At present, efforts are underway in Washington to dig the final trench, while legislators are considering another potential round of coronavirus incentives.
The majority leader of the Senate, Mitch McConnell, held private talks for days with the minority leader in the House of Representatives, Kevin McCarthy, Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows about what outgoing President Donald Trump will be willing to sign in his last days in office.
Proposals for a new round of stimulus checks have been delayed for months now because they have been held up by the political stalemate in Congress and the elections, and experts are skeptical about the noise being made by top decision-makers. Some believe that the steps taken are still not enough.
“Most political observers remain (very) skeptical, pointing out that the respective positions of Senate Speaker Mitch McConnell and House Speaker Nancy Pelosi do not seem to have made much difference,” Stephen Innes, chief strategist for global markets at Axi, told Washington Newsday in an email commentary.
“More noise than political substance at the time,” he continued. “When I woke up among the sirens of irritation, I was very optimistic, but not so optimistic now, but I’m glad that the opposite has been proven.
“If it came through, it would reduce the likelihood of a rapid and significant stimulus under the Biden administration,” he continued.
Innes believes that the probability of a lame duck deal remains less than 50 percent and that the main focus will be on the runoff election in the Georgian Senate in January. If the Republicans hold the Senate, we could be “back to square one,” he concluded.
The Democrats are looking at their own counteroffer to McConnell’s deal. House Speaker Nancy Pelosi spoke to Mnukhin on Tuesday for the first time since late October.
“Fiscal policy is really the only game in town now,” Gayle Allard, professor of economics at IE Business School, told Washington Newsday.
“$908 billion could be enough to reverse growth and income in the last quarter of the year if passed quickly and if consumers and businesses spend the money they receive rather than save it.
“It could be a bridge into the new year when confidence returns hopefully thanks to the vaccine and falling infection and death rates,” she continued.
Allard notes, however, that economists are concerned that the initially high pace of recovery is slowing: incomes are falling, unemployment is rising and the fourth quarter looks weak. Both Fed Chairman Jerome Powell and President-elect Joe Biden say fiscal measures are urgently needed.
The package that McConnell has put into circulation totals $908 billion and appears to include $322.7 billion in small business relief, including $257.7 billion earmarked for the Paycheck Protection Program. It also includes a $10 billion loan from the Treasury Department to the USPS, $105 billion to “help students return to school,” $16 billion for testing and contact tracing, $31 billion for vaccine costs including development and distribution, and $20 billion for additional assistance to farms.
A draft indicates that the proposal does not provide for a second round of controls.
McConnell said Trump would sign the bill, and additional support could be passed in the near future. However, the draft is only a modest revision of a previous partisan plan that has already been blocked twice. Some Democrats and one Republican reacted quickly to signal opposition to McConnell’s draft.
The price was almost twice as high as McConnell’s proposed “target package” of $500 billion and less than half of the $2.2 trillion demanded by Speaker of Parliament Nancy Pelosi, but it fell flat with leaders on both sides of the political aisle.
“We don’t have time for messaging games, we don’t have time for lengthy negotiations. The way to get a result is to get a signature from the president,” McConnell said at his weekly press conference on Tuesday. “There’s no time to waste.”