Wednesday, February 28, 2024

Stimulus update: Congress enters critical week to strike deal

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For the latest information on ongoing stimulus negotiations, please see our cover here.

Congress is now really on the phone with just a week to put pen to paper on a relief package.

Friday, Congress passed weeklong spending bill to avoid government shutdown and give executives an extra week to craft a stimulus package before critical programs expire at the end of the year. Both sides have said they would prefer to reach a deal this week on both an omnibus spending bill and another COVID-19 relief deal.

The stakes are high. Without congressional action, a slew of pandemic benefits will expire this month, including some unemployment benefits and moratoriums on evictions. This is something the already weakened economic recovery may have difficulty absorbing.

Of the more than 19 million Americans who currently receive unemployment benefits, about 13 million would lose their benefits the week of December 26, when Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Benefit (PEUC) expire. Passed as part of the CARES law in March, PUA expands the number of people eligible for unemployment benefits – for example, small-scale workers and the self-employed in the United States – while PEUC grants 13 additional weeks of unemployment benefits to skilled people.

“If we don’t get this help, [the recent unemployment] The report suggests that the economy will start to reverse, we will start to lose jobs and unemployment will start to rise again, ”Moody’s chief economist Mark Zandi recently said.Fortune.

Where are the negotiations

Last week, both sides of the aisle expressed their views and proposals for the next deal, but neither provided a bill.

A Biparty proposal of $ 908 billion has gained ground in recent weeks, although it is not clear whether influential party members like Senate Majority Leader Mitch McConnell will participate. The White House too released its own $ 916 billion proposal, although it includes minimized unemployment benefits but $ 600 incentive checks. Democrats shot down quickly the White House proposal.

However, Democratic Senator Joe Manchin, one of the leaders of the bipartisan bill, still seems optimistic. The bipartisan bill “did not collapse”, said on “Fox News Sunday”. “We have been meeting day and night for the past month,” he said, adding that “we will produce a bill for the American people [on Monday], 908 billion dollars ”, unveiled“ before the end of the day ”.

Still, there remain several long-standing sticking points for both parties, namely state and local funding, protection from COVID-19 lawsuits for businesses and another round of stimulus checks. McConnell has previously proposed to drop the two most controversial issues (state and local funding and corporate responsibility) in the interest of the time, although some like Democrat Senator Chuck Schumer did not react well initially to the proposal.

But the last iteration of a chord might look a little different. On Sunday, Politico and CNN reported that the bipartisan $ 908 billion bill could now be split into two parts: a $ 748 billion coin for common items such as funds for jobless health care and benefits, and the another, a tranche of 160 billion dollars, for the main blocking points of public and local funding. with temporary liability protection. While this may be a compromise, it is not clear whether there will be enough support for this new deal to pass.

Meanwhile, House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin are expected to speak again on Monday after a Sunday afternoon conversation on spending, Pelosi’s deputy chief of staff Drew Hammill. written in a tweet. And according to Hammill, Pelosi is sticking to his guns: “The President believes, at a time when the virus is in full swing, that the need for public and local funding is even greater, especially given the responsibility of States to distribute and administer the virus. vaccine.”

This week will be crucial for both sides to reach a compromise, especially on these contested issues, in order to adopt a package and provide relief to the millions who are still suffering during the holidays due to the pandemic.

More to read absolutely financial cover of Fortune:


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