by Greg Valliere, AGF Management Ltd.
FACED WITH THE THREAT of a political and economic backlash, the Senate began to move late yesterday on a stimulus bill. But time is short, which means some version of an old Washington standby — “kick the can” — may be required.
NEGOTIATORS SAID JUST AFTER MIDNIGHT that there’s agreement between Republican leaders and the White House; the latter will agree to virtually anything, while there’s still huge disputes among the former. But this is a start.
NOW COMES THE REALLY HARD PART: Since last night’s bill apparently did not include any aid for state and local governments, the liberal House — which passed a $3 trillion-plus bill on May 15 — will immediately reject the Senate bill, beginning an acrimonious debate between the two houses.
KICK THE CAN? Both parties worry that they won’t agree on a bill in time to extend unemployment benefits, which expire at the end of this month (actually, states need to get a green light by this Friday to continue sending checks).
NOT ONLY IS A COMPLETE DEAL HIGHLY UNLIKELY by the end of this month, it might not be finished by Aug. 7, when the summer recess is scheduled to begin. So lawmakers in both parties are talking about a temporary extension of unemployment benefits, while shelving the rest of the stimulus bill until early September.
ANOTHER OPTION would be for Congress to delay the August recess until a bill is finished, which would be an incentive to get moving. Under this scenario, the unemployment deal would get cut first, followed by the rest of the package.
DETAILS ARE SKETCHY EARLY THIS MORNING, but it appears that there’s agreement among Republicans on money for virus testing, aid to schools, more assistance to business including liability reform, and the concept — if not the exact dollar amount — of stimulus checks, which still seem more popular than a payroll tax cut.
BOTTOM LINE: The $600 weekly unemployment checks are widely viewed as a disincentive for people to return to work, so the dollar amount probably will be cut. But going to zero would cause a political uproar and wouldn’t help the shaky economy. So Congress may have to pass something within days, while arguing over other provisions into early August.
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URBAN UNREST: Last weekend alone, 49 people were shot and 7 killed in Chicago; in late June an incredible 63 people were shot in Chicago, with 16 killed in just one weekend. And in Portland, violent young punks — not peaceful protesters — have taken over much of downtown, which has been heavily vandalized.
THIS IS RAPIDLY BECOMING AN ISSUE that upsets more than just Donald Trump’s base; it’s a concern of moderates and liberals, many of whom will permanently flee dozens of other cities that have become dangerous, including New York. Urban violence has skyrocketed, the statistics don’t lie.
FOR ANYONE WHO THINKS Trump is certain to lose this fall, we offer a note of caution — yes, he’s clearly the underdog, but read Karl Rove’s column in this morning’s Wall Street Journal. In addition to the urban violence, there’s the issue of Joe Biden’s agenda, which could become an albatross for the Democrats.
TRUMP HAS GOTTEN A WAKE-UP CALL from the polls this month, and his tone has shifted. He’s finally paying more attention to masks and the virus, and seems more focused and less bombastic in his press briefings. He still has a narrow path to re-election.
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This post was first published at the AGF Perspectives Blog.
