WASHINGTON — While the final makeup of the next Senate remains in flux until two run-off elections in Georgia are held, strong divisions are already evident over whether there is a need for additional stimulus and relief for Americans and the economy.
President-Elect Joe Biden has indicated he plans to push for a significant stimulus package in response to the coronavirus pandemic, but several powerful Republicans in the Senate have said they do not believe it is necessary to extend programs created by the Fed to help both companies and municipalities. Those Federal Reserve efforts include programs that buy state and local bonds, purchase corporate debt and make loans to small and medium-size businesses.
The Treasury Department and the Fed have said they hope to decide by mid-December whether to continue the efforts. Treasury Secretary Steven Mnuchin has already indicated he would favor ending the program that buys municipal bonds.
Sen. Patrick J. Toomey (R-PA), who could soon lead the Senate Banking Committee, has said recently he does believe Treasury and the Fed have the legal authority to extend new loans or buy new securities beyond this year without congressional approval, the New York Times reported. Toomey said he believes it was Congress’s intent for the relief programs to end on Dec. 31.
"The private sector is providing the capital that's needed," Toomey said. "It's now time to terminate these programs…and, frankly, to take a victory lap that we have gotten our economy back on track. It's not done yet, but it is definitely heading very much in the right direction."
‘The Wrong Moment’
On the other hand, “the programs’ expiration could come at exactly the wrong moment, as the U.S. faces an expected surge in coronavirus cases this winter and as fiscal stimulus measures that Congress passed in the spring fade. While lawmakers have toyed with passing a new relief bill before next year during the lame-duck session of Congress, President Trump’s election loss makes the outcome highly uncertain,” the Times noted.
Democrats have made clear they disagree with Toomey.
“It’s clear that the Fed and the Treasury have the authority to extend the facilities, and they should,” Bharat Ramamurti, a Democratic member of the Congressional Oversight Commission, which oversees the programs, told the Times. “There is continuing need for municipalities and smaller businesses, and there is a significant chance of market disruption if these facilities are not extended.”
Economists and analysts told the New York Times they believe “there is logic in keeping that option open until a vaccine is widespread and the crisis is clearly over — and there is plenty of capacity left in the Fed’s programs to buy more debt and make more loans. But the central bank cannot make material changes to the programs’ terms to keep them running into 2021 without the Treasury’s signoff.”