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US Stimulus: Congress Continues Its Dance

27 August 2020   |  

Well, the Congressional music seems not to have stopped just yet—with the deeply divided House and Senate continuing their (unsurprising) stimulus dance. The negotiations have moved little since late July, when Senate Republicans released their outline for a $1 trillion bill (which they’ve since followed up with a scaled-back plan). For their part, Democrats have thus far remained committed to the House’s $3.5 trillion package, passed on a near-party-line vote in May.

But is further stimulus yet warranted? True, unemployment benefits (to the tune of $600/week) expired as of July 24 and are generally considered a high priority. But other features of the CARES Act and the Fed’s stimulus plans have yet to be fully tapped. For example, the Treasury provided $75bn in equity to the Main Street Lending Program to help finance up to $600bn of loans to small and mid-sized companies. As of mid-August, some $100mn of those funds has been lent out. That’s in addition to the Fed’s programs to provide loans to businesses and support the corporate bond market, among other liquidity measures. There are also reports of many who still await their first stimulus check.

Nevertheless, negotiations continue apace—and in the meantime, President Trump signed an executive order to provide $300/week. It’s unclear how much aid this will afford—the program is rather complex and requires some legwork on states’ parts to determine eligibility. Whether the two sides will reach an agreement is very much an open question: Until recently, one commonality seemed to be a second round of stimulus checks (generally, for those earning less than $100,000/year)—but Republicans’ latest proposal, in an attempt to decrease the overall price tag, scrapped a second round of direct payments altogether in favor of other measures.

Another major sticking point has been the age-old political landmine of state and local government aid. The CARES Act did include $150bn via the Coronavirus Relief Fund for state, local and tribal governments. But Republicans are loath to include more in this round, with some channeling ye olde Anti-Federalists, arguing ongoing support would amount to a bailout for states already struggling with deficits (like Illinois). Democrats (today’s Federalists, continuing our comparison) have stood firm on further aid’s necessity to sustaining hopes of economic recovery.

Even if Republicans and Democrats can rediscover some common ground, a finalized bill seems highly unlikely until sometime in September, at best. The closer we get to the election without a deal, the likelier it seems we mightn’t see one until the end of the year—or possibly not in 2020 at all.

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