UPDATED 9:25 AM PT – Sunday, December 20, 2020
Lawmakers in the upper chamber reached an agreement on a key milestone towards passing a fifth stimulus package.
During a rare Saturday session, Senate Minority Leader Chuck Schumer (D-N.Y.) and Sen. Pat Toomey (R-Pa.) reached a compromise on curtailing the Fed’s special lending authorities.
After a full day of talks on the stimulus bill, the agreement was finally reached in the 11th hour.
The Schumer-Toomey compromise would reallocate $429 billion in unused CARES Act funds for the Fed’s credit lending programs to offset a large part of the new bill.
The Schumer-Toomey compromise will sweep out the $429 billion in unspent CARES Act funding for the Federal Reserve’s credit lending facilities and repurpose it as an offset for a new $900 billion coronavirus relief bill, GOP sources say https://t.co/UFXzg9lNqw
— Alex Bolton (@alexanderbolton) December 20, 2020
Reaching an agreement on this aspect of the legislation was key to cementing a greater deal.
Sen. Toomey explained why he and other conservatives were advocating for the inclusion of a provision into the next coronavirus relief bill. The provision would limit the Federal Reserve’s lending power.
Toomey argued for the termination of three lending programs that were established to help credit markets function at the start of the pandemic. Back in March, more than $400 billion in Federal Reserve emergency lending powers was approved under the CARES Act.
Schumer accused Toomey of “calling 11th-hour demands.” He also claimed Toomey’s legislation was the only significant hurdle to completing an agreement.
“The terms I have advocated for have been mischaracterized by the Senate Minority Leader and others,” Toomey stated. “While Democrats claim such provisions are only an attempt to handicap a potential Biden administration or cripple the economy — that’s simply not the case.”
He added his language puts an end to the three programs that “did their job, functioned and restored the private credit markets, but they don’t need to continue.”
The Pennsylvania lawmaker argued that extending the programs would be unnecessary, considering how underutilized they were. Toomey also noted the programs have proved to be unimportant in recent months by leaving billions of dollars untapped.
However, Democrats argue such language would curtain credit lending programs from restarting “without congressional consent,” which they claim would impair the Federal Reserve’s future emergency lending power.
In the meantime, Republicans maintain the position that not limiting the power of the Federal Reserve will consequently politicize it, which would grant too much power to the next administration. It could become an extension of the next administration to create fiscal policies through lending stipulations.
Meanwhile, Toomey emphasized the programs were funded by the CARES Act and now that they’ve achieved their purpose, there is no need for them.
Congress continues to work tirelessly to finalize a relief package so Americans can receive funding.