WASHINGTON — Jump-starting negotiations with days to spare, the White House on Tuesday offered Democrats a $916 billion pandemic stimulus proposal that would meet their demand to provide some relief to state and local governments and include liability protections for businesses that have been a top priority of Republicans.
The offer from Steven Mnuchin, the Treasury secretary, to Speaker Nancy Pelosi was the first time since November’s elections that the Trump administration has engaged directly in talks on Capitol Hill about how to prop up the nation’s flagging economy. It came as lawmakers raced to reach a deal on another round of coronavirus relief before they conclude this year’s session, now expected to happen next week.
The plan does not include a proposed revival of $300 weekly enhanced unemployment benefits, thought it would extend other federal unemployment programs set to expire in the coming weeks. Instead, it would include another, smaller round of direct payments to Americans, amounting to $600 per person.
“The president’s proposal must not be allowed to obstruct the bipartisan congressional talks that are underway,” Ms. Pelosi and Senator Chuck Schumer of New York, the minority leader, said in a statement, calling the cuts to unemployment insurance benefits from a proposed $180 billion to $40 billion “unacceptable.”
In a statement issued after his conversation with the speaker on Tuesday, Mr. Mnuchin offered little detail other than his intent to offset the cost of the package in part by repurposing $429 billion in funds from earlier legislation and using unspent funds from a popular federal program for small businesses that lapsed this year.
The proposal emerged as a bipartisan group of moderate lawmakers was meeting virtually to work toward an agreement on the details of its $908 billion compromise plan. It was unclear how Mr. Mnuchin’s proposal would affect discussions on that package, which Democratic leaders on Tuesday said “are the best hope for a bipartisan solution.”
The two provisions Mr. Mnuchin singled out as part of his offer — what he called “robust” liability protections for businesses, schools and hospitals, and funds for state and local governments — have been the largest sticking points in efforts to reach a compromise.
The administration’s proposal also included funds for vaccine distribution and the revival of the Paycheck Protection Program, the small-business loan program.
“It’s a very good offer,” said Representative Kevin McCarthy, Republican of California and the minority leader. “It focuses on the things that need to be there.”
Earlier Tuesday, Senator Mitch McConnell, Republican of Kentucky and the majority leader, signaled openness to a deal, floating the possibility of removing both the liability provision and funding for state and local governments. He argued that dropping both parties’ top priorities could smooth the way for a narrower deal with funding for vaccine distribution, schools and small businesses.
“We know the new administration is going to be asking for another package,” Mr. McConnell said on Tuesday, offering an implicit acknowledgment of President-elect Joseph R. Biden Jr.’s victory. “What I recommend is we set aside liability, and set aside state and local, and pass those things that we agree on, knowing full well we’ll be back at this after the first of the year.”
The idea amounted to the first significant concession in months from Mr. McConnell, who had previously called the legal protections a “red line” in stimulus talks. But Democrats scoffed at it, after months of insisting that any stimulus agreement include funds to bolster state and local governments that have lost hundreds of billion of dollars during the pandemic and are facing devastating budget cuts. Republicans have branded the provision a “blue-state bailout,” though state officials in both parties have lobbied for additional relief.
“He’s sabotaging good-faith bipartisan negotiations because his partisan ideological effort is not getting a good reception,” Mr. Schumer said. In her own statement, Ms. Pelosi declared that “Leader McConnell’s efforts to undermine good-faith, bipartisan negotiations are appalling.”
Mr. Schumer said Democrats’ proposals for funding state and local governments had “broad bipartisan support,” unlike Mr. McConnell’s liability proposal. The measure would provide five years of legal protection from coronavirus-related lawsuits for businesses, schools, hospitals and nonprofit organizations that make “reasonable efforts” to comply with government standards.
But many Democrats have rejected what Senator Bernie Sanders, the Vermont independent, derided as “a get-out-of-jail-free card to companies that put the lives of their workers and customers at risk.” And while Mr. McConnell has warned of a wave of lawsuits related to the pandemic, economic data shows that there have been only a relatively small number so far.
The bipartisan group of lawmakers is discussing liability protections in its outline of the $908 billion compromise, as well as how to allocate $160 billion currently set aside for state and local governments.
“I hope that we can come up with an agreement,” Senator Susan Collins, Republican of Maine, told reporters when asked about Mr. McConnell’s suggestion. “If we can’t, then I see a certain logic in passing what we do agree with, given that there’s widespread support for another round of P.P.P., helping our schools, our health care providers, providing more money for testing and vaccine distribution.”
Leaders of both parties have agreed that some form of relief needs to be approved before Congress departs at the end of the year, and to work toward attaching it to a catchall government spending package.
Both chambers are expected to approve a one-week stopgap bill in the coming days to avert a government shutdown on Friday and buy additional time for negotiators.
Reporting was contributed by Luke Broadwater, Nicholas Fandos, Jim Tankersley and Alan Rappeport.