Sacramento, California 2020-10-17 09:11:48 –
(CBSNewYork) — Discussions on a possible second stimulus continued last week between Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin. And the House and the White House seem to be moving towards some sort of commonality. But their commonalities are still far from what the Senate may approve.
Exactly how far? If Senate leader Mitch McConnell can be believed, it’s well over $ 1 trillion.
Pelosi and Mnuchin spoke long Thursday afternoon. And in those discussions, a big hurdle was overcome. According to a Pelosi spokesperson, both sides are now willing to include the country’s strategic test plan and do not seem to argue over a particular language.
Chairman Mnuchin and the clerk spoke today at 3:30 pm for 1 hour and 22 minutes. The Secretary-General accepted the Democratic Party’s words for a national strategic test program with “minor” edits and said the words would be shared tomorrow. Speakers are looking forward to the review. (1/4)
— Drew Hanmill (@Drew_Hammill) October 15, 2020
Both sides have already agreed on the need for another round of stimulus checks up to $ 1,200. In addition to what the state already offers, additional federal funding for unemployment insurance is also mixed. The CARES law included a $ 600 weekly add-on. The second stimulus package may also include another payment in the range of $ 400 to $ 600.
There is still some distance between what Democrats want to spend and what the White House has officially proposed. The House of Representatives passed a $ 2.2 trillion package a few weeks ago. The White House offered $ 1.8 trillion last weekend. The significance of the $ 400 billion gap is unclear, as President Donald Trump also revealed that he is willing to spend more.
>> Read: Market strategists warn that “the pain felt on the main street is quite different from what is reflected in the stock market.”
As the President said at the City Hall on Thursday night, “We are negotiating. I am ready to sign a big beautiful stimulus. I want to be big, I want to be bold. Nancy Pelosi and I, If we agree with something, Republicans will agree with it. “
That was probably the news for McConnell. Much more important than the $ 400 billion gap is the gap of about $ 1.5 trillion between the total cost of potential Pelosi-Mnuchin transactions and what Senate Republicans would be willing to spend.
The Senate will vote for a payroll assistance proposal totaling about $ 500 billion this Monday. Last month, McConnell called the $ 2 trillion price tag “eccentric.” He also reiterated that he wouldn’t even bring a comprehensive package to the floor. (Pelosi was just as uninterested on her side to entertain independent measures.) But yesterday McConnell told reporters, “We are discussing more with the Treasury Secretary and the speaker. I have. ” And President Trump seems willing to impress the majority leader with the need for greater stimulus.
The Chair also raised today a comment by Prime Minister McConnell about his willingness to put a comprehensive package on the Senate floor. The Secretary-General has indicated that the President will work with Prime Minister McConnell if an agreement is reached. (3/4)
— Drew Hanmill (@Drew_Hammill) October 15, 2020
Therefore, even if there is no time to reach an agreement before the election day, the state of stimulus negotiations remains in flux. However, the need for a second stimulus is becoming more and more urgent day by day.
Employment growth is slowing and furloughs are on the rise. Last week, 898,000 people applied for unemployment benefits for the first time. This is the highest level of new unemployment allowance in two months. An additional 373,000 people who were not previously qualified for unemployment requested pandemic unemployment assistance.
The first round of stimulus checks is the past few months for most people. And now, unemployment assistance is beginning to run short for those who lost their jobs early in the pandemic. It just continues. The additional $ 600 per week benefit of the CARES Act ended in July. And in the coming weeks and months, the state’s unemployment benefits will begin to disappear.
>> Read: Stimulation Package Update: What will happen to the economy without a second stimulus?
“So I hear a lot about the $ 600 addition,” said YEBBA Nersisian, an associate professor of economics at Franklin & Marshall University. “Are people going to get it, or is Congress going to do it? But the more important question is whether to extend the period during which people can collect unemployment. It depends on the condition. 13 From week to 26 weeks, it’s a period when the unemployed can collect unemployment, and for many of them, by the end of the year, I think it will be gone. For those who don’t, it’s probably early next spring. And it will be gone. “
Today, more than 15% of the workforce, 25 million people, receive some form of unemployment allowance. Declining income for most consumers will certainly affect the wider economy. “Eviction and foreclosure seem inevitable without another stimulus,” says Nersisyan. “How are they going to pay rent and mortgages if people lose their jobs and have no unemployment allowance?”
“Also, there will be more SME closures, which is very disappointing,” continues Nersisyan.
David Joy, Chief Market Strategist at Ameriprise Financial, agrees. “Most of the original stimulus is lacking, so I think we’ll need to bridge an additional round of fiscal stimulus, which is a reduction in unemployment allowances and a reduction in mortgage and rent grace. Therefore, we must continue to bridge that bridge in order for the economic recovery to affect all members of the economy and allow people to return to work. A healthy economy for society as a whole. Is required. “
The economy is stagnant. “We are not yet completely confident that the economy has gained enough traction to sustain the recovery it has enjoyed over the past three months,” says Joy. “That’s why I’m seeing many interested observers still looking for alternative stimuli. You see the Federal Reserve calling it, you see the private industry calling it. So I still feel that the economy continues to need a little more help. “
Will Washington respond to further stimulus calls?