A long-awaited pandemic relief package seemed to be at hand late Saturday after Sen. Patrick J. Toomey dropped his demand to prevent the Federal Reserve from potentially restarting similar lending programs to those created earlier this year.
The breakthrough came after Toomey, R-Pa., met for several hours Saturday night with Senate Minority Leader Charles E. Schumer and other senators involved in banking issues.
"I believe we'll be able to, yes." Schumer said late Saturday when asked if lawmakers would be ready to vote on a package Sunday. "House and Senate."
A senior Democratic aide told reporters that Toomey was no longer insisting on permanently shutting down any lending facilities aimed at boosting demand for corporate bonds, municipal bonds and loans to midsized businesses. Similar, though not identical, programs could still be established by the Fed under the potential agreement.
Toomey had argued the lending programs weren't central to the Fed's mission and could result in propping up profligate state governments, for instance. Toomey spokesman Steve Kelly said the "tentative agreement is an unqualified victory for taxpayers."
Kelly said Congress would have to approve any new lending facilities that duplicate those that are ending on Dec. 31 under the new provision, with the remaining $429 billion left unspent for those and other Fed programs returned to the Treasury.
"Compromise language is being finalized and, now that this obstacle has been cleared, a final agreement on an emergency relief package is significantly closer," said the senior Democratic aide, who didn't want to be identified because the discussions were private.
The lending programs were used sparingly this year even after Congress poured hundreds of billions of dollars into those and other Fed facilities, but Democrats insisted that similar tools be available in the event the incoming Biden administration needs them next year.
If the Fed lending deal holds, lawmakers could clear a nearly $1 trillion COVID-19 aid package as well as the underlying $1.4 trillion fiscal 2021 appropriations bill before stopgap funding for federal agencies runs out at midnight Sunday.
The House is scheduled to come back into session Sunday at noon and the Senate at 1 p.m. A notice from House Majority Leader Steny H. Hoyer, D-Md., earlier Saturday evening said further scheduling information would be provided Sunday morning.
Toomey earlier Saturday appeared willing to accept a narrower scope for his proposal. "I think we should be able to get a deal done," Toomey said after an initial meeting with Schumer.
Schumer later told reporters Democrats were waiting for a revised offer from Toomey. Sen. Bill Cassidy, R-La., said Toomey was working on a bipartisan proposal with fellow Banking panel member Kyrsten Sinema, D-Ariz. that would have a "more narrow focus" than Toomey's initial plan. A Sinema spokesman couldn't immediately be reached for comment.
Tax deductions, tariffs
Sen. John Cornyn, R-Texas, told reporters earlier Saturday evening that talks were getting to a “better place” on the Fed dispute. He said there were a few other outstanding issues to hammer out, however, including two issues where many Republicans diverge from the Trump administration.
The White House has been pushing to reinstate tariffs on certain goods manufactured in foreign-trade zones near border ports of entry that were left out of the U.S.-Mexico-Canada trade pact. Critics like Cornyn say the provision will force employers in Texas and elsewhere to pay some $2 billion in extra tariffs.
And Republicans and Democrats alike want to let businesses that received grants through the Paycheck Protection Program deduct expenses paid for with those forgiven loans. The Treasury Department argues that would be an extra windfall for those companies that wasn't intended, but critics say denying those deductions would sock the very companies Congress tried to help with huge unexpected tax bills.
The Fed lending issue seemed to be the most intractable one during the day Saturday. Toomey argued on the floor that Democrats wanted to keep the facilities up and running into next year to help state and local governments and implement "social policy." He said doing so would erode the Fed's independence and politicize the institution.
Senate Republicans discussed the Toomey proposal on a call Saturday, after which the conference appeared mostly unified around Toomey's intent and ready to dig in.
"Oh I could see us here until New Year's, or Christmas Eve, maybe New Year's Eve," Sen. John Kennedy, R-La., told reporters. "But it's not some esoteric quibble. And it's not just Pat Toomey. This is now the Republican position."
Nonetheless, Toomey said on the floor and in separate comments to reporters that he was willing to negotiate with the Democrats. "If you want language that is narrower, I’m all ears. We could work this out," he said during his speech.
On a conference call with her caucus on Saturday, Speaker Nancy Pelosi reserved special criticism for Toomey's proposal to bar future administrations and Fed board members from using similar recession-fighting tools.
According to a source on the call, Pelosi told Democrats that "for them to write in there that this cannot happen ever again is just beyond the pale."
Toomey earlier on Saturday indicated he'd already scaled back his proposal from language that had circulated earlier. In describing his provision, he mentioned only the new Fed facilities set up to buy corporate bonds, state and local municipal bonds and midsized business loans.
Previous language Toomey had been pushing would have also eliminated the Fed's ability to restore a facility that supports debt backed by consumer loans, which also existed during the financial crisis in 2008 and 2009. The so-called Term Asset-Backed Securities Loan Facility supports the issuance of debt securities backed by assets like student loans, auto loans and commercial mortgages.
The TALF was little used this year, lending about $3.6 billion out of up to $100 billion in loan authority, according to Fed data. But it was considered an effective tool during the Great Recession in getting consumer credit flowing again and lowering borrowing costs.
During Saturday's conference call with House Democrats, Pelosi had said Toomey's initial proposal would "forever prohibit the president from engaging in exactly what President Obama did at the time of the Great Recession."
Rising price tag?
On the Senate floor Saturday morning, Schumer referenced "a $1 trillion relief package" negotiators were aiming to wrap up, which is higher than the $900 billion target that's been cited over the past few days. That could suggest Democrats were making progress negotiating the price tag up in exchange for a deal that preserves some of what Toomey wants.
Senate Finance ranking Democrat Ron Wyden said he was most focused on resolving the "Toomey issue" as well as providing more generous unemployment benefits, which earlier this week were hovering at around $300 per week. Wyden, D-Ore., said he wanted to get that figure as close to $600 as possible, the amount provided in March that ended in late July.
"What I'm spending my time on is essentially, particularly now again with the Toomey issue and the unemployment issue, and I'm trying to get it up as close as we can to the [$]600," Wyden told reporters. "I'm gonna keep bearing down until the last minute to try to get the most help possible to all these families on an economic tightrope."
Similarly, Sen. Bernie Sanders, I-Vt., said "we're trying hard" to get direct payments to households higher than $600 per person as currently envisioned. He wants $1,200 as provided in the March law, though that figure seemed unlikely. Sanders said Friday he might object to the big omnibus bill taking shape without "substantial" tax payments.
Pelosi told Democrats on their Saturday conference call that she was pushing back against GOP efforts to cut food aid in the package, according to a different source on the call.
Lindsey McPherson, Niels Lesniewski, Chris Cioffi, Doug Sword, David Lerman and Paul M. Krawzak contributed to this report.