Mitch McConnell says Congress should redirect unspent stimulus money to prop up small businesses, backing Mnuchin in his fight against the Fed

Mitch McConnell

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Senate Majority Leader Mitch McConnell issued a statement on Friday afternoon supporting Treasury Secretary Steven Mnuchin’s call for Congress to repurpose unspent stimulus money — and backing the Trump administration in its extraordinary clash against the Federal Reserve.

McConnell said “there is an obvious right use” for the unused funds. He argued it should be directed at “urgent, important, and targeted relief measures” that Republicans have sought for months over repeated Democratic objections they are not enough.

“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. “Our medical system should not be denied additional support, including for distributing the life-saving vaccines that appear to be on the horizon.”

His comments omit any reference to aiding unemployed Americans, a step Mnuchin said Congress could take with the funds on Friday. Next month, the US economy faces another cliff with 12 million jobless Americans at risk of losing all their unemployment benefits because federal initiatives are expiring.

McConnell’s comments come as Mnuchin defended his decision to not extend several Fed emergency lending programs past December 31 on Friday. The move triggered a rare rebuke from the central bank which said it wanted them to continue, forming a rift between two government institutions that had collaborated to manage the economic fallout of the pandemic this year.

In a CNBC interview, Mnuchin said Congress designed the programs to end this year and the Fed was wrong in its interpretation of the law. “They weren’t in the room, that’s not their job,” he said.

He also urged Congress to reallocate the money, though it would require the Fed to sign off as well.

“We don’t need this money to buy corporate bonds. We need this money to go help small businesses that are still closed or hurt, no fault of their own,” he said. “Or people who are gonna be on unemployment that’s running out.”

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The Fed programs at the center of the dispute were instituted shortly after the CARES Act was passed. Congress allocated $454 billion to the Treasury to backstop Fed lending and settle roiling markets as the pandemic struck.

Democrats assailed Mnuchin for ending the programs. They argued it would limit the tools available to President-elect Joe Biden to strengthen the economy. The Biden transition team also blasted the move in a statement to the Washington Post, calling it “deeply irresponsible.”

“At this fragile moment, as the COVID and economic crises are re-accelerating, we should be reinforcing the government’s ability to respond and support the economy,” spokesperson Kate Bedingfield said.

The treasury secretary also faced criticism from economists and some Republicans as virus cases surge, prompting renewed lockdowns. However, the Trump administration struck a more optimistic tone about the risks facing the US economy.

“The economy has tremendous momentum,” White House National Economic Council Director Larry Kudlow told reporters on Friday. He also said there is “a lot of hardship out there” and reiterated the …read more

Source:: Business Insider – Politics

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