Don’t Expect A Stimulus Deal Until After November

Will a stimulus deal happen before the November election?

Here’s what you need to know.

Stimulus Deal

With Congress at an impasse over a potential stimulus deal, Sen. Richard Shelby (R-AL) says that a stimulus deal likely won’t happen before the election on November 3. Shelby, who chairs the Senate Appropriations Committee, doesn’t see a clear path to stimulus legislation in the next two months. “Unless something really broke through, it’s not going to happen,” Shelby said.

It’s a different tone than Senate Majority Leader Mitch McConnell (R-KY) expressed in July when McConnell predicted a stimulus deal would take a few weeks to complete. Since then, Republicans and Democrats are at a stalemate over multiple issues, including the amount of financial aid to state and local governments. Democrats initially proposed a $3 trillion stimulus package (the Heroes Act)—which included nearly $1 trillion in aid to state and local governments—although Pelosi said Democrats would be willing to agree to a $2.2 trillion bill. Senate Republicans initially led with the $1 trillion Heals Act, and have since reduced the size of their proposed stimulus deal to a “skinny” $500 billion stimulus package. The Senate will vote on the smaller Republican plan today—which includes extended unemployment benefits, funding for small business loans and funding to open schools—although the proposed legislation is not expected to pass.

Focus shifts to avoiding government shutdown

While a new stimulus package has been the focus for several months, now Congress may shift its attention to a continuing resolution to avoid a federal government shutdown. The federal government’s fiscal year ends September 30, so Congress needs to approve funding to keep the federal government operational. Congress can approve a continuing resolution to keep funding the federal government at the current level. “My guess would be that if we leave in September with a [continuing resolution], we will not come back to do anything before the election,” Sen. Roy Blunt (R-MO) said.

White House chief of staff more optimistic on stimulus package

White House Chief of Staff Mark Meadows offered a more optimistic tone on a potential stimulus deal before the election. Despite the impasse, Meadows —who had been a lead negotiator with Treasury Secretary Steven Mnuchin—says the Congress should compromise on areas of bipartisan support such as second stimulus checks, federal unemployment benefits, school funding and small business loans. “I do believe we’ll see [a stimulus deal before the election], only because I’ve had a number of conversations, probably a dozen sometimes a day, with different rank-and-file members,” Meadows told Maria Bartiromo on Fox Business. “When you listen to them, they’re listening to their constituents.”

How the election can impact a stimulus deal

On November 3, 2020, the president, 35 senators and all members of the House of Representatives are up for re-election. That is critically important to a stimulus deal because legislators will spend October campaigning in their districts. If Congress will reach a stimulus deal (and there is no guarantee Congress will), it would likely happen in September to make time for campaigning next month. Based on this schedule, Congress has about three weeks to reach a stimulus deal. Here’s another consideration that could play into each party’s political calculus. Republicans have positioned themselves as the party looking to get a deal done. By focusing on areas of bipartisan support such as unemployment benefits and school funding, Republicans put forth a smaller stimulus deal (even if it doesn’t pass) to show the American people that Republicans want a stimulus package. Even if it fails, Republicans can tell their constituents that Democrats didn’t want to get a deal done and wouldn’t compromise. In contrast, Democrats blame Republicans for focusing on optics, and will argue that Republicans don’t want to help Americans with essential funding ranging from state and local aid to food security to higher unemployment benefits in the wake of the Covid-19 pandemic.

Could Democrats wait until after the election for a stimulus deal?

Democrats also could delay a stimulus deal until after the election. Why? Republicans control the White House and Senate. If Joe Biden wins the White House or if Democrats win the Senate, or both, a stimulus deal could look different after January. Democrats would have more leverage. If Biden wins and Republicans retain control of the Senate, Biden could veto stimulus legislation and could apply more pressure for a larger stimulus deal. If Biden wins and Democrats control the Senate and House, Democrats could largely shape the size and scope of the stimulus deal. However, the gamble could backfire. For example, if President Donald Trump wins re-election, and Republicans retain control of the Senate, Democrats could lose leverage to push forward their legislative agenda.

Next Steps

It’s still possible that Congress passes a continuing resolution to fund the government beyond September 30 and reaches a stimulus deal before the election. Importantly, legislative priorities and elective politics are both at play here. Both parties can benefit politically by passing a bipartisan stimulus deal. However, based on these legislative and political realities, the timing and scope of any potential stimulus deal may come before or after the election.

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