Omnibus Spending & COVID-19 on Table; Shutdown Possible

Congress appears on the verge of approving an Omnibus Spending Bill to fund the US Government (USG) through the end of the current fiscal year that runs until September 30, 2021 and a $900B COVID Relief program. Without some action by midnight there would be a government shutdown.

One alternative that is being considered is a short-term Continuing Resolution (CR) that would fund the government for a few days while work is finished on the COVID Relief package. The other alternative is to have the government suffer a short-term shut down over the weekend with passage of a budget and relief bill on Sunday or Monday.

A breakthrough could be announced at any time; but the broad outline of the COVID Relief package is legislation that contains the following: an individual $600 stimulus check for each adult and child under age 17, 10 weeks of extended unemployment that would include a $300 weekly supplement from the federal government, a new PPP small business loan program, and money for schools and vaccine distribution. There are other ideas such as funds designated for art and cultural institutions and an airline employee program that are being negotiated.

While all the Congressional leaders agree that a deal is near, a last minute complication has been a proposal by Republican Senator Pat Toomey to close down the Fed’s emergency lending program that was created by the CARES Act passed in March. There is concern that the language is too broad and could limit future financial intervention by the Fed if needed to prop up the economy. More narrow language seems like a possible compromise.

While Congress writes the final relief provisions there may be a need for a short-term CR in order to avoid a two- or three-day government shut down. Then, the main legislative hurdle is the need for the Senate to obtain unanimous consent to get a bill passed without the usual time for debate. There are a few Republican Senators who oppose the nearly $1T relief package and they could show their opposition by blocking a short-term government funding bill.

Both Speaker Pelosi and Leader McConnell have vowed to stay in Washington until a joint government funding and COVID relief deal is done. I expect the package to be complete and passed in the next few days, but there could be a near meaningless government shutdown over the weekend.

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