Senate Majority Leader Mitch McConnell attending a meeting Friday on Capitol Hill to discuss an economic bill in response to the coronavirus pandemic.
Photo: saul loeb/Agence France-Presse/Getty ImagesWASHINGTON—Negotiations on a massive economic stimulus package hit snags on how to provide assistance to Americans during the coronavirus pandemic as a target to reach a bipartisan agreement by Friday slipped.
Among the chief remaining obstacles to an agreement on the legislation, which could ultimately cost more $1 trillion, was deciding on whether to give cash payments directly to some Americans, expand unemployment insurance or some combination of the two.
A Senate Republican opening offer and the Trump administration called for direct payments to workers, while Democrats have sought dramatically increased unemployment benefits.
Democrats are also pushing for the final agreement to expand paid leave and funds to support state and local efforts to respond to the disease outbreak, which has brought much of American life to a standstill, cratered financial markets, and brought the global economy to the brink of a major slowdown.
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Senate Majority Leader Mitch McConnell (R., Ky.) had called on lawmakers to reach an initial agreement by the end of the day Friday, but lawmakers and Trump administration officials ended talks Friday with a goal of beginning negotiations again Saturday morning.
“It’s a big complicated huge bill and tonight, I would hope to come to agreements tomorrow,” said Senate Minority Leader Chuck Schumer (D., N.Y.), who spoke with House Speaker Nancy Pelosi (D., Calif.) and Treasury Secretary Steven Mnuchin twice on Friday. “They’re making progress, but there’s so much to do, I think tonight is hard.”
White House Legislative Affairs Director Eric Ueland said Republicans hoped to have an agreement in hand by Saturday afternoon so the Senate could move forward with a vote early next week.
Any eventual deal will need to be bipartisan because it requires 60 votes in the Senate and must pass the Democratic-controlled House to become law, meaning Republicans and Democrats will have to bridge their divisions.
“There’s tremendous spirit to get something done,” said President Trump at the daily White House coronavirus briefing. He said he had good telephone calls with Messrs. Schumer and McConnell.
While sounding optimistic notes about the state of talks, Mr. Trump bristled at suggestions that the government’s effort is falling short on testing, potential treatments and medical equipment.
Democrats and Republicans were also working on bolstering the nation’s public health infrastructure, bracing for thousands of people sick with the novel coronavirus to be hospitalized. Democrats called for a $400 billion federal investment to address capacity issues and medical-supply shortages at hospitals, particularly rural and smaller ones.
“Our hospitals across the country are about to be overwhelmed,” said Illinois Sen. Dick Durbin, the No. 2 Senate Democrat. “They’ll be faced to make some horrible triage choices about survivors. We don’t want to reach that point.” He called for a doubling of hospital capacity.
Republicans on Friday seemed less inclined to appropriate cash to hospitals. The Republican plan would boost Medicare payments to health-care providers.
“We realize we’re going to have to do some things to help out providers,” Sen. John Thune (R., S.D.) said. “The question is how can you do that quickly and what’s the most effective mechanism.”
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The National Governors Association asked lawmakers on Thursday to double the increase in Medicaid support that passed earlier this week. Gov. Larry Hogan of Maryland, a Republican, and Gov. Andrew Cuomo of New York, a Democrat, said in a letter that though lawmakers increased the federal reimbursement rate by 6 percentage points, that “falls short of what states will need.” Republicans have said that many states have robust emergency funding programs, as Democrats have advocated for sending along more federal assistance.
Mr. McConnell’s broad plan, released late Thursday, calls for taxpayers to receive up to $1,200, with married couples eligible to get as much as $2,400, with an additional $500 for every child. Those payments would scale down for individuals who earn more than $75,000 a year and couples that make more than $150,000. Individuals who make more than $99,000 and households that earn more than $198,000 won’t be eligible for direct assistance.
Lawmakers in both parties were pushing Friday for a number of changes or additions to that proposal. Members of both parties expect that expanding unemployment insurance will be included in the final deal in addition to some sort of cash assistance.
“What we as Republicans got to understand: There’s got to be an unemployment compensation benefit part of the package, and I support that. It makes sense to me. Everybody’s not going to be able to be run through these systems,” said Sen. Lindsey Graham (R., S.C.).
Mr. Thune said “we’ll see” whether changes will be made to the direct-payments proposal in the GOP plan, saying there are “real concerns about the alternative was backfilling money through unemployment insurance accounts, state accounts, and there are real concerns about whether or not that can be done.”
Administration officials have also raised concerns about how quickly the existing unemployment insurance program could disburse funds to Americans.
“The administration has raised questions, as you know, about how it would be administered. We have said, well, we think in most states it can be handled, but we will work with you,” said Sen. Ron Wyden (D., Ore.), the top Democrat on the Senate Finance Committee. “That’s going be the issue that we will be toiling on way into the late hours.”
A person familiar with the matter said that lawmakers were nearing an agreement that would expand unemployment insurance to nontraditional workers, including self-employed people, though they were still debating what share of a worker’s wages to provide as a benefit.
Mr. Ueland said that the eventual agreement was likely to include both an expansion of unemployment insurance and direct cash assistance.
“We are busy deeply exploring the concept of some of the unemployment insurance ideas that are on the table in addition to what we have proposed to provide direct relief to the American people,” he said.
Republicans and Democrats also have both criticized how Mr. McConnell’s plan for cash assistance treats low-income people. Under the Senate GOP opening proposal, Americans who didn’t make enough money to pay income tax would only be eligible for a minimum of $600. Republicans and Democrats want to boost assistance to those low-income Americans.
“I couldn’t believe that they were talking about lowest-income people getting $600 and somebody making $75,000 getting twice as much as that, $1,200. So those numbers don’t make any sense,” said Sen. Debbie Stabenow (D., Mich.).
The person familiar with the talks said lawmakers were set to eliminate the reduction in payments to lower-income Americans.
Under the Republican proposal, the government will provide $50 billion in loan guarantees for passenger air carriers, $8 billion for cargo air carriers and $150 billion for other large businesses, authorizing the government to take equity stakes in them. The proposal also includes $300 billion for loan guarantees to small businesses.
Sen. Marco Rubio (R., Fla.) said that lawmakers were close to an agreement on the small-business provisions but were still negotiating on how to define a small business.
Beyond the direct payments to individuals, the Republican proposal would let employers defer payroll-tax payments until 2021 and 2022. Companies would also get more flexibility to use operating losses against past profits to get quick refunds, and businesses would get reprieves from several errors or ambiguities in the 2017 tax law that they have been complaining about for years.
On education, the Republican plan would allow the secretary of education to defer student loan payments for three months without a penalty.
The GOP plan would also relax restrictions on telehealth, expand flexible-spending accounts to pay for certain over-the-counter drugs, and boost Medicare reimbursements to providers.
House Democrats aren’t scheduled to come back to Washington until there is legislation to vote on, though Mrs. Pelosi is in close contact with Mr. Schumer on the matter, aides said.
In a Congress typically beset by partisan polarization and legislative gridlock, lawmakers have advanced legislation with unusual speed, passing an initial $8.3 billion bill that included funding for vaccine development and then passing this week subsequent legislation providing for paid leave that is estimated to cost more than $100 billion.
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—Siobhan Hughes, Lindsay Wise and Richard Rubin contributed to this article.
Write to Natalie Andrews at Natalie.Andrews@wsj.com and Catherine Lucey at catherine.lucey@wsj.com
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