Economy

Stimulus Talks Kick Off In DC As Economy Flashes Red

As negotiations on another major stimulus package get underway today in Washington, D.C., a roughly $2 trillion gap exists between the proposal put forth by House Democrats and the plan being hammered out by Senate Republicans.

House Speaker Nancy Pelosi is slated to meet later Tuesday (July 21) in private with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows to discuss another round of stimulus spending amid signs the economic recovery may be stalling as coronavirus infections and deaths surge, according to press reports.

The two top Trump Administration officials are slated to meet earlier with Senate Republicans, who are still hammering out their own proposal.

The talks kick off with major differences looming in the positions of all three sides, but especially between House Democrats and Senate Republicans, with a $2 trillion gap between the plan the Pelosi’s team has put forth and the numbers floated by the Senate Majority Leader Mitch McConnell.

While House Democrats have already passed their own, more than $3 trillion stimulus plan, Senate Republicans have signaled they are looking for a package in the $1 trillion range.

The $3 trillion Heroes Act, passed by the House in May, calls for $1 trillion in aid to state, local, tribal and territorial governments, who have been struggling with major budget gaps as tax receipts have plunged in the wake of the pandemic.

The bill also provides $200 billion in hazard pay for essential workers, extends the $600 a week in additional unemployment benefits, provides $175 billion in housing assistance, and another $75 billion for coronavirus testing, among other things.

Meanwhile, all sides face a looming fiscal deadline, with billions in extended unemployment benefits that have given jobless workers an extra $600 a week set to expire at the end of the month, removing a potentially critical support from underneath the struggling economy.

“It would neither be another multi-trillion-dollar bridge loan to make up for a totally shut-down economy ... nor an ordinary stimulus for a nation ready to get back to normal,” McConnell said in a statement released Monday. “The need now lies somewhere in between.”

There are also major differences between the Trump Administration’s proposal and what Senate Republicans want, with GOP senators reportedly frustrated over a push by the administration to slash tens of billions in coronavirus testing money that are a likely part of the Senate’s proposal.

Senate Republicans are also reportedly lukewarm about another central pillar of the administration’s plan, which would cut payroll taxes.

Overall, Senate Republicans are expected to proposal lowering the additional unemployment benefits to $200 to $400 a week, down from $600 now, a level some in the business community have complained has removed incentives for employees to return to work.

The Senate proposal is also expected to include a liability shield protecting businesses from COVID-19 lawsuits by employees and others, as well as tens of billions in funding for schools.

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