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Time is running out for the U.S. government to approve a second coronavirus relief package, with Congress adjourned until next week and the Biden administration focusing on taking office in January.
So where do Americans anxiously await another federal stimulus check – the cash payments initially distributed this spring? For now, stuck in limbo.
Granted, lawmakers could still pass a scaled-down stimulus bill when they return to Washington, DC on November 30, but most economists believe it is unlikely to fit the CARES (Coronavirus Aid, Relief and Economic Security) of $ 2.2 trillion that was signed in March and handed over $ 1,200 checks to most Americans.
Democrats and Republicans stay away on several key issues, such as providing hundreds of billions of dollars in funding to states and cities that have been affected by declining tax revenues amid the coronavirus pandemic.
Even if Congress passes an aid bill early next month, it could take weeks for the IRS to electronically deposit funds into people’s bank accounts, let alone mail millions of paper checks. It took most Americans between one and three months to get their so-called Economic Impact Payment after the bill was signed this spring.
This would leave many households and businesses in limbo, with millions of people are expected to lose their unemployment benefits by the end of the year and nationwide deportation moratoria expiring in the new year. The number of Americans asking for unemployment help pink for the second week in a row, a sign that the economic recovery is losing momentum.
Millions of Americans “are heading for a gloomy winter as safety nets expire,” Nancy Vanden Houten, senior economist at Oxford Economics, said in a report. “We are pessimistic about the prospect of significant short-term budget relief and fear that several social safety net programs may be allowed to expire, affecting millions of households across the country.”
Rather than trying to break the months-long deadlock on stimulus funding, experts believe Congress is more likely to focus on passing legislation to fund the federal government after December 11. , thus avoiding a government shutdown.
Deutsche Bank economists Peter Hooper and Matthew Luzzetti believe Congress could launch a lean stimulus package early next year. Janet Yellen, who would be President-elect Joe Biden’s choice for Treasury secretary, would likely push for a quick bill, economists told investors this week.
Yet Yellen would not take on that role until the arrival of the Biden administration on January 20 and would also require the approval of a politically divided Senate.
And a spokesperson for President-elect Joe Biden’s transition team rebuffed a report that Mr Biden would support a quick relief bill even if it meant slashing some of the Democrat’s priorities, such as helping people. local governments, the source of congressional news. La Colline reported on Monday. “The president-elect fully supports the president and the leader in their negotiations,” transition spokesman Andrew Bates said in a statement.
What delays an invoice?
House Democrats passed an updated Health and Economic Recovery and Emergency Solutions (HEROES) Act on October 1, but the $ 2.2 trillion bill collided to opposition from Republican lawmakers.
Among the major disagreements: whether the federal government should help cash-strapped cities and states weather the massive economic blow caused by the pandemic. The crisis could lead to a federal budget deficit of $ 434 billion through 2022 in the most severe scenario, which would include a resurgence of the virus and a lack of stimulus assistance, according to Moody’s Analytics.
The HEROES Act has reportedly provided more than $ 400 billion in funding to states and local governments, but Republicans have challenged that aid, including President Donald Trump, who opposed what he calls “bailouts” for states ruled by democrats. But the point is, many Republican-led states and cities are also facing budget deficits, including Ohio and Texas, the latter of which is in a $ 4.6 billion budget hole.
Democrats and Republicans also remain very distant on the issue of unemployment assistance, with Democrats pushing for the renewal of the additional $ 600 in weekly wages under the CARES law. Republicans have argued that the improved unemployment benefits are too generous and deter people from returning to work, despite a lack of economic data to support the claim.
Edge of a cliff
It is more certain that millions of households face increasingly serious financial problems, which are only likely to worsen once the aid and protections of the CARES Act expire at the end of the year.
About 6.7 million people could be expelled in the coming months as a federal moratorium on evictions ends on Dec. 31, according to a report by the National Low Income Housing Coalition and the University of Arizona. This would approach the number of people who lost their homes to foreclosure during the 2008 financial crisis and the recession that followed.
And nearly 12 million unemployed workers are expected to be cut off from unemployment assistance Boxing Day, according to an analysis by the Century Foundation, a progressive think tank. That threshold would reduce total household income by about $ 19 billion a month, Oxford Economics said Tuesday, which could lead to lower overall consumer spending as the economy slows.
More than 125 economists this month signed an open letter urging lawmakers to allocate money to stimulus checks.
“Recurring direct payments will help families meet basic needs, boost national and local economies and accelerate recovery,” they wrote in the letter. “The cash reaches millions of people struggling economically, including those who do not qualify for unemployment benefits.”
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