Democrats in Congress and the incoming Biden administration accused Republicans of jeopardizing a $ 900 billion fiscal stimulus package by insisting on curbs on lending powers in the Fed crisis, as tensions flare up in the final move negotiations.
The final hurdle to reaching an agreement came as leaders on both sides sought to reach a compromise that would help the world’s largest economy counter the recent increase in coronavirus cases and support a slow recovery.
The dispute over Fed lending It broke out unexpectedly On Thursday, when Pat Tommy, Republican senator from Pennsylvania, said he and other lawmakers in his party pressed for a clause that would prevent the Federal Reserve from reviving a series of lending facilities linked to pandemic Which is due to expire at the end of the year.
Democrats reacted angrily to Tommy’s move on Friday, saying it may restrict the ability of U.S. policymakers to respond to the economic downturn next year.
“As we survive an unprecedented economic crisis, it is in the interest of the American people to preserve the ability of the Federal Reserve to respond quickly and robustly,” said Brian Deese, who was appointed by President-elect Joe Biden to be director of the Brian Deese.
“Undermining this authority could mean less lending to main street businesses, higher unemployment rates, and more economic pain across the country.”
Data released late Thursday revealed Prof. An increase in requests for help From the Federal Reserve’s Main Street Lending Program, created to help grapple with small and medium-sized businesses and which ends December 31.
Maxine Waters, chair of the House Financial Services Committee, and Richard Neal, chair of the House Ways and Means Committee, issued a joint statement criticizing Mr. Tommy’s move. And they said that “the extremist demand of the Republicans in the Senate threatens to thwart this urgently required measure, and it must be abandoned immediately so that we can move forward.”
“The proposals to sabotage President Biden and our nation’s economy are reckless, they are wrong, and they have no place in this legislation,” said Elizabeth Warren, a Senator from Massachusetts, in a statement.
As the disagreements escalated, Republicans responded that Democrats were more interested in preserving the tools to bail out financial markets from a deal. They also noted that their party members including Mr. Tommy have long been pushing for the idea of limiting the Fed’s ability to revive its lending facility, so that should come as no surprise.
“The language defended by Republicans in the Senate is affecting a very narrow world of lending facilities, and it is certainly not a comprehensive reform of the Fed’s emergency lending authority,” Tommy said Friday, defending his plan.
Larry Kudlow, Donald Trump’s chief economic adviser, said the White House strongly supports its position, as have other Republican colleagues.
Republican senator from Texas, John Cornyn, added on Twitter that the provision “will only enforce accountability and consensus rather than allow unilateral action” while Tom Cotton, Arkansas Senator, said, “Democrats are angry because they want the Fed to use the bribe money.”
The future of the Federal Reserve’s crisis lending facility has been in the air since Stephen Mnuchin, the US Treasury secretary, instructed the Fed close A number of them are at the end of the year, including those who buy corporate and municipal debt.
The Fed and Treasury would have the power to revive them without congressional approval, using more limited funding than the Treasury’s Rainy Days Fund, but Tommy’s plan will hold that back.
The struggle over Fed lending means that negotiations are now expected to continue into the end of the week. Lawmakers had hoped to strike a deal before the deadline expired on Friday night to avoid a government shutdown, so the House of Representatives had to pass a temporary bill to extend government funding for another two days until Sunday.
The Senate is expected to consider a similar measure later on Friday.
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