McConnell proposes shifting unspent small business funds to COVID-19 aid

Darnell Taylor
November 22, 2020

Treasury Secretary Steven Mnuchin on Friday defended his decision not to extend funding for several Federal Reserve lending facilities, calling on Congress to reappropriate the almost $500 billion to help small businesses and unemployed workers.

At a news conference earlier Friday, Pelosi cited the Fed's "highly unusual" public dispute with Mnuchin over letting the emergency lending programs expire."Again, why? Why?"

In an interview with CNBC Friday morning, Mnuchin defended his actions, saying that it was "not a political issue".

The Fed said Thursday that it "would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still strained and vulnerable economy".

The US Chamber of Commerce called for a reconsideration of Mr Mnuchin's decision.

"While the backstop measure have been little used so far, the deteriorating health and economic backdrop could shine a bright light on the Fed's diminished recession-fighting arsenal and prompt an adverse market reaction", said Gregory Daco, chief US economist at Oxford Economics. Mnuchin wants some of the money back, arguing that many markets are no longer at risk of seizing up and so don't need further aid beyond next month. Policy makers have acknowledged that is partly because early iterations of the tools were too narrow and created to limit credit risk.

"American workers should not lose their jobs needlessly when a second round of the job-saving Paycheck Protection Program for the hardest-hit small businesses would make a huge difference", the Kentucky Republican said.

Mnuchin is focused, the official said, on additional paycheck aid to idled workers, unemployment compensation and grants to help businesses that have been struggling amid COVID shutdowns, as many firms can not take on more debt. "We need this money to go help small businesses that are still closed or hurt, no fault of their own". "Or people who are gonna be on unemployment that's running out". The Treasury Secretary asked Powell to return that money so Congress can spend it on additional relief measures.

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"Congress' intent was clear: These facilities were to be temporary, to provide liquidity and to cease operations by the end of 2020", Toomey said in a statement.

U.S. Treasury Secretary Steven Mnuchin briefs reporters on President Donald Trump's newly signed executive order imposing new sanctions on Iran, at the White House on June 24, 2019 in Washington, DC.

Mnuchin also said Republican leaders will discuss a plan to push through targeted fiscal stimulus with the help of Democrats.

Mnuchin surprised Fed officials on Thursday by demanding the return of unused funds set aside to support Fed lending to businesses, nonprofits and local governments.

"Congress should repurpose this money toward the kinds of urgent, important and targeted relief measures that Republicans have been trying to pass for months, but which Democrats have repeatedly blocked with all-or-nothing demands", McConnell said in a statement. "They weren't in the room, that's not their job", he said.

But Mnuchin denied it was meant to handicap his successor and said his department would work closely with the incoming administration "if things get certified" - a reference to President Donald Trump's legal challenges to election results. Lawmakers and aides see attaching coronavirus-relief measures to the spending bills as the most likely avenue for providing more aid this year.

On Thursday, aides to Pelosi, McConnell, Schumer and House Minority Leader Kevin McCarthy met to discuss a separate $1.4 trillion funding bill that's needed to keep the federal government open after December 11.

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