Congress Clears Two-Day Spending Extension to Finalize Stimulus Deal

WASHINGTON — Heading off a government shutdown with hours to spare, Congress on Friday approved a two-day spending bill to avert a weekend lapse in funding while negotiators struggled to clear away the final stubborn hurdles to a $900 billion stimulus compromise.

The measure bought time for lawmakers to haggle over a number of unresolved issues in the emerging deal, including a dispute over a last-minute Republican demand to bar the Federal Reserve from restarting a series of pandemic relief programs and potentially limit some of its powers to fight financial crises in the future.

President-elect Joseph R. Biden Jr., who is set to inherit the task of dealing with the pandemic’s fallout, weighed in from the sidelines of the talks, dispatching a top economic adviser to warn that the move to rein in the Fed could frustrate efforts to stabilize the economy.

“While we are encouraged by the bipartisan effort underway to provide critical relief to millions of Americans, the package should not include unnecessary provisions that would hamper the Treasury Department and the Federal Reserve’s ability to fight economic crises,” Brian Deese, Mr. Biden’s choice to chair the National Economic Council, said in a statement.

Despite the disagreement — and continuing negotiations over the details of unemployment benefits, small-business funds and disaster aid for state and local governments — congressional leaders and aides insisted they were closer than they had ever been to a long-stalled compromise to address the devastating toll of the pandemic. The short funding extension, aides said, signaled optimism that the agreement could be drafted into legislative text and pushed through both chambers by Sunday.

“As of right now, we have not yet reached a final agreement, regretfully,” Senator Mitch McConnell, Republican of Kentucky and the majority leader, said Friday evening on the Senate floor. “There’s no reason why the federal government funding should lapse while we hammer out our remaining differences.”

In a rare moment of bipartisan, bicameral efficiency, the House approved the measure by a lopsided margin, and the Senate passed it by voice vote soon after. The rapid-fire approval came after a day of uncertainty on Capitol Hill, when lawmakers in both parties signaled they might object to any more short-term funding extensions, forcing a holiday-season weekend shutdown as negotiators scrambled to complete the stimulus deal.

And while President Trump was expected to quickly sign the temporary spending extension, the painstaking work of cementing the stimulus agreement remained. The plan under discussion would provide funding for $600 stimulus checks for millions of Americans, the revival of a lapsed supplemental federal unemployment payment at $300 per week, food and rental assistance, and hundreds of billions of dollars for businesses, schools and vaccine distribution.

Without action by Congress, where stimulus talks have been stalemated for months, unemployment benefits were are set to run out for millions of Americans next week.

The elements of the recovery plan have been clear for months. But in the final hours of negotiations, a new issue surfaced that was scuttling final agreement. Senator Patrick J. Toomey, Republican of Pennsylvania, proposed a measure that would bar a future Treasury secretary from restarting five emergency loan programs that the Fed has created to provide an economic backstop during the pandemic.

The programs have kept credit flowing to medium-size businesses, state and local governments and corporations. Concern centered on the breadth of Mr. Toomey’s proposal: It would prohibit both those programs and any “similar” one, which could curb the Fed’s future ability to keep credit flowing to states and businesses.

Democrats charged that the language was a last-ditch effort to deprive Mr. Biden and his administration of critical tools to support the economic recovery.

“We’ve got to be able to solve that,” Senator Richard J. Durbin of Illinois, the No. 2 Senate Democrat, said of the dispute over the Fed’s powers. “I can’t believe all this effort and assistance to millions of Americans has come down to this obscure fund. It would be such a terrible waste.”

In a statement, Mr. Toomey dismissed the Democrats’ criticism, arguing that his proposal “affects a very narrow universe of lending facilities and is emphatically not a broad overhaul of the Federal Reserve’s emergency lending authority.”

The disagreement played out on a day when the top congressional leaders, Mr. McConnell and Speaker Nancy Pelosi, as well as an array of rank-and-file lawmakers, publicly accepted early injections of the newly approved coronavirus vaccine, rolling up their sleeves in front of news cameras as a way to ensure continuation of government and bolster public confidence in a vaccine that is seen as crucial to an economic rebound. But the scenes also offered a potent reminder that even as congressional leaders have failed for months to deliver desperately needed economic assistance in the form of a stimulus measure, they were at the front of the line to receive a vaccine that the vast majority of Americans do not yet have access to.

Negotiators worked into Friday night to put the finishing touches on key details of the stimulus compromise, continuing negotiations on how long unemployment benefits should last, how to distribute federal relief for small businesses and the extension of a federal eviction moratorium. The plan was expected to revive the Paycheck Protection Program, a loan program for struggling small businesses.

With Republicans insisting on keeping the overall cost of the measure below $1 trillion, it was substantially narrower than the $2.2 trillion stimulus law enacted in March, when the toll of the pandemic was just becoming clear. It fell well short of the scope of the recovery measure that most economists believe is necessary, and will guarantee that Mr. Biden will have to move quickly on another aid package, something he has already signaled will be his first priority.

The $600 stimulus payments and $300-per-week enhanced federal unemployment benefit amounted to half of the amounts authorized back then.

On the Senate floor, Senators Josh Hawley, Republican of Missouri, and Bernie Sanders, independent of Vermont, mounted renewed attempts to approve $1,200 direct payments to Americans.

Senator Chuck Schumer of New York, the Democratic leader, also endorsed the effort to send another round of $1,200 direct payments.

Senator Ron Johnson, Republican of Wisconsin, blocked both attempts, calling it “a shotgun approach” at one point on Friday and criticizing the broader effort to send another round of taxpayer funds to prop up the sputtering economy.

“We will not have learned the lessons from our very hurried, very rushed, very massive earlier relief packages,” Mr. Johnson said on the Senate floor. “We’re just going to do more of the same, another trillion dollars.”

Reporting was contributed by Jeanna Smialek, Nicholas Fandos, Luke Broadwater and Jim Tankersley.