Don’t Count on a Covid Relief Bill Anytime Soon

Don’t Count on a Covid Relief Bill Anytime Soon

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Plus, coronvirus relief grant scams
Wednesday, August 26, 2020
 

White House ‘Not Optimistic’ About Reaching Coronavirus Stimulus Deal Soon

White House Chief of Staff Mark Meadows said Wednesday that he’s “not optimistic” about reaching a coronavirus relief deal with congressional Democrats before the end of September and sought to cast blame for the ongoing impasse on House Speaker Nancy Pelosi.

Meadows said he has not had conversations with Democratic leaders since talks broke down nearly three weeks ago and that he had asked his staff to reach out to Pelosi on Tuesday but did not anticipate a response. He said that rank-and-file Democrats have been more open to a deal.

“If we got back in the room with some of their priorities, we could cut a deal — the president wants to do that. But I’m not optimistic,” Meadows said in a morning interview with Politico, adding, "It's really been Speaker Pelosi really driving this train as a conductor more so than anybody. And I think she talks privately that she wants a deal and maybe even publicly that she wants a deal, but when it comes to dealing with Republicans and the administration, we haven't seen a lot of action."

Pelosi spokesman Drew Hammill told Politico that a Meadows' staffer had texted to confirm that Pelosi’s office had the correct number for the chief of staff, but did not mention resuming talks. "Democrats have compromised in these negotiations," Hammill said in a statement to Politico. "We offered to come down $1 trillion if the White House would come up $1 trillion. We welcome the White House back to the negotiating table but they must meet us halfway."

Republicans have refused those demands and continue to work on their own, narrower package. "We're very close to having a bill that Republicans are prepared to move on, hopefully as early as next week," Republican Sen. Marco Rubio of Florida told “Fox & Friends” on Wednesday.

Government funding deadline looms:
As if a pandemic, a recession, stalemated coronavirus relief talks, racial justice issues, an election, wildfires and hurricanes weren’t enough for the nation to deal with, Congress must also agree on government funding for the fiscal year that will start on October 1. Lawmakers are expected to have to pass a stopgap measure known as a continuing resolution, or CR, to extend funding and prevent a government shutdown just ahead of the elections.

In his interview with Politico, Meadows suggested that Pelosi may want to link coronavirus relief to such a funding bill as a way to gain more leverage. “I think the speaker is going to hold out until the end of September and try to get what she wants in the funding for the government during the CR or whatever funding mechanism happens to come up at the end of September,” he said.

Pelosi has rejected the idea of waiting until next month for a coronavirus deal, saying earlier this month that “people will die” if Congress didn’t act sooner.

Meadows backed the idea of coupling the bills and doing it quickly. “I think that if we do a COVID deal right now, we ought to just do a continuing resolution as part of that solution so that we take a shutdown off the table,” he said.

Bloomberg News reports that Senate Republicans are “actively preparing” for talks combining coronavirus stimulus and government funding and that Senate Majority Leader Mitch McConnell (R-KY) has circulated a draft of a slimmed-down stimulus bill that would provide $300 a week in unemployment benefits through December.

The bottom line:
There’s still no movement toward a deal that can pass both chambers of Congress. “The stimulus delays come as economists are increasingly warning that the U.S. risks a prolonged recession if Congress doesn’t provide $1 trillion to $2 trillion in relief funds this fall,” Bloomberg’s Erik Wasson and Justin Sink write.

Quote of the Day: Rock-Bottom Interest Rates for Years to Come

“I wouldn’t be surprised if interest rates are still zero five years from now.”

Jason Furman, chief White House economist in the Obama administration, in a Bloomberg News article on expectations that the Federal Reserve could hold interest rates near zero for the next five years, if not longer. David Wilcox, a former Fed official now with the Peterson Institute for International Economics, tells Bloomberg that rock-bottom rates could last six or seven years if damage from the coronavirus recession lingers.

More Than $1 Billion in Suspicious Coronavirus Relief Grants: Report

In some parts of the country, the federal government has provided coronavirus relief grants to more businesses than are eligible to receive them, at a cost of at least $1.3 billion.
An analysis by Bloomberg Businessweek found 52 congressional districts in which the number of recipients of emergency grants made by the Small Business Administration exceeded the number of eligible small businesses.

The grants, made through the now-depleted $20 billion Economic Injury Disaster Loan program, were intended to help small businesses keep their doors open during the coronavirus crisis. Firms could receive $1,000 per employee, up to $10,000. But the analysis found that in some cases far more small businesses received the maximum grant of $10,000 than there were firms with 10 or more employees in the area.

“The epicenter was six adjacent congressional districts in the Chicago area, where 81,000 grants were approved even though there are only 19,000 eligible recipients,” Bloomberg Businessweek said. “That’s more than $600 million going to phantom entrepreneurs.”

The problem could be much bigger:
The SBA says it has fraud safeguards in place — but also that it had been under pressure to provide loans quickly as the coronavirus closed down the economy in the spring and early summer.

SBA Inspector General Hannibal Ware warned in July that there was “potentially rampant fraud” in the grant program, citing $47.8 million in suspect loans his office had uncovered. “The level of fraud we’ve seen in this has been pretty pervasive,” Ware told Bloomberg Businessweek.

In a preliminary report, Ware said organized fraud rings had targeted the program. In one example, the IG said: “Various romance scams and social media solicitations persuade people to provide personally identifiable information to ‘get free money.’ The information is then used to apply for SBA economic injury loans and portions of the proceeds go to the ringleader.”

The true cost of the many scams may be considerably higher than the $1.3 billion identified by Bloomberg Businessweek. That analysis focused only on grants of $10,000, but not all of them were reviewed. In addition, the majority of grants made by the program were for between $1,000 and $9,000, which suggests that there could be many more suspicious loans to uncover.

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