GOP squabble over HEALS Act Coronavirus check stimulus package
Senate Majority Leader Mitch McConnell finally revealed the HEALS Act Coronavirus stimulus check and aid package, but it’s still a long way from being approved by both houses of Congress. Even Republicans can’t agree on what’s best for the economy as the bill doesn’t even have the full support of the GOP.
Get The Full Seth Klarman Series in PDF
Get the entire 10-part series on Seth Klarman in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.
Q2 2020 hedge fund letters, conferences and more
GOP infighting continues over HEALS Act Coronavirus stimulus check and aid package
The Wall Street Journal reports that the key point of division in the HEALS Act stimulus package is government spending. Fiscal conservatives are worried about spending money, so they oppose most of the provisions in the bill.
Roubaix Capital’s small and mid-cap US equity long/short strategy ended the first quarter of 2020 down 0.3% net. According to a copy of the firm’s first-quarter investor update, a copy of which ValueWalk has been able to review, Roubaix’s small and mid-cap equity strategy outperformed its benchmark, the HFRI Equity Hedge (Total) Index, by 12.7% Read More
Meanwhile, Republicans who are up for reelection feel the need to do something as elections are now less than 100 days away. The divisions within the GOP run deep as Sen. Lindsey Graham of South Carolina predicted over the weekend that half of Republicans will vote note on the HEALS Act stimulus package.
The problem is that the GOP’s political pragmatists are facing off with its budget hawks. Incumbents in swing states are hanging in the balance. Republican senators who are risk of losing their elections don’t want to go back on the campaign trail during the August recess without anything to show for their efforts.
However, fiscal conservatives oppose any bill that they believe will inflate the deficit gap even further and conditioning the American people to expect more handouts from the government after the pandemic is over.
Elections in focus
Some Republicans warn that control of the Senate and the White House in November is at stake. The Cook Political Report said last week in its analysis of key Senate races that for the first time in the current election cycle, Democrats are favored to retake the Senate.
Democrats are already in control of the House of Representatives and are expected to retain or grow their majority in the November elections. That means the Senate is an important part of the GOP’s bid to keep the Democrats from controlling both houses of Congress.
Democrats only need to take three seats from Republicans to take control of the Senate. If President Donald Trump is reelected, then Democrats will need to take four seats to take control.
Other points of squabbling in the HEALS Act stimulus package
According to The Wall Street Journal, some Republicans are privately grumbling that McConnell and Treasury Secretary Steven Mnuchin waited to look to start assembling a package. They also argue that the process of putting together the HEALS Act stimulus package has not been transparent.
They’re concerned that starting with a $1 trillion price tag gives the GOP the disadvantage before negotiations with Democrats even begin. One Senate GOP aid said that by starting at $1 trillion, the price of the package is only going to go up, which will be a problem for fiscal conservatives.
The aide added that if the Trump administration expects all 53 Republicans to vote in favor of whatever they say, it will be a lot more difficult than they think. The aide also said the Senate could pass a temporary bridge for the increased unemployment benefits, which expired on Saturday because of the way states process unemployment claims.
The rest of the HEALS Act stimulus package could be pushed until September, which would mean Americans will be waiting much longer for a second round of coronavirus stimulus checks and other important assistance in dealing with the pandemic.
The HEALS Act stimulus package includes more coronavirus stimulus checks, $105 billion for schools and universities and more small business assistance. It also offers liability protections for businesses, schools and healthcare providers and $16 billion for COVID-19 testing and contact tracing. It also earmarks $26 billion to work on and distribute a coronavirus vaccine.
The bill also extends the extra unemployment benefits, but instead of the $600 per week that has been in place under the CARES Act, it reduces the extra amount to $200 per week.