? Unclear. Republicans aren't moving any time soon. Neither are Democrats. Something has to give.

The Small Business Administration's timeline

The Small Business Administration has told lawmakers the small business emergency loan program will run out of money by the end of this week, sources tell CNN.

The next date that matters: The Senate convenes for its next pro forma session Thursday, April 16 at 3 p.m. ET. There likely needs to be a breakthrough before that point given the current speed with which the Small Business Administration lending program at the heart of the dispute is burning through cash at the moment.

Just noting: Mnuchin is everywhere, doing everything at this point. He's talking to leaders in both parties about new emergency relief money, he's appearing at White House press conferences, he's negotiating the tension filled airline bailout, he's announcing the first tranche of direct payments, he's working with the Federal Reserve to finalize the distressed large company lending facility, he's working with lenders and SBA officials to clean up the Paycheck Protection Program, he's regularly on the phone, sources tell CNN, with industry groups across the spectrum trying to listen to concerns or provide more details on programs are negotiations.

Deputy Treasury Secretary Justin Muzinich has become Mnuchin's point man of sorts on working with the Federal Reserve on rolling out its lending programs and the airline negotiations, sources say, and by all accounts has become Mnuchin's point person on the overall implementation of the $2.2 trillion emergency economic relief law. But Mnuchin really is everywhere, doing seemingly everything right now. And it's a lot.

Unemployment insurance

Unemployment insurance offices have become one of the places hardest hit by the coronavirus. The surge in claims, coupled with more federal dollars being delayed in landing in the states has led to a bottlenecking that has left lawmakers scrambling to try and help people back in their districts.

In Virginia, freshmen Democratic Rep. Abigail Spanberger told CNN the state increased staffing by 20%, but the phone lines are still tied up, the wait times to speak to a real person are long, and even if someone completes the application process, they aren't getting the confirmation email they would typically get to know that their claim is being processed.

"I am on regular calls with the delegation," Spanberger said noting that the state is "doing everything" they can but the volume is crushing right now.

The emergency lending program for small businesses

Lawmakers have an eye on three issues with the Small Business Administration's Paycheck Protection Program right now. All of which they acknowledge are unintended consequences of getting a $350 billion program off the ground in a week. As we've noted repeatedly, not one of these lawmakers believes the solution was to get the program in perfect working order before launching it.

"The CARES Act was not perfect," Democratic Rep. Jason Crow of Colorado told CNN on Monday. "We passed it quickly because we had to."

Lawmakers still worry that banks are giving preferential treatment to existing customers.

In a letter Monday night, American Banker's Association President and CEO Rob Nichols acknowledged as much in the early days of the program and told senators in a letter that in order to ensure banks were serving everyone, they need relaxed regulations on "know your customer" requirements and Bank Secrecy Act regulations. Nichols' point is that they are committed to getting the loans to everyone, but "while the CARES Act calls for speed, other existing banking laws require banks to take the time to verify important borrower information."

A group of lawmakers are trying to get Treasury to issue new guidance that small businesses don't have to use 75% of the loan for payroll: In order to get the loan forgiven, business owners have to keep their staff on the payroll and pay them the wage they were earning before the coronavirus spread in the US, but additional guidance from Treasury outlined that 75% of the loan has to go to payroll, something lawmakers say wasn't their intention. Some lawmakers including a group of moderate Democrats in the House are pushing to change that guidance.

On fraud: There is not widespread evidence of any fraud occurring at this point, but some lawmakers have acknowledged that they want to see more safeguards on who is actually eligible for a PPP loan. Under the current law, a business owner has to self certify that the loan is necessary because of coronavirus, but some including Republican Sen. Ron Johnson of Wisconsin have already started pushing to ensure that there are more stringent limits on who can get the loans. The fear is that a business that doesn't need the loan is getting in line ahead of those who are in dire need.

The PPP Numbers

As of last night, the Small Business Administration had approved more than 1 million applications for more than $240 billion. That doesn't mean that money has gone out the door to small businesses -- that is entirely up to the lender to close the loan and disburse it. But in talking to small business owners the last few days the money has started to reach bank accounts at a significant volume, particularly once the larger banks cleared up questions about how to actually close the loans.

Given the rollout issues, some of which are still very much a problem, it underscores just how urgent the need was for this money, and the pure volume of applications coming into banks around the country. That application volume, at this point, has been the biggest issue most participants have faced with the process.

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