The feud over the next congressional response to the coronavirus is running long.

After the Senate adjourned with no action on Monday, it's clear that a slugfest between Democratic and Republican leaders will bleed into a second week over how to deliver the next tranche of economic stimulus. A continued deadlock is untenable: A popular small business program is set to run out of funds as soon as the end of the week and governors are begging for more money.


But neither party seems ready to buckle. Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) announced they have no intention of backing off their drive to marry the GOP’s $250 billion request for Paycheck Protection Program funding with $250 billion for state and local governments. The two leaders said “it’s time for the Republicans to quit the political posturing by proposing bills they know will not pass.”

Yet Republicans aren’t budging in their insistence that the small-business funding is the only measure that can pass unanimously. And they say it’s the only money that is needed immediately given that the coffers for other programs aren't yet empty. Still, banks say it's unclear whether the funds will run out this week or later this month.

The negotiations are complicated by Congress' unusual posture amid the coronavirus crisis, with lawmakers from both houses working from their home states and unlikely to return to Washington until May at the earliest.

Both chambers were initially due to return April 20. But House leaders announced Monday that the chamber wouldn't be back until at least May 4, unless lawmakers need to fly back for an emergency session. The Senate, which is also expected to extend its recess, could make an announcement as soon as Tuesday.


Both chambers have been operating in pro forma skeleton sessions, that allow only a single lawmaker to derail everything. Republican aides said conservatives will reject any spending beyond the Paycheck Protection Program; the next Senate pro forma session is Thursday. The House is in Tuesday, and Pelosi continues to insist a small-business-only bill would be quickly rejected in her chamber.

While the dispute centers around what leaders are calling an interim bill, the amount of money being discussed is massive. Governors want $500 billion for state and local governments, Republicans want $250 billion for small businesses and Democrats also want $100 billion for hospitals. The bill passed at the end of March was $2.2 trillion.

Senate Majority Leader Mitch McConnell (R-Ky.) sought to approve that $250 billion for small businesses last week while Democrats countered with their own $500 billion proposal. Both efforts failed, but as a result of the impasse Republicans believe Democrats will be caught holding the bag when the Paycheck Protection Program is oversubscribed later this week.

“[House Minority Leader Kevin] McCarthy and McConnell are pretty much dug in," said Sen. John Cornyn (R-Texas), who is close to McConnell. “If we get to the point where basically we run out money for this program ... that’s going to be an unsustainable position. So I think time is not on Schumer’s and Pelosi’s side.”




Yet Democrats say it’s a fight worth having. Pelosi told House Democrats on a private call Monday that McConnell could try to bring up the GOP bill during the Senate's next pro forma session Thursday. Republicans have not ruled out the possibility that McConnell brings up the legislation again later this month.

"Mitch McConnell wants to do it so he can say we’re against this or that," Pelosi told Democrats, according to two sources on the call. But she said Democrats didn't plan to back down, telling her caucus that hospitals and local and state governments are "desperate" for additional funds.

That stance has broad support in the party. Democratic Sen. Jon Tester of Montana, one of the handful of red state Democrats left in the Senate, said he does not “feel the urgency” to bend to the GOP’s wishes. He said without more money for hospitals, his state’s rural outposts could be shuttered forever.

“It’s real money, and it’s all borrowed. I’m not opposed to infusing money in tough economic times. What I am opposed to is putting money where it’s not going to do the maximum amount of good,” Tester said in an interview. "If we don’t deal with the health care issue first, the economy is not going to snap back."

He said the $350 billion Paycheck Protection Program was supposed to last for two months: “So if that isn’t happening we should find out why.”

The Trump administration reported huge demands for the loans, fueling the sense of pressure to approve funding legislation. Add to that an increasingly dire economic outlook as upward of 16 million Americans claimed unemployment benefits in recent weeks. But it's still unclear how much money has landed in the hands of small businesses after a series of stumbles in the program's launch.

The Small Business Administration said on Monday morning that about 904,000 applications were approved for a total of $221 billion; the fund has $350 billion total in it. Republicans said that puts pressure on Congress to respond.

“Our Democratic colleagues want to just start throwing money in every direction possible when it’s not clear exactly why that’s the right response,” said Sen. Pat Toomey (R-Pa.) in an interview Monday morning. “It’s very, very hard for them to defend blocking [the Paycheck Protection Program money]. Especially as it becomes increasingly clear … that we’re going to consume all of the money.”


Some in the banking industry believed that figure was meaningless because lenders only just began issuing funds to borrowers.

For several days after the program's April 3 launch, banks complained that they lacked the necessary guidance and documentation needed to close out loans and get money to businesses. Lenders continued to have angst this week because the administration had yet to tell them how to process applications for self-employed individuals who became eligible for the program Friday.

A spokesperson for Sen. Marco Rubio (R-Fla.), chairman of the Small Business Committee, said the longevity of the program was a moving target "but we expect funding to run out as early as this week."

Democrats are questioning Republicans' assertions that the loan program will be near empty by the end of this week. Rep. Nydia Velazquez (D-N.Y.), chairwoman of the House Small Business Committee, told Democrats on the caucus call Monday that the data just wasn't there to back up the GOP claims.

Some Republicans are uneasy about how the program is playing out. In an interview, Sen. Ron Johnson (R-Wis.) said he believed too many businesses that were not in dire need of help were taking advantage of the low-interest government loans and that Congress should focus only on helping businesses closed by government orders or that could demonstrate a "dramatic drop in revenue."

“People are looking at this and going: this is a great deal, this is a low interest loan. Why not take it," Johnson said. "There are many issues with this program and it’s not necessarily fair. I would like to have us focus more on fixing those issues. And by the way, if we did that, maybe we wouldn’t need another $250 billion."

And bankers also expect the money to last a little longer after all the hurdles the industry faced in processing applications — though they said there is still an urgent need for Congress to replenish the small-business relief.

"The program is likely to run out of money by the end of the month," said Paul Merski, group vice president for congressional relations at the Independent Community Bankers of America. "The sooner Congress can act to supplement the funding for the program, the more loans are going to be able to be disbursed."

