Democrats, Republicans still negotiating over boosting coronavirus aid program for small businesses

An additional $250 billion for Paycheck Protection Program may come by the end of the week, analysts say

U.S. lawmakers are continuing to work toward reaching an agreement on setting aside additional coronavirus aid for small businesses, with one top Democratic saying Wednesday that he remains hopeful a deal can be achieved.

“Hopefully, we are getting closer to an agreement, “ House Majority Leader Steny Hoyer, the Maryland Democrat, told reporters on a conference call Wednesday. “I can’t guarantee that we can get an agreement that we can pass on Friday, but that would be optimal.”

Hoyer said talks continue between congressional Democrats and Senate Majority Leader Mitch McConnell, the Kentucky Republican, and Treasury Secretary Steve Mnuchin. Analysts have been predicting that an extra $250 billion for a Paycheck Protection Program could get approved this week.

“With the PPP expected to hit a funding shortfall at the end of the week, rather than the middle as originally feared, we could see a deal come together just in time to avoid the deadline,” said analysts at Height Capital Markets in a recent note. “In this scenario, investors could see the details of a deal as early as late Wednesday, though during the day on Thursday seems more likely.”

Height’s team said the Republican-led Senate could approve a deal in a pro-form session planned for Thursday afternoon, with the Democratic-run House then following suit on Friday.

Two top Democrats — House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer — last week called for an additional $250 billion requested by the Trump administration for the Paycheck Protection Program to get packaged with other provisions, such as $100 billion for health-care institutions, $150 billion for state and local governments, and extra help for food-stamp recipients.

Pelosi and Schumer also said they want $125 billion of the PPP loans channeled through “community-based financial institutions that serve farmers, family, women, minority and veteran-owned small businesses and nonprofits in rural, tribal, suburban and urban communities.”

But McConnell signaled in a series of tweets last week that he wasn’t budging from the GOP plan just to get an additional $250 billion for PPP. The loan program for small businesses initially received $350 billion in last month’s $2 trillion coronavirus package, known as the CARES Act or Washington’s “Phase 3” virus legislation.

Pelosi and Schumer on Monday doubled down on their stance, saying in a statement that there are “real problems facing this country, and it’s time for the Republicans to quit the political posturing by proposing bills they know will not pass either chamber and get serious and work with us towards a solution.” McConnell and House Minority Leader Kevin McCarthy, the California Republican, also sounded resolute in a statement on Saturday, saying they will “continue to seek a clean PPP funding increase.”

During a sparsely attended Senate session last Thursday, McConnell had sought unanimous consent to raise the funding for the Paycheck Protection Program to $600 billion from the earlier $350 billion, but Democrats objected and offered their own more comprehensive and expensive bill, and ultimately the Senate adjourned. Congress is on recess and not slated to return to Washington, D.C., until April 20, but lawmakers can conduct pro-forma sessions and pass legislation by unanimous consent or voice vote.

“Please do not block emergency aid you do not oppose, just because you want something more,” McConnell said to Democratic senators on Thursday before his effort failed. The Kentucky Republican also had this to say in a tweet: “If we want to act fast, Congress has to focus. There is no realistic chance that another sprawling bill which allocates half a trillion dollars to a number of priorities, even important ones, will be able to pass the Senate or the House by unanimous consent this week.”

Democratic Sen. Chris Van Hollen of Maryland, on the other hand, said McConnell’s moves were a “political stunt.” Van Hollen noted widespread reports of problems with getting PPP loans.

“We know we need more money for this program,” the Maryland lawmaker said on the Senate floor last Thursday. “But for goodness’ sakes let’s take the opportunity to make some bipartisan fixes to allow this program to work better.”

Pelosi joined Van Hollen last Thursday in describing McConnell’s approach as a “stunt.”

“There is a disparity in access to capital in our country. We do not want this tragedy of the coronavirus to exacerbate that disparity or to ossify it, to solidify it,” the California Democrat said in a conference call with reporters. She suggested some PPP loans should go through community-based financial institutions that are “poised to help those with the smallest businesses.”

Separate from the fight between the Republican-led Senate and Democratic-run House’s leaders, Republican Rep. Thomas Massie of Kentucky has signaled he doesn’t support a quick approval for additional PPP money and could throw a wrench in the process.

In addition to boosting PPP, which some analysts are describing as a “Phase 3.5” response, Democratic and Republican lawmakers and the Trump administration are working on “Phase 4” legislation targeting the coronavirus crisis. Analysts have predicted that next big spending package could cost about $1 trillion and not become a reality for several weeks.

Democratic Sen. Ben Cardin of Maryland expressed optimism last Thursday that a deal could be reached on the possible “Phase 3.5” bill, one that could be cleared by both chambers with minimal fuss given almost all lawmakers are away from Washington.

“I’ve talked to Schumer about a dozen times in the last 12 hours, and I think he is optimistic that we can reach some degree of comity, but today didn’t help. Or at least, Sen. McConnell didn’t,” Cardin said after Thursday’s approximately half-hour Senate session.

President Donald Trump on Friday said he didn’t want money for hospitals and state and local governments in the next measure. “I’d rather have that be in ‘Phase 4.’ I don’t deny it. I think it’s fine, but I think it should be in ‘Phase 4,’” the president said at the daily coronavirus briefing at the White House. The Trump administration also has generated headlines for reportedly opposing rescue moey for the U.S. Postal Service.

U.S. stocks DJIA, -2.37% SPX, -2.48% have been plunging for weeks on coronavirus-related worries but have pared some of their losses thanks in part to hopes surrounding Washington’s aid programs.

This is an updated version of a report first published on April 9, 2020.