Biden team promotes swift stimulus to prepare for a new recession

Washington — President-elect Joseph R. Biden, an adviser, plans to increase the likelihood that the US economy will head into a “double-bottom” recession early next year. According to controversial savvy people, they want Congressional Democratic leaders to reach a swift stimulus with Senate Republicans, even if they haven’t reached the larger package Democrats were looking for. I will.

So far, Senator Nancy Pelosi of California and Senator Chuck Schumer of New York, the leader of the Democratic Party, have insisted that the Republicans agree on a spending bill of over $ 2 trillion, and Mitch McConnell of Kentucky. Senators need a much smaller package. The resulting impasse threatens to delay additional financial assistance until after Mr Biden’s inauguration on January 20.

Many of the president-elect’s advisers end the year with the looming threat of millions of Americans losing the benefits of unemployment in a wave of evictions and foreclosures, as well as worsening economic conditions due to the new surge in Covid-19 infection. I am confident that we need more urgent action by the time. .. That may mean moving at least on the way to McConnell’s $ 500 billion package proposal.

But top Democrats continue to publicly argue that Republicans need to approach their first offer of $ 2.4 trillion. Biden, Pelosi and Schumer publicly argued that Republican leaders were willing to compromise and how they were prepared to diminish their ambitions to reach an agreement with McConnell. Not shown.

“The Covid-19 pandemic and economic downturn wouldn’t end without our help,” Pelosi and Schumer wrote in a letter this month asking McConnell to resume negotiations. “It is imperative that the bill be well-funded and provide meaningful relief to many suffering Americans.”

According to people familiar with Mr. Biden’s plans, Mr. Biden’s team is also considering various other policy options to combat the prospect of a new recession and rising unemployment when he takes office. I will. Some of them, like a large spending bill that includes all or most of his campaign proposals on infrastructure, have Democrats take control of the Senate in two special elections in Georgia in January. It may depend on what you get.

Others will not need Congress. Mr. Biden’s aide will have the president-elect announce that he will sign an executive order on the first day of the office extending the eviction and foreclosure moratorium and postpone the payment of some student loans that will eventually expire. People familiar with this year’s discussion said that they considered. He also announced that under an executive order issued by President Trump, some employers, including the federal government, will sign an order that provides a more gradual schedule of payroll tax repayments postponed to 2021. can.

Such orders mitigate or avoid the economic cliff that protection for lessors, homeowners, and some borrowers expires, which experts fear could accelerate economic contraction. There is likely to be.

According to people, the Biden team is also by the Trump administration to end the Federal Reserve’s lending program, which helped stabilize the market by requiring the central bank to return hundreds of billions of dollars to the Treasury. Looking for ways to avoid last-minute movements Fed in the discussion. One possibility is that Mr Biden’s Treasury will reissue the money to the Fed under new parameters intended to encourage more aid to SMEs than previously supplied. is.

But the most important measure could be the prompt parliamentary approval of the stimulus bill.

“We need emergency assistance and assistance during the lame duck session to help families and small businesses,” Biden’s transition aide Jensaki said before a meeting with Biden’s Vice President Elect Kamala Harris on Friday, Pelosi. And Mr. Schuma. “There is no room for further delay. We need to move forward as soon as possible.”

Biden and other Democrats “agreeed that Congress would need to pass a bipartisan emergency aid package at a lame duck session,” according to a reading of the meeting, but showed what size package would be guaranteed. I wasn’t.

The economy returned to growth in the second half of this year after a sharp recession. However, sluggish retail sales in October, higher unemployment insurance claims last week, and weeks of employment and working hours at small businesses across the country are increasing the likelihood that the economy will return to recession.

“The pandemic is getting more intense and is starting to hurt again,” said Mark Zandy, an economist at Moody’s Analytics.

Biden and an economist close to his campaign are distributing a spreadsheet containing new forecasts from Zandy. It predicts that the economy will begin to shrink again in the first half of next year, unless lawmakers break the protracted deadlock in stimulus negotiations.

Even if pharmaceutical companies are preparing to curb the pandemic and distribute the Covid-19 vaccine, which hopes to rock the economy for rapid growth late next year or 2022, such a reversal is economist. Will bring what we call a double-bottom depression. Zandi predicted that in the first half of 2021, companies would cut 3 million jobs and the unemployment rate would return from the current 6.9% to nearly 10%.

“Speed, size and composition are all important,” said Jared Bernstein, an economist at the Center for Budget and Policy Priorities, who was part of Mr. Biden’s inner circle in the campaign. I did. Especially important. “

The controversy over package size has stagnated negotiations for months. Democrats say multiple senates are inadequate to meet economic needs, especially because state and local governments do not include funds to fill budget holes and avoid furloughs in the public sector. It rejected the Republican proposal (latest about $ 500 billion). Zandy said such packages “probably rarely reach vaccines,” but there is a risk of running out when the economy is still in need of help.

Some Republicans have revisited concerns about government bonds, arguing that the economy is improving, and warned about spending much more.

“We want to reach an agreement in all areas where compromises are well reached, send hundreds of billions of dollars to an urgent and undisputed program, and let Washington discuss the rest,” McConnell said in a Senate speech. It was. This week we have derived a Democratic offer. “By playing an all-or-nothing hardball with this radical proposal, our colleagues have so far ensured that American workers and their families get nothing at all.”

The legislative period before the start of the next parliament in January is rapidly tightening, leaving many skeptics that the stimulus may pass by the end of the year. Most of the spending debate is focused on avoiding government closures and approving the dozens of annual spending bills needed. Approximately one week of the planned legislative date remains, during which legislators must pass legislation to fund the government after December 11. Spread of coronavirus between ranks and files.

Economists are increasingly emphasizing the need for lawmakers to act swiftly, even if that means reaching an agreement in a smaller package. A bipartisan group convened by the Aspen Institute’s Economic Strategy Group (including a former Treasury Secretary under Democratic and Republican administrations) approved a package on Thursday that included assistance to small businesses, individuals, states and local governments. Encouraging the economy to “up to 2021 inches for unwaitable relief.

“What I’m really worried about is the millions of people who have no food or home during the winter,” said Melissa S. Kearney, an economist who leads the strategic group. “For me, that level of personal suffering is a priority for everyone and must overcome political differences.”

Nicholas Funds and Thomas Kaplan contributed to the report.

Biden team promotes swift stimulus to prepare for a new recession

Source link Biden team promotes swift stimulus to prepare for a new recession

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