Mnuchin Asks Fed to Return $455 Billion in Unspent Covid-Relief
Funds
Treasury Secretary Steven Mnuchin on Thursday asked the Federal
Reserve to allow a number of its emergency lending programs to
expire as scheduled at the end of the year and return hundreds of
billions of dollars in unspent funds from its emergency pandemic
lending programs.
Mnuchin said that the programs were no longer needed. In a short
but extraordinary response, the Fed disagreed, marking a rare
public rift between the Treasury and the central bank.
“I am requesting that the Federal Reserve return the unused
funds to the Treasury,” Mnuchin wrote in a
letter to Federal Reserve Chair Jerome Powell. “This
will allow Congress to re-appropriate $455 billion, consisting of
$429 billion in excess Treasury funds for the Federal Reserve
facilities and $26 billion in unused Treasury direct loan
funds.”
Mnuchin asked that five programs for emergency loans to
businesses and local governments expire as scheduled on December
31. “The Fed programs were launched this spring to stabilize
markets and extend credit to U.S. companies as the Covid-19
pandemic took hold,” Bloomberg’s Saleha Mohsin and Catarina Saraiva
note. “They helped quell the panic but take-up has
been relatively low -- which the Fed says is a sign that they’ve
worked.”
Mnuchin requested that, out of an “abundance of caution,” four
other Fed lending programs be extended for 90 days.
In its response, the Fed said that it “would prefer that the
full suite of emergency facilities established during the
coronavirus pandemic continue to serve their important role as a
backstop for our still-strained and vulnerable economy.” Powell
said Tuesday that he didn’t think it was time yet
to end the programs.
Mnuchin’s letter said that, in the “unlikely event” that the
shuttered lending facilities are needed again, the Fed could
request approval from the Treasury to re-open them, using existing
emergency funding from the Treasury new money from Congress.
Lawmakers Push Toward $1.4 Trillion Spending
Package
Senate Majority Leader Mitch McConnell (R-KY) sent the Senate
home Wednesday for its Thanksgiving break, allowing members to
leave a day early, reportedly in part due to concerns about the
spread of coronavirus after 87-year-old Sen. Chuck
Grassley (R-IA) tested positive Tuesday.
It’s not like the Senate has any matters that require its urgent
attention, anyway, right?
Well, there’s the stalled coronavirus relief legislation. And a
spending package needed to avert a government shutdown after
December 11. But neither of those is close to being ready for a
vote.
On the spending bill, staffers for McConnell,
Senate Democratic Leader Chuck Schumer (D-NY), House Speaker Nancy
Pelosi (D-CA) and House Republican Leader Kevin McCarthy (R-CA) met
Thursday. The lawmakers are reportedly working toward a $1.4
trillion omnibus spending bill that would fund the government
through September 2021 rather than a stopgap measure that would
extend 2020 funding into early next year. The White House is
reportedly
ready to accept such legislation, even though
President Trump warned after signing an omnibus package in 2018
that he would “never sign another bill like this again.”
On the stimulus, Schumer suggested Thursday that
negotiations might be starting up again. “There’s a little bit of
good news, as of today,” he
said. “They’ve agreed to sit down, and the staffs
are going to sit down today or tomorrow to try to begin to see if
we can get a real good Covid relief bill. So there’s been a little
bit of a breakthrough in that McConnell’s folks are finally sitting
down and talking to us.”
Republicans quickly burst that balloon, though, saying that the
meeting was mostly about government funding. The Hill’s Jordain
Carney
reports that the stimulus stalemate is still very
much in place: “Leaders on both sides disclosed this week that
there had been no private conversations between congressional
Democrats and McConnell about a fifth coronavirus relief bill even
as cases climb across the country and some cities and states are
reimposing restrictions to try to curb the spread.”
What’s next: When lawmakers return after the holiday,
they will have about 10 working days before the House is scheduled
to leave until January, Carney
writes. "We've got time," Senate Appropriations
Committee Chairman Richard Shelby (R-AL) warned, according to
Carney. "But we've got to move."
Pelosi and Schumer are set to meet in person Friday with
President-elect Joe Biden and Vice President-elect Kamala
Harris.
Jobless Claims Jump as Recovery Risks
Grow
The pace of layoffs increased for the first time in five weeks,
raising concerns about the economic damage being caused by the
resurgent coronavirus.
About 742,000 people filed initial jobless claims last week, the
Labor Department
announced Thursday, an increase of more than
30,000 from the week before. Another 320,000 filed for benefits
through the Pandemic Unemployment Assistance program, which aids
self-employed and gig workers, bringing the total of new filings to
more than 1 million.
The report did have some good news, however. All told, the
number of people receiving any kind of unemployment aid fell
significantly, dropping by 840,000 to 20.3 million.
At the same time, though, that level of participation in jobless
assistance programs remains exceptionally high, and the number of
people falling into long-term unemployment is growing, with nearly
4.4 million people receiving aid in the Pandemic Emergency
Unemployment Compensation program for those who have exhausted
their state-level benefits.
Bumpy path for the labor market: Economists worry that
ramped up restrictions enacted
to fight the virus surge could drive unemployment higher in
coming months. “The road to recovery is likely to be quite rocky,
unfortunately,” Nathan Sheets, PGIM Fixed Income’s chief economist,
told Bloomberg News. “The virus and the
restrictions being put in place to fight the virus are likely to
take a bite out of economic activity over the next, say, three or
four months.”
Warnings from analysts: The International Monetary Fund
released a report Thursday that warns that the recovery is looking
less robust. “While global economic activity has picked up since
June, there are signs that the recovery may be losing momentum, and
the crisis is likely to leave deep, unequal scars,” the report
says. “Uncertainty and risks are exceptionally high.”
The G-20, a forum for central bankers from the leading
industrialized nations, also expressed concerns. “The recovery is
uneven, highly uncertain and subject to elevated downside risks,
including those arising from renewed virus outbreaks in some
economies,” the group said in a communique
reported by Bloomberg.
IMF Managing Director Kristalina Georgieva told Bloomberg
that the data underlines the need for more fiscal support. The
recovery is “losing momentum, and in that context our first message
to leaders is: do not withdraw support for the economy
prematurely,” Georgieva said Thursday. “It’s so important that we
don’t pull back until we see the health crisis in the rear-view
mirror.”
White House Seeks Deal on Confederate Base Names: Report
Lawmakers are hoping to pass the annual defense authorization
bill before the end of the year, but a provision that requires the
Pentagon to remove the names of Confederate leaders from military
bases could earn the legislation a veto from President Trump, who
has expressed strong opposition to the idea, despite bipartisan
support for the plan in Congress.
Sen. James Inhofe (R-OK) reportedly warned top lawmakers this
week that the provision would have to be removed if they want the
bill to pass. However, The New York Times
reported Thursday that White House Chief of Staff
Mark Meadows has “hinted” that Trump would accept the base renaming
provision in exchange for a repeal of certain legal protections
currently in place for social media companies.
Specifically, Meadows said the White House is looking for a
repeal of Section 230 of the Communications Decency Act of 1996,
which protects the likes of Facebook and Twitter from liability
over writings posted by their users.
Democrats say the idea is unlikely to gain traction. “On
its face, there’s issues of jurisdiction, lack of clarity on what
the White House actually means when it says repeal Sec. 230, and
also it’s unclear if congressional Republicans support this,” a
Democratic aide
told The Hill.
News
CDC Warns America: Do Not Travel for Thanksgiving
– NBC News
White House Signals Acceptance of Omnibus Spending
Package – Roll Call
U.S. Covid Hospitalizations Near 80,000 as Records Topple
Daily – Bloomberg
Hospitals and Health Care Workers Issue a Call to Arms for
Wearing Masks – New York Times
Trump's Vaccine Team Will Not Brief Biden Administration: US
Senator – Reuters
Biden Team Finds Workarounds While Trump Digs In Over
Transition – Bloomberg
Republican-Leaning U.S. Chamber of Commerce Urges Trump to
Stop Delaying Transition to Biden Administration – USA
Today
Biden, Harris to Meet With Governors, Trump Again Has No
Public Events – NBC News
‘It’s Complicated’: Biden Team Weighs Whether to Retain
Deborah Birx – Politico
House Budget Chairman Seeks to End Committee’s Term
Limits – Roll Call
Shelby Adds $760 Million for Unrequested Ships With Alabama
Ties – Roll Call
White House Killed Deal to Pay for Mental Health Care for
Migrant Families Separated at Border – NBC
News
Views and Analysis
States That Imposed Few Restrictions Now Have the Worst
Outbreaks – Lauren Leatherby and Rich Harris, New York
Times
Washington Takes a Break With Major Economic Pain on the
Horizon – Tory Newmyer, Washington Post
Congress, Don't Forget the Long-Term
Unemployed – Claudia Sahm, Bloomberg
Our Covid-19 Polarization Will Only Get Worse. We Need to
Find a Balance. – Gary Abernathy, Washington
Post
Why Congress Should Be Much More Worried About Covid-19 Than
They Are – Chris Cillizza, CNN
The Siren Song of Austerity – J. Bradford DeLong,
Project Syndicate
Joe Biden Could Shepherd a Massive, Pro-Family Package
Through Congress – Henry Olsen, Washington
Post
How Joe Biden Can Use the Political Power of Obamacare to
Expand It – Rahm Emanuel, Politico
Even With a Vaccine, This Virus Will Take Time to
Conquer – Michael S. Saag, Washington Post
I Was Part of a Trial for Pfizer’s Covid-19 Vaccine. It’s a
Miracle for Genetic Medicine. – Walter Isaacson,
Washington Post
Every American Should Be Tested for Covid-19 Once a
Week – Faye Flam, Bloomberg
We’ve Figured Out It’s Safe to Have Schools Open. Keep Them
That Way. – Danielle Allen and Ashish Jha, Washington
Post
When Will We Throw Our Masks Away? I Asked Dr.
Fauci – Elisabeth Rosenthal, New York Times
Improving State Tax Collections Don’t Let Congress Off the
Hook on COVID-19 Relief – Tracy Gordon, Tax Policy
Center