White House and Senate leaders reached a deal on the biggest bailout in history on Wednesday, a $2tn rescue package for the US economy ravaged by the coronavirus.
After days of round-the-clock and at times extraordinarily tense negotiations among senators and administration officials, a compromise was struck just after midnight to rush financial assistance to workers, businesses and the healthcare system as the pandemic sweeps the country, deepening economic fallout as Donald Trump considers easing restrictions aimed at combating the contagion.
“We have a deal,” said Eric Ueland, the White House legislative affairs director, just before 1am, adding that the text of the bill needed to be completed.
“We have either clear, explicit legislative text reflecting all parties or we know exactly where we’re going to land on legislative text as we continue to finish.”
The Senate majority leader, Mitch McConnell, saluted “a bipartisan agreement on a historic relief package for this pandemic”, a deal he described as a “wartime level of investment into our nation”.
The minority leader, Chuck Schumer, said: “This is not a moment of celebration, but one of necessity. To all Americans I say: help is on the way.”
The Senate reconvened on Wednesday but a drive to push through the package quickly was upended by the objections of a group of conservative lawmakers.
Three Republicans – Lindsey Graham, Tim Scott and Ben Sasse – raised concerns over what they claimed was a “massive drafting error” that would create a “strong incentive for employees to be laid off instead of going to work”.
The Vermont independent (and candidate for the Democratic presidential nomination) Bernie Sanders countered that he would “put a hold on” the bill, in order to push for stronger conditions on bailed-out businesses, unless the Republicans dropped their objections.
House speaker Nancy Pelosi said the Senate bill went “a long way down the road in meeting the needs of the American people”, but did not give a clear sign of approval.
The legislation is an order of magnitude larger than the $800bn stimulus bill passed in 2009 to alleviate the economic pain of the Great Recession. And yet it is only expected to be a temporary patch to stabilize an economy spiraling out of control. Senators have already signaled a need to begin work on the next stimulus package.
The treasury secretary, Steven Mnuchin, who has led negotiations with Democrats, said Trump would “absolutely” sign the bill if Congress approved it.
The legislation would also prohibit businesses owned by Trump, his family and members of Congress from receiving loans or investments from the treasury department program.
“Those of us who write the law shouldn’t benefit from the law,” Schumer told CNN on Wednesday.
US stock markets, which rose more than 2,100 points, or more than 11%, on Tuesday, continued to rise, albeit at a slower pace, on Wednesday.
But many on Wall Street appear uncertain that the stimulus package, together with a Federal Reserve pledge of nearly $4tn in aid, will counter the havoc an uncontained coronavirus outbreak could still wreak.
“This was a one-day bull market,” said CNBC’s Jim Cramer. “You had stocks that moved so much they basically moved as if the second half of the year is going to be good. I struggle to find out why the second half of the year should be good. I hate this kind of rally. This was a machine-driven rally, just like the sell-offs. I want to wait to see.”
Relief that US politicians had reached a deal pushed world stock markets up on Wednesday. Indexes in Europe and Asia rose a day after the Dow Jones had its best day since 1933. The FTSE-100 in London closed up 4.45% at 5688.
A major sticking point in the negotiations concerned $500bn for guaranteed, subsidized loans to larger industries, including a fight over how generous to be with airlines that have been rocked by a near-shutdown of travel. Hospitals would get significant help as well.
The deal provides for one-time direct payments of up to $1,200 to most adults and greatly expanded unemployment insurance. It also includes a $367bn program for small businesses to keep paying employees forced to stay home.
On Wednesday, New York governor Andrew Cuomo assailed the relief package in his daily press briefing, calling the $3.8bn in financial assistance that would flow to his state, the center of the outbreak in the US, a “drop in the bucket”.
The deal came as Trump grew impatient with his administration’s decision to impose strict restrictions on all aspects of public life to try to slow the spread of the virus, a move recommended by health officials.
On Tuesday, Trump said he was aiming to reopen “large sections of the country” by Easter, just over two weeks away, as public health officials and state governors rejected that timeline as potentially unsafe.
“We cannot let the cure be worse than the problem itself. At the end of the 15-day period, we will make a decision as to which way we want to go,” Trump wrote in an all-capitals tweet. He doubled down during a Fox News town hall on Tuesday, arguing against the best advice of experts that a crippled economy caused by mandated social isolation would inflict more harm than the spread of the virus.
The 15-day period of White House guidelines to enforce physical distancing and other measures began on 16 March.
Loosening restrictions on public activities and social distancing would defy the best advice of his administration’s health officials, including Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, who warned that the US has not yet experienced the worst of the pandemic.