Coronavirus Stimulus Talks Make Progress Despite Resistance

“Our conversation provided more clarity and common ground as we move closer to an agreement,” Mrs. Pelosi said in a letter to House Democrats Tuesday evening, following her 45-minute conversation with Treasury Secretary Steven Mnuchin Tuesday afternoon. The Tuesday deadline she set “enabled us to see that decisions could be reached and language could be exchanged, demonstrating that both sides are serious about finding a compromise.”

White House chief of staff Mark Meadows said on CNBC that the day’s talks had been “productive enough to continue to have discussions tomorrow,” adding that Mrs. Pelosi and the administration were now trying to secure “some kind of agreement before the weekend.”

Any deal approaching $2 trillion would encounter deep resistance in the GOP-controlled Senate. Senate Majority Leader Mitch McConnell (R., Ky.) told Senate Republicans at their weekly lunch Tuesday that he had advised the White House not to divide the Senate GOP right before the election and that a $2 trillion relief bill would split the caucus, according to people familiar with the comments.

“That’s a high number to me,” Senate Appropriations Committee Chairman Richard Shelby (R., Ala.) said Tuesday of a deal upwards of $1.8 trillion. “I am not optimistic about us doing anything.” On Monday night, Senate Majority Whip John Thune (R., S.D.) said it would be difficult to find the 13 Republicans that would be needed for a deal to clear the 60-vote threshold to advance in the Senate if all 47 Democrats support it.

President Trump on Tuesday said he would be willing to support a larger spending level than Mrs. Pelosi, but offered few details on what that would look like. In the face of Senate GOP resistance, he said he would be willing to pass the bill with largely Democratic votes.

“I’d take all the votes you could get, whether it’s Democrat or Republican,” Mr. Trump said. Mr. McConnell said over the weekend that if a deal is reached, the Senate would consider it, but he didn’t commit to a vote before the election. Some GOP aides thought the chamber would likely adjourn after the expected confirmation of Supreme Court nominee Amy Coney Barrett next week.

“If a presidentially supported bill clears the House, at some point we’ll bring it to the floor,” Mr. McConnell told reporters Tuesday.

“Just right now, procedurally, the mechanics of getting a deal done [before the election] would be challenging to say the least,” Mr. Thune said Tuesday.

At the root of Republicans’ resistance are their concerns that Mr. Mnuchin is ceding too much to Mrs. Pelosi and that a potential deal would contain few GOP policy victories while requiring trillions in new deficit spending, Republican aides said.

The White House’s latest $1.88 trillion offer narrowed the difference with the $2.2 trillion relief bill passed by House Democrats earlier this month, but a new overall spending level hasn’t been agreed upon.

Mr. Meadows said the two sides remained “several hundreds of billions of dollars” apart, as well as still trying to hammer out policy divisions.

“We’re not just down to a difference of language and a few dollars. We still have a ways to go,” he said. Mrs. Pelosi had asked Democratic committee chairs to work with their GOP counterparts to hash out some policy disputes.

On Tuesday afternoon, Democrats blocked Senate GOP legislation to fund another round of forgivable, government-backed loans to small businesses under the Paycheck Protection Program. The bill would have provided $258 billion in funding for the PPP, whose authorization expired in August, allowing certain companies with no more than 300 employees to apply for a second loan.

Democrats, who focused more on worker safety and sought to strengthen Occupational Safety and Health Administration rules during the pandemic, sent a new counterproposal to the administration on the issue Tuesday afternoon.

Mrs. Pelosi said that two policy issues remained the biggest sticking points: how much funding to include for state and local governments, and what kind of legal protections to provide businesses and other entities operating during the pandemic.

Mr. McConnell has said for months that expanded liability protections are among his top priorities for another relief bill, saying they are necessary for businesses and schools to reopen.

Mr. McConnell has suggested temporarily offering legal protections to schools, businesses, health-care providers and nonprofit organizations when sued by people allegedly exposed to the coronavirus. Under his proposal, defendants would only be held liable if they didn’t make reasonable efforts to comply with public-health guidelines and instead demonstrated gross negligence or intentional misconduct, according to the summary.

The defendants would have the right to move the case to federal court if they so choose, offering a potentially more favorable alternative to state courts.

She said the two sides were also working out a disagreement over tax proposals, including Democrats’ push to prevent corporations from taking current losses and claiming them against taxes paid at the old 35% tax rate. In relief legislation passed in March, lawmakers agreed to relax rules on how businesses can use losses incurred in 2018 through 2020 to offset past and current income. Democrats later argued that the provision gave away too much tax revenue to companies and high-income business owners.

The March law also relaxed rules about when high-income people can use their business losses to offset other income. Democrats want to put those limits back in place.

—Andrew Duehren, Andrew Restuccia and Richard Rubin contributed to this article.

Write to Kristina Peterson at [email protected]