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Stimulus package could top $2 trillion as negotiators look to clear final major hurdles

US negotiators entered a crucial day in the effor...

Posted: Mar 21, 2020 11:53 AM
Updated: Mar 21, 2020 2:15 PM

US negotiators entered a crucial day in the effort to deploy more than $1 trillion in emergency stimulus to a staggering economy, with a growing consensus on a final agreement, but a handful of significant hang-ups still to be resolved.

Bipartisan groups of senators worked late into Friday night with top officials from President Donald Trump's administration to lock in a final agreement -- a deal that people directly involved in the negotiations tell CNN could top a cost of $1.5 trillion -- before falling short of a midnight deadline imposed by Senate Majority Leader Mitch McConnell.

Larry Kudlow, a top economic adviser to Trump, went even further in estimating the overall scope of the package Saturday, telling reporters it could top $2 trillion.

'The package is coming in about 10% of GDP, it's a very large package,' Kudlow, the director of the National Economic Council, said. Ten percent of gross domestic product is roughly $2 trillion.

Kudlow later explained that he was referring to the total programmatic scope of the emergency actions the administration plans to utilize, between the stimulus legislative package and funds that could be used to capitalize Federal Reserve emergency lending facility that would support hundreds of billions in loans.

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The expanding price tag of the package was matched only by the expanding crisis it is being drafted to try and blunt. The negotiations are expected to continue toward a final agreement through the day, with both sides acknowledging failure at this point isn't an option.

'Let me just report that we are continuing to make good progress,' McConnell told reporters on Saturday. 'All of the discussions have been in good faith and so that's all I can report at the moment, but I think we're clearly going to get there.'

The urgency of the moment was apparent throughout the day and night Friday, with senators assigned to specific subject areas cloistered in a web of hearing rooms in a Senate office building, as Kudlow, Treasury Secretary Steven Mnuchin and Labor Secretary Eugene Scalia shuffling between rooms in an effort to make progress across a sweeping range of stimulus and emergency aid options.

Trump told reporters Saturday at an afternoon briefing on coronavirus that 'we are getting close' to reaching a deal on a proposal, and negotiators are expected to continue discussions throughout Saturday as they look to clinch a final agreement.

McConnell, a Kentucky Republican, has set a deadline for drafting the legislative text by Saturday afternoon, adding pressure to negotiators in the midst of working through a massive package designed to surge aid to individuals, small businesses and distressed larger industries facing economic devastation as the spread of coronavirus continues to accelerate nationwide.

McConnell also set up a procedural vote to move forward on the legislation for Sunday, laying the groundwork for a possible final vote to pass a deal by Monday -- an urgent timeline requested by Mnuchin.

Senate Democratic Minority Leader Chuck Schumer said Friday he was hopeful a global agreement could be reached on the package by Saturday, acknowledging its 'a big, complicated, huge bill.'

Schumer has remained in close contact with his House counterpart, Speaker Nancy Pelosi, as has Mnuchin, who held two conference calls with Schumer and Pelosi as the negotiations progressed on Friday. The sign off from Pelosi, who instructed her House committee chairs to send proposals to be included in the Senate talks to her policy team, is crucial to any final agreement.

The major outstanding issues as the four working groups reconvene Saturday are centered on two Democratic priorities -- one to expand and enhance unemployment insurance benefits and a second to create a stabilization fund to address revenue shortfalls in states.

The unemployment insurance proposal has been by far the most significant hurdle to the talks, people involved say, with Democrats seeking to expand both the duration and size of benefits. Republicans have balked over whether the state-by-state system is capable of handling such an influx and the Labor Department sought to create a work around proposal to address the issue on Friday.

Republican and Democratic negotiators traded proposals on Saturday as they sought to bridge the most significant divide of the talks, a signal that both sides were moving close to an agreement.

As senators broke for the night, Senator Ron Wyden, the top Democrat on the Senate Finance Committee, said Republicans and Democrats planned to take proposals from the night's talks back to their respective sides to see if they could be agreed to before proceeding.

'I think we made good progress. But both sides now have issues that they have to go back and check,' Wyden told reporters.

Negotiators are also working to finalize details of direct payments to individuals and families, a central plank of the Trump administration's proposal, with both sides nearing agreement to expand both the size of the rebate checks and the scope of those eligible to receive them, people involved in the talks told CNN. Specifically, the negotiators have agreed to expand the size of the direct assistance to lower-income individuals and families, the people said.

The way the bill is set to be structured, the combination of the unemployment insurance piece and the direct payments piece are closely intertwined, with both still open for negotiators to work through. Senators appeared close to an agreement on matching the amount of money deployed through direct assistance with the same amount to expand unemployment insurance -- a number set at roughly $250 billion each, the people said.

As a final agreement in principle remained out of reach, the details also remained fluid. 'There are still some issues outstanding on the tax and relief to the American people piece,' Ueland told reporters.

Work on more than $200 billion for airlines and other distressed large industries, a $300 billion proposal to provide forgivable loans of up to $10 million to small businesses and a surge in spending to aid health care providers all appeared to be close to consensus.

This story has been updated with additional developments Saturday.

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