US Senate Reaches Tentative Agreement on $900 Billion COVID Relief Package

"Expectations to Ease Federal Government Shutdown Concerns"
Ongoing Disagreements Over Fed Emergency Lending Program

[Image source=EPA Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Major foreign media reported that the U.S. Senate has tentatively reached an agreement on the COVID-19 relief package, on which the Republican and Democratic parties had struggled to agree. As a result, the $900 billion (approximately 1,000 trillion KRW) COVID-19 relief package is expected to be fully launched. The U.S. federal government has also averted the risk of a shutdown.

According to foreign media including The Wall Street Journal (WSJ) on the 19th (local time), the Republican and Democratic parties in the U.S. Senate reached a tentative agreement on the $900 billion COVID-19 relief package after late-night discussions. Senate Majority Leader Chuck Schumer of the Democratic Party said at a press conference after the negotiations, "If there are no unexpected variables and we continue in the current direction, the relief package could be voted on tomorrow (the 20th)."

Mitch McConnell, the Republican Senate Majority Leader who had been negative about the COVID-19 relief package, is also reported to have finally agreed to the support measures. A spokesperson for Leader McConnell said at a press conference, "With the debate over the Federal Reserve (Fed) concluded, the relief package will be applied to families, workers, and businesses in urgent need." The relief package includes direct support measures totaling $600 billion, such as weekly payments of $300 to the unemployed, support for schools and medical facilities, and vaccine distribution budgets.

Major foreign media also forecast that the $1.4 trillion federal government budget bill will be passed along with the relief package. If the budget bill is not passed, the U.S. federal government would have faced a shutdown risk starting at 12:01 a.m. on the 21st. A federal government shutdown means that the government temporarily halts all operations because the government budget bill fails to pass Congress, making it impossible to pay federal employees.

Regarding the relief package, both parties extended the session through the weekend to negotiate. As the negotiations prolonged, Congress passed a budget bill valid for two days, from the 19th to the 20th, on the 18th to buy more time and prevent a federal government shutdown.

The main point of contention between the two parties over the relief package was whether to grant the Fed the authority to establish and implement emergency lending programs independently without congressional approval. On that day, both parties agreed that the Fed would retain the authority to establish and implement emergency lending programs without congressional approval, but with restrictions preventing the Fed from repeating the exact same program as in March of this year without congressional approval, WSJ reported.

The Republican Party opposed extending this program, which was urgently granted to the Fed due to the COVID-19 pandemic, arguing that it represents unnecessary government intervention in the market and that the Democrats are trying to open a backdoor to funnel blind funds to state governments led by their party governors until next year. In contrast, the Democratic Party countered that the Republicans are trying to tie the Fed’s hands so that the Biden administration, which will take office in January next year, cannot properly use the relief package, and insisted that the Fed should maintain independent authority over emergency lending programs in relation to Congress.

If the Republican Party wins only one of the two seats in the Georgia Senate runoff election on the 5th of next month, it will hold the majority in the Senate. It is known that the Democratic Party is concerned that President-elect Joe Biden will be at the mercy of the Republican-controlled Senate when pushing for relief packages after taking office.

This content was produced with the assistance of AI translation services.