The latest stimulus talks ended in a stalemate when Congress and the House of Representatives both broke for their late summer recesses without coming to an agreement on the next stimulus bill. Congress is set to return to their session tomorrow, while the House is not expected to return to session until September 14th, a week from today.
There were a few talks during the recess, and while they did not result in any firm agreements, some observers believe another stimulus deal is getting closer.
Let’s take a look at where the latest stimulus bill left off and what still needs to happen for a new bill to be passed.
Next Stimulus Bill – Where We Left Off
Hopes for a quick resolution on the next stimulus bill were high coming into the last voting sessions. After all, both houses of Congress and both parties were vocal in their support of another round of stimulus support. They also agreed, for the most part, on where support was needed the most.
For example, both parties and houses of Congress openly supported another round of stimulus checks, extended unemployment benefits, small business relief, and other measures to support the economy.
However, there was a wide gap in the amount of support each of these line items should receive. Broadly speaking, the Republican-led Senate wants to keep the total relief spending in the next bill to around $1 trillion, while the Democrat-led House put forth the $3.4 trillion HEROES Act in May, which was rejected outright by the Senate.
The Senate proposed the $1 trillion HEALS Act during their last session, which many Democrats believed did not do enough to address the issues many Americans are currently facing. And while Democratic leadership sought over $3 trillion in the HEROES Act proposal, they have since maintained they are willing to negotiate and have reduced their requests by over $1 trillion from earlier proposals. But even $2 trillion is too rich for many of the more fiscally conservative Republicans.
Both parties also disagree on how much aid should be provided to different groups. For example, the Democrats, in general, prefer the extended unemployment benefits resume at the full $600 per week that was included in the CARES Act, while many Republicans believe that to be an excessive amount that encourages some people to remain on unemployment benefits instead of seeking new employment.
The Republicans also oppose providing extensive financial aid to state and local governments, stating that it would be a bailout for agencies that were already mismanaging their money. State and local government support is high on the Democrats’ agenda.
President Trump’s Presidential Actions Only Provide Limited and Temporary Support
When it became evident that no bill would be agreed upon prior to the August recess, President Trump took action and signed three presidential memorandums and an executive order to provide more immediate relief.
These executive actions are designed to provide a $300 weekly unemployment benefit, a payroll tax holiday for those earning less than $100,000 per year, student loan relief, and an eviction moratorium.
However, these are temporary measures at best, and lack the full weight of bills that can be drafted and voted into law by Congress.
For example, the weekly unemployment insurance benefit is funded by reallocating FEMA funds and is more limited in scope than it would be if drafted into law. Individual states must apply to FEMA for access to the funds, and funds are limited, meaning it’s possible the benefits may run out within a short time period.
The payroll tax holiday is not a tax cut as President Trump originally desired. Instead, it is a payroll tax deferment. Unless the laws are rewritten, there will be a large tax bill due in just a few month’s time. Because no laws were changed, many employers are opting out of changing their payroll process at this time, meaning many people aren’t even receiving the intended benefit.
These benefits are a start, but they are limited in scope and duration.
What Can We Expect from the Senate in the Next Session?
During the recess, there was some discussion of the Senate proposing a $500 billion “Skinny Stimulus Bill” which would be a pared-down version of the $1 trillion HEALS Act that was rejected by the House during the last voting sessions.
It is widely believed that the next bill will focus on areas where the two parties already agree, such as:
- Funding for Expanded Unemployment Benefits
- PPP & Small Business Loans
- Liability Protections
- Education Funding
- Funding for coronavirus testing and vaccines
- Funding for the USPS
However, the next bill may leave out a second stimulus check. This is despite the fact that both parties have vocally supported a second stimulus check in recent weeks, and President Trump has also called for another round of direct stimulus payments.
It is unknown whether or not a “skinny” bill would be passed. But based on the recent negotiations between the two major parties, it is not likely to happen. The Democrats are seeking to pass a larger bill to include another round of stimulus checks and more funding for state and local governments. The reduced bill is moving in the opposite direction and may not gain enough support to be passed into law.
But one thing is for certain, time is of the essence. The fiscal year ends on September 30th, which is always a busy time of year. And of course, this is an election year. Both parties have a lot at stake.