Time is running out for the US government to approve a second coronavirus relief package, with Congress postponed to next week and the Biden administration focusing on taking office in January.
So where does this make Americans anxiously await another federal check on incentives – the cash payments that were originally distributed this spring? For now, stuck in a dead end.
Sure, lawmakers can still pass a reduced incentive bill when they return to Washington on November 30, but most economists believe it is unlikely to comply with the 2.2 trillion Aid, Aid and Economic Security Act (CARES) dollars, which was signed into law in March and provided $ 1
Democrats and Republicanson several key issues, such as providing hundreds of billions of funding for 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, the IRS could take weeks to deposit funds electronically into people’s bank accounts, let alone send millions of paper checks. It took between one and three months for most Americans to receive the so-called “Economic Impact” after the bill went into effect this spring.
This would leave many households and businesses hanging, withuntil the end of the year and the national moratoriums on evictions, which expire in the new year. The number of Americans applying for unemployment benefits in turn, a sign that economic recovery is losing momentum.
Millions of Americans are “heading for a gloomy winter as safety nets run out,” said Nancy Vanden Houten, a leading economist at Oxford Economics. “We are pessimistic about the prospect of some significant short-term fiscal relief and fear that some social security programs may leak, affecting millions of households across the country.”
Instead of trying to overcome the long-term stalemate in funding incentives, experts believe Congress is more likely to focus on passing legislation to fund the federal government after Dec. 11, preventing the government from shutting down.
Deutsche Bank economists Peter Hooper and Matthew Luzetti believe that Congress may repeal a reduced stimulus package early next year. Janet Yellen, who has reportedly been elected Joe Biden’s president as finance minister, is likely to push for a quick bill, economists told investors this week.
Still, Yellen will not take over until the Biden administration is introduced on January 20, and will also require approval from a politically divided Senate.
A spokesman for President-elect Joe Biden’s transition team has rejected a report that Mr Biden will support a rapid relief bill, even if it means reducing some of the Democrat’s priorities, such as helping local governments, a source in Congress told The Hill. Monday. “The president-elect fully supports the speaker and the leader in their talks,” transition spokesman Andrew Bates said in a statement.
What does it matter?
Democrats in parliament passed an updated Universal Health and Economic Recovery Act (HEROES) on Oct. 1, but the $ 2.2 trillion bill went into opposition by Republican lawmakers.
Among the major disagreements: Should the federal government help cities and states with money to overcome the huge economic blow caused by the pandemic. The crisis could lead to a $ 434 billion federal budget by 2022 in the worst-case scenario, which would include a resurgence of the virus and a lack of more stimulus, according to Moody’s Analytics.
The HEROES bill would provide more than $ 400 billion in funding for state and local governments, but Republicans turned it down, including President Donald Trump, who objected to what he called “bailouts” for Democrat-run states. The fact is, however, that many Republican governments and cities also face budget deficits, including Ohio and Texas, the latter staring at a $ 4.6 billion budget hole.
Democrats and Republicans are also far behind on the issue of unemployment benefits, with Democrats pushing for a resumption of the additional $ 600 a week paid under the CARE Act. Republicans say the increased unemployment benefits are too generous and discourage people from returning to work, despite the lack of economic data to support the claim.
End of a rock
It is more certain that millions of households are facing deepening financial problems, which are likely to worsen only after the expiration of assistance and protection under the Care Act at the end of the year.
About 6.7 million peoplein the coming months, as the federal moratorium on evictions ends on Dec. 31, according to a report by the National Coalition for Low-Income Housing and the University of Arizona. This will be close to the number of people who lost their homes due to imprisonment during the financial crisis of 2008 and the ensuing recession.
And almost 12 million unemployed must bethe day after Christmas, according to an analysis by The Century Foundation, a progressive think tank. The restriction will reduce total household income by about $ 19 billion a month, Oxford Economics said on Tuesday, potentially slowing overall consumer spending as the economy slows.
More than 125 economists signed an open letter this month urging lawmakers to set aside money for incentive checks.
“Recurring direct payments will help families meet basic needs, stimulate the state and local economy, and accelerate recovery,” the letter said. “The money reaches millions who are struggling economically, including those who are not eligible for unemployment benefits.”