Congress edges closer to Covid-19 stimulus compromise as government shutdown looms

US Treasury Secretary Steve Mnuchin says latest offer will satisfy opposing demands for a stimulus package

Federal Reserve Chairman Jerome Powell fist bumps Treasury Secretary Steven Mnuchin after a House Financial Services Committee hearing in the Rayburn House Office Building in Washington, US, December Show more

The Trump administration proposed a $916 billion coronavirus relief package on Tuesday, after congressional Democrats rejected a suggestion for a pared-down plan from the Senate's leading Republican, Majority Leader Mitch McConnell.

Steven Mnuchin, the Treasury Secretary, said he presented the administration's plan in a conversation with House of Representatives Speaker Nancy Pelosi, a Democrat. Writing on Twitter, he said it included money for state and local governments – a Democratic priority – and liability protections for businesses, a Republican priority.

Earlier on Tuesday, Mr McConnell suggested that politicians pass a targeted coronavirus relief plan that did not include the liability protections or the state and local government aid, as those have been among the more contentious provisions during months of arguments in Washington about a fresh coronavirus package.

But Ms Pelosi and Senate Democratic Leader Chuck Schumer dismissed Mr McConnell's idea and accused him of trying to obstruct bipartisan efforts to reach a deal.

Late on Tuesday, Ms Pelosi and Mr Schumer said it was progress that Mr McConnell had signed off on the $916bn offer, but bipartisan talks were the best hope for a solution.

"The President’s proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan Members of the House and Senate from $180bn to $40bn. That is unacceptable," they said in a statement.

Republicans and Democrats face mounting pressure to deliver a new infusion of aid to families and businesses reeling from a pandemic that has killed more than 283,000 people in the United States and thrown millions out of work.

Politicians enacted $3 trillion in Covid-19 aid earlier this year but have not been able to agree on extra relief since April. House and Senate leaders have said they will not leave town this year without approving more help.

Mr Mnuchin, on Twitter, said $140bn of the $916bn administration proposal would be covered by unused funds from the small business portion of previous coronavirus relief, and that $429bn would come from Treasury funds.

House Republican Leader Kevin McCarthy told reporters in the Capitol he thought Mr Mnuchin's plan was "a great offer".

The administration offer tops, just slightly, the $908bn Covid-19 relief framework that a bipartisan group of lawmakers from the House and Senate outlined last week. They have been trying to agree on language on liability provisions as well.

Senator Angus King, an independent who caucuses with Democrats and has been working on the bipartisan plan, said that he and Republican Senator Lindsey Graham were "very close" to an agreement between themselves on a liability provision. He did not elaborate.

Mr Mnuchin's offer came as something of a surprise as he had conducted lengthy talks on a possible deal with Ms Pelosi before the November 3 presidential election, but these had failed. There had been no public proposals from the administration since the election, which Republican President Donald Trump lost.

President-elect Joe Biden said on Tuesday that Congress should immediately fund vaccine distribution this month in case early efforts by the Trump administration stall.

McConnell's idea shot down

For McConnell to suggest abandoning the liability provisions, even temporarily, marked a significant departure for him, as he has spent much of the year talking about how necessary such protections are for businesses, universities and other organisations.

Mr McConnell, who spoke earlier in the day, said politicians should pass what they can agree on, such as aid to small businesses, vaccine delivery and assistance to healthcare workers.

But his idea was rejected by Mr Schumer and Ms Pelosi, who said that scrapping new aid to state and local governments would put at risk the jobs of police, firefighters and other front-line public workers battling the Covid-19 pandemic.

A group of emergency aid programmes implemented in response to the pandemic, including supplemental unemployment benefits and a moratorium on renter evictions, is set to expire at the end of December.

Aid to state and local governments is a top Democratic priority for the next round of Covid-19 relief, but is opposed by many Republicans, who say they fear it will be used by those governments to plug non-pandemic-related holes in their budgets.

Ms Pelosi and Mr McConnell have said they hope to attach long-awaited Covid-19 relief to a broad $1.4 trillion spending bill, known as an omnibus, that lawmakers are also trying to pass this month. Failure to pass the spending legislation could lead to a partial government shutdown.

Earlier on Tuesday, Ms Pelosi said she supported including another round of $1,200 direct payments for Americans in the next package of coronavirus relief. Mr Schumer said he would also back them.

Mr McConnell has been pushing a smaller $500 billion measure and has said Mr Trump would accept that.