Last Tuesday, President Donald Trump seemingly ended negotiations with Democrats over a new coronavirus relief bill. Stocks fell after the President’s tweet, with the Dow Jones Industrial Average ending down 376 points. Facing mounting political and public pressure to strike a deal before the election, the President changed his tune hours later, suggesting he was willing to negotiate if the massive relief bill was broken into smaller stand-alone bills, including airline relief and stimulus checks.
On Friday, the President once again changed his stance, this time offering a $1.8 trillion proposal to Speaker Nancy Pelosi, the most substantial offer yet from Republicans. Both parties plan to work throughout the weekend to try and reach a deal.
Republican and Democratic lawmakers have been negotiating an additional economic stimulus for months, both agreeing that the bill should include aid for unemployed workers, small businesses, schools, and public-health efforts, among other measures. But they have remained at odds over the amount necessary to provide relief.
Many Republicans are opposed to a large new round of deficit spending and expressed more confidence that the economy is recovering. Thus, they were originally unwilling to spend more than $1.6 trillion on a coronavirus relief bill. Democrats, on the other hand, believe a larger package is necessary to provide relief to American households and businesses still experiencing the economic impact of the pandemic. Last week, House democrats passed a $2.2 trillion coronavirus relief package, down from their initial $3.4 trillion proposal. Their bill proposed widespread financial support to those affected by the pandemic, including restaurants, airlines, and the postal service, and an additional round of direct checks to Americans of $1,200 per taxpayer and $500 per dependent. The bill would also renew the $600 in supplemental unemployment aid.
While the Trump Administration’s latest offer brings the parties closer than ever on the additional stimulus, they remain divided over substantial differences in the allocation of funds. The Trump Administration’s offer allegedly includes $300 billion of federal aid to state and local governments, up from the $250 billion they proposed last week. Democrats, however, included $436 billion for state and local governments in the bill they passed last week. This was already a substantial drop from the more than $900 billion Democrats initially sought.
Economists have expressed fears regarding our economic recovery if no coronavirus relief bill passes. They point to stalling job growth and the need to prevent a drop in household spending, and they are worried that temporary layoffs will become permanent as businesses remain shuttered for good. Federal Reserve Chairman Jerome Powell said this week that too little economic support from Congress would lead to a weak recovery, outweighing the risks of providing too much.
Even if the parties are able to reach a deal on coronavirus relief, it is unknown how soon the American people would benefit, with Senate Majority Leader Mitch McConnell expressing he plans on prioritizing the confirmation of Judge Amy Coney Barrett to the Supreme Court.