US nears approval on $2 trillion stimulus: Update 2

Adds details throughout

The US Senate plans to vote today on a massive emergency relief package meant to sustain businesses and workers during efforts to contain the spread of the coronavirus outbreak.

The $2 trillion package would offer billions of dollars in grants and loans to airlines, manufacturers and other businesses forced to cut capacity in recent weeks as the coronavirus spread across much of the US. But the agreement would not offer targeted support to the oil sector or fund President Donald Trump's plans to buy enough crude to refill the US Strategic Petroleum Reserve (SPR).

The Senate bill, at a cost equivalent to nearly 10pc of US GDP, would be the largest relief package in US history. It would offer $500bn in emergency loans to businesses, another $350bn in loans and grants targeted specifically to small businesses and checks of up to $1,200 to most taxpayers. The legislative text has not yet been released, but an earlier version provided $50bn to passenger air carriers and $8bn to cargo carriers.

Congressional leaders negotiated the deal over five days, as the spread of coronavirus in hotspots like New York City, Washington state and New Orleans, Louisiana, pushed the death toll past 800. The US is set to release unemployment data tomorrow that some analysts expect could show as many as 3mn jobless claims in the week ended on 21 March.

US Senate majority leader Mitch McConnell (R-Kentucky) said the chamber will pass the bill today, sending the measure to the US House of Representatives for its likely approval as soon as tomorrow. But swift passage is not yet guaranteed, since only a single objecting senator could force procedural delays, and the Democratic-controlled House must also approve the measure.

US senators Ben Sasse (R-Nebraska), Rick Scott (R-Florida), Tim Scott (R-South Carolina) and Lindsey Graham (R-South Carolina) today raised objections to part of the package increasing unemployment benefits to $24/hr for four months. They worry this will prompt lower-paid workers and nurses to want to be laid off and remain furloughed, if the unemployment benefits bring in more income than their normal salaries.

The agreement does not include $3bn for the administration to buy crude to refill the SPR, a measure that Senate minority leader Chuck Schumer (D-New York) derided as a "bailout for big oil." That could complicate the administration's solicitation, set to close tomorrow, to buy up to 30mn bl from producers with fewer than 5,000 employees. The US Energy Department did not respond to a request for comment as to whether it could pay for oil puchases using other funding sources.

But the agreement would give the administration more flexibility on when to sell $450mn of crude from the SPR to fund upgrades at the four storage facilities in Texas and Louisiana that make up the reserve. The administration earlier this month halted the sale of 12mn bl from the reserve to pay for upgrades, citing the plunge in crude prices.

The Senate agreement will prohibit airlines from stock buybacks and giving bonuses to chief executives, Schumer said today. Crucial to the agreement is the inclusion of a Democratic demand for increased oversight of a $500bn fund for businesses, and a prohibition on Trump's hotel and other businesses from receiving loans and investments from those funds.

Oil industry officials acknowledged weeks ago it would be politically difficult to obtain specific support from the US Congress in the stimulus agreement. Instead industry groups have appealed directly to the US administration for help during the coronavirus outbreak.

The trade group the American Petroleum Institute on 23 March asked the US Environmental Protection Agency for "temporary relief" from dozens of rules on emissions testing and environmental reporting, arguing compliance could be complicated by workers being forced to stay home.

Environmental groups have balked at the request.

By Chris Knight and Kevin Foster