by Greg Valliere, AGF Management Ltd.
THE DAM BURST YESTERDAY, as rank-and-file members of Congress vowed to pass a pandemic relief bill before Congress goes home late this month. The problem is that everyone seems to have a different plan, which means a compromise has to come together quickly.
THERE ARE MANY KEY DATES in the next few weeks, but 12:01 a.m. on Dec. 12 is crucial — a bill keeping the government open has to pass by then, so that’s the obvious vehicle for a covid relief bill. (This being Washington, a “kick the can” extension on the budget measure could delay final resolution until Christmas Eve.)
IF THERE’S A CONSENSUS IN CONGRESS, it’s this: We cannot go home for the holidays without addressing hunger, layoffs, evictions and unemployment. The aid only has to last until spring, when vaccines will lift the economy. And we could always re-visit stimulus after Joe Biden’s inauguration.
BUT THE IDEA OF WAITING UNTIL THE INAUGURATION is losing support, even among Democrats who want a big stimulus package, for two reasons: First, if the Democrats fail to win both seats in Georgia, a GOP-controlled Senate could totally abandon virus aid. Second, even if a big aid package passes after the inauguration, it could be nearly springtime before there’s much economic impact.
THOSE REALITIES HAVE PROMPTED centrist members of Congress to push hard for a package now. They have proposed just under $1 trillion in aid — including two controversial provisions: liability protection for businesses, and a modest amount of aid to state and local governments.
THE CENTRIST COMPROMISE PROPOSAL would include $288 billion for small-business relief, including the PPP, $16 billion for the distribution of a coronavirus vaccine, $82 billion for schools, $25 billion for rental assistance and $180 billion for additional unemployment insurance, including $300 a week through March. The plan also would give $17 billion to airlines, the Wall Street Journal reports.
THE PROBLEM, AS USUAL, is that the dollar amount is too rich for Mitch McConnell and GOP deficit hawks, and doesn’t spend enough for Nancy Pelosi and the Progressives. But there’s very strong support from the center in both houses, which persuades us that a bill can pass.
AT THE LEAST, we anticipate some stimulus will get attached to the budget bill, with an attitude that “it’s better than nothing.” In the meantime, Pelosi and Steve Mnuchin are talking. She’s the key, as usual; she has to accept half a loaf rather than none.
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THE IMPACT OF BILL BARR’S STATEMENT: By acknowledging that there was no massive fraud in the election, surely not enough to affect the outcome, Attorney General William Barr has given cover to Republicans who have been reluctant to concede the obvious: Donald Trump lost the election.
CONGRESSIONAL REPUBLICANS KNOW TRUMP LOST, but they also know that the GOP’s base overwhelmingly believes that the election was stolen. And it appears that Trump is preparing to run in 2024. So a majority of GOP lawmakers won’t speak out — unless they have cover, which Barr has provided.
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This post was first published at the AGF Perspectives Blog.
