New pressure on lawmakers as virus aid for firms hits limit

With a key coronavirus rescue fund exhausted, lawmakers faced new pressure Thursday to break a stalemate over President Donald Trump’s $250 billion emergency request to replenish the program that helps small businesses keep workers on their payroll.

Senate Minority Leader Chuck Schumer and Treasury Secretary Steven Mnuchin are in talks about legislation to shore up a paycheck subsidy program. The Small Business Administration announced Thursday it has reached its $349 billion lending limit and is no longer accepting applications, and Trump immediately weighed in on Twitter to bash Democrats.

“Democrats are blocking additional funding for the popular Paycheck Protection Program. They are killing American small businesses. Stop playing politics Dems! Support Refilling PPP NOW – it is out of funds!” Trump wrote.

House and Senate Democratic aides expected another round of talks Thursday by phone with Treasury officials about Democratic demands for additional money for hospitals and state and local governments.

The outlook for the legislation is unclear, and negotiators are unlikely to meet a potential deadline of a vote during Thursday afternoon’s pro forma session. The session, Democrats say, will not feature a GOP attempt to pass Trump’s request — or to shame Democrats were they to object.

The Capitol is largely shuttered, requiring consensus from all sides for any legislation to pass, and top GOP leaders are vowing to stick closely to Trump’s request despite Democrats’ additional demands. Long-standing feuds and rivalries hang over the talks, including a toxic relationship between House Speaker Nancy Pelosi and Trump.

But the unprecedented legislative environment gives Democrats considerable influence, even if their funding requests for hospitals and state and local governments may have to be scaled back significantly or dropped, at least for now.

Democrats blocked a fast-track bid to pass the funding last week, and Republicans in turn stymied their efforts for additional funding for other priorities in a brief debate that was mostly a messaging exercise.

Majority Leader Mitch McConnell issued a joint statement Wednesday night with top House Republican Kevin McCarthy of California urging quick funding for the payroll protection program. The Senate is away from Washington through May 4, though it convenes twice each week for pro forma sessions that could be used to pass more coronavirus aid — though only if no senator objects.

Republicans amped up the pressure for a “clean” extension of the paycheck program in statements Wednesday night. House GOP Whip Steve Scalise said Democrats “need to stop holding small businesses and workers across America hostage to their endless spending demands.”

“Our nation is not the same as it was a month ago,” McCarthy said in a call with reporters on Thursday. “This isn’t a time to play politics; there’s plenty of time to play politics.”

With leaders unable to readily summon lawmakers to Washington, the usual power dynamics are scrambled, especially in the House. There, Minority Leader McCarthy, for example, can stymie legislation more easily than if members are present, and Pelosi, D-Calif., cannot rule the House with her typical tight grip.

At issue is a $350 billion paycheck protection program that’s a centerpiece of last month’s $2.2 trillion rescue bill. The program gives grants to businesses with fewer than 500 workers so that they can maintain payroll and pay rent while shutting down their businesses during social distancing edicts.

The program has been swamped by businesses applying for loans and has reached its appropriations limit. Mnuchin says an additional $250 billion is needed immediately.

But Democrats want money for hospitals burdened under COVID-19 caseloads and additional funding for states and local governments straining as the economy slides into recession.

They also want to make sure the paycheck protection program is opened up more to businesses that don’t have established relationships with banks that have been accepting applications for rescue funding.

Pelosi is pressing to add money to be distributed by community development financial institutions, which are small, nontraditional lenders that focus on making loans in underdeveloped and underserved neighborhoods, typically communities with larger minority populations.

“We want to make sure that as it gets more money, many more people get access to the credit,” Pelosi said.

Eventually, the need for consensus seems likely to result in a relatively limited package.

“It’s a matter of adding money to things they’ve already done so long as the amounts aren’t out of whack with reality,” said Hazen Marshall, a former GOP leadership aide who lobbies Congress. “They can probably thread this needle if they can just keep it to money.”

Republicans are increasingly agitating to help rural hospitals, while Democrats are also keen to boost aid to cash-strapped states and local governments whose revenues have cratered. Aiding the states may be a stretch for now, however, as the issue can easily provoke fights between large, high-tax states such as California and New York and smaller states more typically run by Republicans.

Senate Democrats are already eyeing the next coronavirus bill, proposing that it include $30 billion for a comprehensive federal plan to ramp up testing and its supply chain for diagnostic materials, as well as the ability to trace the spread of COVID-19.

Greater access to testing is a key element to have in place in order to reopen the economy, as Trump is itching to do. The proposal envisions emergency money to quickly scale up testing and develop a pipeline to ensure an adequate supply of material.