Mr. Powell, who told lawmakers that the Fed would have preferred to keep those lending programs going while acknowledging that it was Mr. Mnuchin’s place to decide, painted a more dire picture of the economic outlook. He pointed to continued uncertainty around the speed of a vaccine rollout, the reality that millions remain out of work and the fact that small businesses could fail in the winter months.
“We do have a long way to go,” Mr. Powell said. “We’ll use our tools until the danger is well and truly past, and it may require help from other parts of government as well, including Congress.”
Republicans insist that the economy is recovering and that the United States does not need to borrow more money for another big relief package, while Democrats insist that a large jolt of stimulus is necessary and that now is not the time to worry about deficits.
The Presidential Transition
“There’s a reason states and localities have to have a balanced budget but we’re allowed to have a deficit to deal with crises and emergencies as we have in the past,” Mr. Biden said. “We have to keep vital public services running, have to give aid to local and state governments to make sure they can have law enforcement officers, firefighters and educators as we did in 2009.”
After months of deadlock on Capitol Hill, a bipartisan group of senators tried to move things forward with the $908 billion compromise stimulus proposal, funded in part by repurposing the money that Mr. Mnuchin clawed back from the Fed lending programs.
The proposal, spearheaded by two centrists — Senators Joe Manchin, Democrat of West Virginia, and Susan Collins, Republican of Maine — and a handful of senators from both parties, has not been publicly endorsed by either Speaker Nancy Pelosi of California or Mr. McConnell.
Intended as a stopgap measure to last until March, it would restore federal unemployment benefits that lapsed over the summer, but at half the rate, providing $300 a week for 18 weeks, and does not include another round of checks for every American. The measure would provide $160 billion to help state, local and tribal governments facing fiscal ruin — a fraction of what Democrats had sought. Also included was $288 billion to help small businesses, restaurants and theaters, and a short-term federal liability shield from coronavirus-related lawsuits.