Monday, July 15, 2024

Hopes for a US stimulus rise as job creation slows

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Fears of a hesitant US recovery have energized discussions over a new fiscal stimulus package in Congress, signaling a shift in political dynamics in Washington that could bring some relief to the global economy.

On Friday, Republicans and Democrats on Capitol Hill demonstrated their willingness to compromise on a plan to inject hundreds of billions of dollars – and possibly up to $ 1 billion – into the world’s largest economy with a agreement before the end of the year.

Negotiations on further relief measures had been stalled for months, with Congress Democrats pushing for a very big bill and Republicans resisting on the grounds that the recovery was self-sufficient and that limited government support was needed.

However, the sharp rise in coronavirus infections, hospitalizations and deaths has spurred the movement on Capitol Hill. The sense of urgency was reinforced by a weak employment report from November on Friday which showed slower job growth at a monthly rate of 245,000.

“This jobs report is a crying warning that a double-dip recession is imminent and must be a wake-up call to anyone who opposes genuine bipartisan emergency aid,” said Chuck Schumer, the most senior Senate Democrat.

Joe Biden, the president-elect, sought to stimulate talks in an address in Wilmington, Delaware, saying, “People are not looking for documents. They just need help.

Nancy Pelosi, the Democratic Speaker of the House of Representatives, rejected suggestions that her party had played badly in pushing for a bigger package, saying Mr. Biden’s election prompted them to discuss a plan bipartisan with a lower price.

“With a Democratic president committed to a scientific solution for this, with the idea that we will have a vaccine, it completely changes the situation,” she told reporters.

Other members of his caucus said a deal was overdue. “I wish something happened in the fall,” said Tim Ryan, a Democratic representative from Ohio. “Getting average people up until the end of the holiday season in view of public health [crisis] and what they have already experienced, for me shows you how broken the political system is.

Republicans have expressed more interest in reaching a deal in recent days. Mitch McConnell, Senate Majority Leader, said Thursday he was “encouraging to see some encouraging signs in the last few days” and that there was “a move in the right direction”.

“The fire alarm is ringing on our economy and the only question is whether Congress will respond,” said Neil Bradley, vice president of policy at the US Chamber of Commerce. “The time has come for Congress to come up with a bipartisan bill.”

Both sides have indicated that the negotiations will be based on a $ 908 billion plan presented this week by a bipartisan group of senators, including Democrats Mark Warner of Virginia and Joe Manchin of West Virginia and Republicans Susan Collins of Maine and Mitt Romney of Utah.

The proposal included $ 288 billion in assistance for small businesses, $ 180 billion in unemployment benefits and $ 160 billion for cash-strapped state and local governments. It would also offer aid to sectors in difficulty, including $ 17 billion for the airline industry.

The movement towards a deal could weaken further, as there are significant sticking points. Republicans have long insisted on liability guarantees for companies so they can keep operating for pandemic, but Democrats see it as a threat to worker safety. Many Republicans are also skeptical of helping states and local governments, a key priority for Democrats.

Progressive Democrats such as Alexandria Ocasio-Cortez of New York have called for any bill to include a new round of direct payments to Americans, modeled on the $ 1,200 per person sent earlier this year, which means that Ms. Pelosi could face a backlash. from the left to any agreement. Left-wing senator from Vermont, Bernie Sanders, released a statement opposing the nascent compromise on Friday.

“Given the enormous economic desperation facing working families in this country today, I cannot support this proposal unless it is dramatically improved,” Sanders wrote on Twitter.

Josh Gottheimer, a Democratic representative from New Jersey who is helping draft the legislation, said a final deal was unlikely to include stimulus checks.

“This was one of the things for which, frankly, there was no strong support from some pockets in the negotiations,” he said. He said the bipartisan group would work on a new version of the legislation with the aim of passing a bill before many emergency stimulus packages run out on December 26.

Any deal will require the approval of outgoing President Donald Trump, unless there is a veto-proof majority. Speaking to reporters at the White House on Friday, Peter Navarro, Mr. Trump’s trade and manufacturing adviser, suggested the president was likely to support a deal.

“Capitol Hill needs to do its job now – they need to do it quickly. They have to stop fiddling around while Rome is on fire, ”Navarro said. “There’s a train wreck coming up, guys. Okay? And it’s your job to flip the switches so the trains don’t hit.


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