US stimulus efforts stall as Senate adjourns

Congressional efforts to provide additional stimulus for the US economy have stalled, with the Republican-controlled Senate adjourning for a 10-day recess without considering a $3tn-plus economic relief bill passed with Democratic votes in the House of Representatives.

Senior Republicans have dismissed the House legislation as a “liberal wish list” and said they would wait to see the impact of $3tn in stimulus already appropriated before taking further steps.

“We need to assess what we have already done, take a look at what worked and what didn’t and we will discuss the way forward in the next couple of weeks,” Mitch McConnell, the Senate majority leader, said after a lunch this week with fellow Republican senators and President Donald Trump.

The Kentucky Republican added: “There’s only one way out of this dilemma. America has to grow again, to open up again and I am pleased that is beginning to happen in my state and other states.”

Mr Trump, who is seeking re-election in November, has encouraged governors across the US to reopen non-essential businesses in an effort to kick-start growth and put millions of Americans back to work, disregarding the advice of public health officials who have warned that a premature reopening could lead to a second wave of Covid-19 cases.

Another 2.4m Americans applied for unemployment benefits last week, bringing the total number of first-time applications to 38.6m since the pandemic hit, according to official figures published on Thursday.

Nancy Pelosi, the Democratic speaker of the House, cited the latest unemployment figures as reason for the Senate to consider the “Heroes Act”, an 1,815-page House bill that includes $500bn for state governments and $375bn for local authorities facing increased costs and lower tax revenues as a result of the coronavirus pandemic.

“We call on Leader McConnell, we have the ‘Heroes bill’, others say he has the ‘Zeroes bill’,” Ms Pelosi said.

House Democrats did not consult with Republicans in drafting the bill, which also includes another round of $1,200 means-tested “economic impact payments” for US adults earning up to $75,000 a year, and an extension of enhanced unemployment benefits through to early next year.

Ms Pelosi remained adamant on Thursday that Mr McConnell and the Republicans would ultimately negotiate. Previous stimulus agreements have been hashed out by Ms Pelosi, Mr McConnell, Steven Mnuchin, US Treasury secretary, and a handful of other congressional leaders.

“He may not know yet, but they will come to the table . . . because it is absolutely essential,” Ms Pelosi said.

Before the Senate adjourned on Thursday, there were signs that some Republicans were beginning to break with Mr McConnell.

Cory Gardner, the Republican senator from Colorado who is facing an uphill battle for re-election in November, said on Wednesday that “now is not the time for the Senate to go home”.

“It’s unfathomable that the Senate is set to go on recess without considering any additional Covid-19 assistance for the American people,” Mr Gardner said on Twitter. “Anyone who thinks now is the time to go on recess hasn’t been listening. Coloradans and Americans alike have sacrificed and are hurting.”

Susan Collins, the Republican senator from Maine who is also headed towards a difficult race in November, echoed Mr Gardner, saying: “Congress has a tremendous responsibility to help mitigate the impact of this crisis on our states and our local communities and on the families they serve. We must not wait. We should act now.”

Ms Collins, along with Marco Rubio, the Republican senator from Florida, introduced a bill on Thursday that would give more time for small businesses receiving government loans under the Paycheck Protection Program to spend the money on payroll.

The current scheme requires businesses to spend 75 per cent of the government funds on payroll within eight weeks of receiving the money, if they want the loan to be forgiven — a provision that many businesses have said is unreasonable given the continuation of lockdowns for non-essential businesses in many cities and states.

The tweaks to PPP will be debated and voted on when the Senate returns on June 1, while similar legislation is expected to be approved in the House next week.

Mr McConnell is nevertheless likely to come under more pressure to present a Republican stimulus proposal when the Senate is back in session.

“There is a high likelihood we will do another rescue package, but we need to be able to measure the impact of what we’ve already done, what we did right, what we did wrong, and correct that,” Mr McConnell told Fox News on Thursday evening. “We’re not quite ready to intelligently lay down the next step, but it’s not too far off.”

McConnell allies like Lindsey Graham, the senator from South Carolina, have called for big investment in infrastructure in recent days. Rob Portman, the senator from Ohio, has proposed a $450 “return-to-work” bonus to encourage people claiming unemployment benefits to re-enter the workforce.

Senate Republicans have previously raised concerns that the current enhanced unemployment benefits scheme means many Americans are earning more out of work than they did when they were employed, and Mr McConnell has said any subsequent stimulus deal would not extend the extra benefits.

“We do need to continue unemployment insurance, it is extremely important at a time like this, but to pay people more not to work than to work doesn’t encourage resuming your job,” Mr McConnell told Fox. “That will end in July, and we think that in order to create jobs, we need to incentivise people to go back to work, not encourage them to stay home.”

The Senate majority leader has also called for increasing protections for employers facing coronavirus-related litigation, calling the issue a “red line” for Republicans in any future talks.

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