White House to announce $11.6 billion aid for Puerto Rico: Fox News

WASHINGTON (Reuters) – The White House plans to announce an $11.6 billion aid package for Puerto Rico, focused on the territory’s energy and education systems, to help the island recover from the devastation brought by 2017’s Hurricane Maria, Fox News reported on Friday, citing unnamed sources.

Puerto Rico was already struggling financially before the deadly hurricane struck three years ago, and filed a form of municipal bankruptcy for the commonwealth in 2017 to restructure about $120 billion of debt and obligations.

Since then, the U.S. commonwealth has been hit by more hurricanes, earthquakes, the coronavirus pandemic and political upheaval, and has been the target of increased federal scrutiny into its use of U.S. aid. A large portion of its financial distress was linked to the territory’s power utility.

(Reporting by Lisa Lambert; editing by Susan Heavey and Jonathan Oatis)

Democrats offer to cut $1 trillion from coronavirus plan, White House says no

By Richard Cowan and David Morgan

WASHINGTON (Reuters) – Democrats in Congress said on Friday they had offered to reduce a proposed coronavirus aid package by a trillion dollars if Republicans would add a trillion to their counter-offer, but the idea was flatly rejected by Donald Trump’s White House.

House Speaker Nancy Pelosi disclosed the offer as she and Senate Democratic Leader Chuck Schumer prepared to meet White House negotiators again on Friday afternoon.

Treasury Secretary Steven Mnuchin, one of the White House negotiators, rejected Pelosi’s proposal out of hand, telling reporters, “that’s a non-starter.”

After nearly two weeks of talks that have failed to make substantial progress, the Republican president has threatened to pull his negotiators out and instead issue executive orders to address the human and economic toll of a crisis that has killed more than 160,000 Americans and thrown tens of millions of people out of work.

It was unclear how much any president could do by executive order. At a news conference, Schumer said the president could not order any new money spent – as that is the power of Congress – but could only defer costs until they were eventually paid.

Democrats have advocated for a $3 trillion-plus economic aid program, while leading Republicans have proposed about a third of that.

“Yesterday I offered to them, we’ll take down a trillion if you add a trillion in,” Pelosi said. “They said absolutely not.”

She said she would make the offer again at an afternoon negotiating session with Mnuchin and White House Chief of Staff Mark Meadows. “We’ve got a responsibility to find common ground,” Pelosi said.

Pelosi said the proposed $1 trillion cut in Democrats’ plan would mean the aid would run out sooner.

Schumer said the White House would have to compromise with Democrats, because they need Democratic votes to get anything passed by Congress. “They can’t just say no,” he said.

“Their other choice is to do some weak insufficient executive orders that wont do the job for the people we want to help,” Schumer said.

Pelosi said Democrats want the biggest possible number for reviving an expired federal payment to the unemployed that had been $600 a week. Renewing that benefit has been a leading Democratic demand.

The White House at one point suggested $400 a week in federal benefits for the unemployed, but Democrats rejected it and have refused to do a separate deal on that, saying they wanted a comprehensive package that also included money for state and local government and other matters.

Congress passed more than $3 trillion in relief legislation early in the pandemic. Senate Majority Leader Mitch McConnell has said a new boost is needed to help the U.S. economy, but some of his fellow Republicans oppose doing anything more.

Pelosi and Schumer have pushed for a comprehensive package of assistance for the unemployed, the poor, hospitals, schools, and state and local governments.

(Additional reporting by Susan Heavey, Lisa Lambert and David Morgan; Writing by Susan Cornwell; Editing by Scott Malone and Howard Goller)

Coronavirus forces U.S. lawmakers to overcome steep partisan divide

By Andy Sullivan and David Morgan

WASHINGTON (Reuters) – With coronavirus cases reported in all 50 U.S. states, lawmakers in Washington are working to limit the economic damage from the widening epidemic. To do so, they must overcome another problem – partisan gridlock.

The Republican-controlled Senate is expected on Wednesday to vote on a roughly $105 billion aid package that bolsters safety-net programs and provides free testing for the highly contagious coronavirus that causes the COVID-19 respiratory disease.

The Democratic-controlled House of Representatives passed the package by an overwhelming bipartisan margin on Saturday.

Senate Majority Leader Mitch McConnell is urging his colleagues to approve it quickly.

“Gag and vote for it,” he said at a news conference on Tuesday.

That may be difficult for some Senate Republicans who worry that the proposed legislation’s sick-leave provisions could heap costs on small businesses. Others have objected it does not cover those who work at corporations that employ more than 500 people.

“I’m pretty concerned with the House bill making a bad situation worse in our economy,” Republican Senator James Lankford said on Tuesday.

Senator Rand Paul, a conservative Republican, will offer an amendment to pay for the new spending in the legislation, said Sergio Gor, a spokesman for Paul. “This would include ending our decades-long involvement in Afghanistan,” he said.

Still, the Senate is expected to approve the bill this week and immediately turn to a third effort, after U.S. Treasury Secretary Steven Mnuchin privately warned that unemployment could hit 20% if Congress does not act.

The third package could include popular items, like giving $1,000 checks to Americans, and less popular items, such as an expensive bailout for airlines that risk falling into bankruptcy due to the sharp decline in travel due the outbreak.

It was unclear when that would be passed or how soon Americans would get the money, but President Donald Trump took to Twitter early Wednesday morning to push the effort.

“For the people that are now out of work because of the important and necessary containment policies, for instance the shutting down of hotels, bars and restaurants, money will soon be coming to you,” Trump said in his tweet.

McConnell said lawmakers were working as rapidly as possible on the third package. “But first, we need to pass the House bill, which hopefully we’ll do later today,” he said on the Senate floor.


Mindful of the backlash to the bank rescue package put together during the 2008 financial crisis, Republicans working on the third effort say it does not amount to a bailout of the industry.

“Chairman Shelby opposes bailouts,” said Blair Taylor, a spokeswoman for Republican Senator Richard Shelby, who is working on the effort.

Separately, the Trump administration on Tuesday night also asked Congress for another $45.8 billion to shore up U.S. agencies responding to the outbreak.

It would also give extra funds to help beef up sanitation efforts at airports, provide extra protective gear to federal agents, bolster cybersecurity protections, improve teleworking capabilities and shore up the Amtrak passenger rail service, which has seen a steep drop in ridership.

Health officials have advised Americans to avoid non-essential travel and large gatherings in an effort to stop the spread of the coronavirus, which has infected more than 6,500 people across the country and killed at least 115.

McConnell on Wednesday warned his fellow senators to abide by the containment guidelines, admonishing them against congregating as they normally do during votes, especially at the “well” of the chamber where staffers work.

“Come in and vote and leave,” said McConnell, who also announced that the Senate’s typical 15-minute roll-call votes would be extended to 30 minutes so that members did not all rush into the chamber at once.


Disputes over taxes and spending have repeatedly brought Washington to a standstill over the past decade, but lawmakers so far have overcome their partisan divisions to confront the crisis.

Congress quickly approved an initial $8.3 billion package to boost the medical response to the pandemic, and the House-passed bill enjoyed broad support from both Republicans and Democrats.

Sick-leave and family-leave provisions alone in the House-passed legislation would cost $105 billion, according to the Joint Committee on Taxation.

Mnuchin said the third package could cost $1.3 trillion – surpassing the $838 billion in stimulus provided by the American Recovery and Reinvestment Act of 2009, which passed Congress with only a handful of Republican votes.

Conservatives like Republican Senator Tom Cotton are calling for it to include expanded safety-net benefits.

Senate Democratic Minority Leader Chuck Schumer, meanwhile, has proposed spending $750 billion on further safety-net enhancements, such as emergency child care for health workers, and House Speaker Nancy Pelosi said on Tuesday that the third package should include benefits for self-employed workers.

Lawmakers from both parties also have lined up against Trump’s proposed payroll tax cut on the grounds that it would take too long to make a difference and would not help those who lose their jobs.

(Reporting by Andy Sullivan, David Morgan and Susan Cornwell; Additional reporting by Richard Cowan and Susan Heavey; Editing by Christopher Cushing, Angus MacSwan and Paul Simao)

Israel defense sector faces big hit after new U.S. aid agreement

Visitors watch a demonstration at the Israel Aerospace Industries (IAI) booth in the IMDEX Asia maritime defence exhibition in Singapore

By Steven Scheer

JERUSALEM (Reuters) – Israel’s defense industry faces layoffs, closures and a scramble to set up shop in the United States following the signing of a new U.S. military aid package that phases out Israel’s ability to spend a quarter of the funds on its own businesses.

The 10-year, $38 billion agreement, signed on Sept. 15 after a year of negotiations, comes into effect in U.S. fiscal year 2019. It constitutes the most military assistance Washington has ever provided to an ally, but was clinched only after Prime Minister Benjamin Netanyahu accepted concessions.

Key among those is the gradual phasing out of a clause allowing Israel to spend 26.3 percent of the funds on its own defense sector, which competes actively with U.S. firms such as Boeing, Lockheed Martin, General Dynamics and Raytheon.

That means Israeli defense companies will miss out on up to $10 billion that might otherwise have been spent on home-made drones, missiles, tanks and other equipment, depending on the precise terms of the phase-out, which remain unclear. Once that phase-out is completed, all the funds in the agreement will have to be spent in the United States.

“It’s quite a problem,” said one Israeli defense industry official, who asked not to be named because of the sensitivity of the issue. “The bigger companies and most advanced ones with the best technology and capabilities will be able to survive, but the smaller you are, the bigger the problem is.”

Netanyahu’s office declined to comment on the domestic consequences of the aid deal but has said the agreement “will greatly strengthen the security of Israel”.

Israel has about 700 defense-related firms, most of them with only 50 to 150 employees. They mainly act as subcontractors to Israel’s four largest defense companies — Elbit Systems, Israel Aerospace Industries, Israel Military Industries and Rafael Advanced Defense Systems.

Israel’s defense exports totaled $5.7 billion in 2015, about 14 pct of all exports and a major driver of the economy.


None of the companies asked by Reuters to discuss the aid package were willing to speak on the record, mentioning concerns about future business. But several executives, speaking on condition of anonymity, said that as a result of the deal they were already considering contingency plans.

One option would be for larger firms to open subsidiaries in the United States, like Elbit has done, to compensate for the loss of business. They might also acquire smaller U.S. firms.

As one executive put it: “This should be translated into an opportunity for the Israeli industry, which should penetrate new markets and improve their competitive ability.”

“We should face the global trends and the fact that Israel is losing its ability to compete,” the official said, adding the company where he works would “accelerate the process” of searching for a U.S. company to buy.

Another area of concern is the loss of Israeli know-how, with aerospace engineers and scientists potentially moving abroad if there is a decline in inward spending and investment.

The executives said they hoped that when the time comes, the government will find the nearly $1 billion a year extra needed to keep the sector afloat under terms of the agreement, although the sum may be hard to come by given the fractured political environment.

According to Israel’s Manufacturers’ Association, even a 1 billion shekel ($265 million) cut in the defense budget will lead to the layoff of more than 2,000 workers, mostly from small- and medium-sized subcontractors that have a “to be or not to be” dependence on orders from the Israeli defense establishment.

A source close to Netanyahu said the prime minister didn’t anticipate any closure of small defense companies, and noted the procurement changes would go into effect only in time.

On the domestic political front, the right-wing leader has drawn fire over the new pact from critics, including his former defense minister Ehud Barak, who said that Netanyahu’s vocal opposition to last year’s U.S.-led nuclear deal with Iran had jeopardized a potentially larger package.

However, with uncertainties surrounding a tightly contested election for the White House, Netanyahu was keen to wrap up an agreement, replacing the current $30 billion deal that expires at the end of fiscal 2018.

Addressing his cabinet on Sunday, Netanyahu called arguments that Israel was short-changed in the negotiations “distortions and fabrications of parties with political interests”.

Avraham Bar David, a former general who works with some 200 small Israeli defense contractors through the Manufacturers’ Association, predicted that “70 to 100 of them” will not survive the local procurement restriction.

“These companies are too small to sell abroad,” he said.

($1 = 3.7734 shekels)

(Editing by Jeffrey Heller and Giles Elgood)