Economic stimulus stalemate
Politics | Republicans and Democrats find little common ground this time around
by Harvest Prude
Posted 8/06/20, 04:49 pm
WASHINGTON—When Stephen Shutters checks the status of his unemployment insurance application, he has seen the same message for the last two weeks: “Your claim is currently being processed. Please allow 48 hours for processing.”
Shutters, 25, is a low-voltage audio-visual installation technician living in Georgia. He installs cables and electronics in churches, schools, and office buildings.
When the coronavirus pandemic struck, he went nearly four months without work. The state of Georgia rejected his initial application for unemployment insurance without giving a reason. A couple of weeks ago, he decided to apply again.
“I’ve drained my savings,” Shutters said.
Meanwhile, Congress remains deadlocked over how to get help to those still suffering the effects of pandemic shutdowns. Many lawmakers are set to leave the nation’s capital on Friday as the August recess begins, but others are calling for Congress to remain in session until a deal is reached.
“I’d prefer to stay here … and get it done like we did the last time, but apparently there’s just not enough progress to justify that,” said Sen. Marco Rubio, R-Fla.
In March, Congress rallied to pass its largest coronavirus relief package, the $2.2 trillion CARES Act. That bipartisanship has since receded, especially as the November general election approaches. Republicans and Democrats agree another large fiscal rescue package is in order, but they remain miles apart on the details.
“There are no top-line numbers that have been agreed to,” White House chief of staff Mark Meadows told reporters on Wednesday. “We continue to be trillions of dollars apart.”
Meadows and Treasury Secretary Steven Mnuchin have taken the lead in negotiating directly with House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y.
Here are the five issues driving a wedge between the sides:
Budget. In May, House Democrats passed the $3.4 trillion HEROES Act. In July, Senate Republicans proposed a $1 trillion package called the HEALS Act, though not everyone in the party agreed on the price tag. Neither side seems willing to move significantly from those numbers.
Unemployment benefits. Democrats want to continue a $600 weekly federal unemployment payment on top of each state’s regular amount. The additional aid expired on Friday. Republicans initially wanted to reduce the payment to $200 per week. This week, they offered a compromise of $400, but it remains unclear whether Democrats will accept it.
“In general, unemployment insurance is thought to have an employment disincentive,” said Angela Rachidi, a poverty researcher at the American Enterprise Institute. “But in economic downturns, it can provide an economic stimulus you might need to get those jobs back.”
Rachidi expressed concern at keeping the $600 amount but said if lawmakers eliminate all additional benefits, it could hit people in states that provide low levels of unemployment insurance hard.
“In the few months after the pandemic started, we saw food insufficiency numbers remain relatively flat, and we saw [the poverty rate] go down,” she said. “Both of those are attributed to the fact that there was this huge economic relief package that Congress put into place.”
Eviction and foreclosure moratorium. The Democrats’ HEROES Act called for a yearlong moratorium on evictions and foreclosures, along with billions of dollars for rental assistance and other homelessness aid. The Republicans’ HEALS Act would not extend the federal moratorium on evictions, which expired on July 24. According to the Aspen Institute, about 20 million Americans will be at risk for eviction and homelessness by September, up from about 2 million in April.
Business liability protections. Republicans released a separate proposal to protect businesses, schools, and churches from lawsuits if people contract COVID-19 there. Plaintiffs would have to prove gross negligence to win their case.
Democrats want to focus on shielding employees through workplace safety standards. Initially, GOP leaders and the White House demanded liability protections as a must-have, but in recent days White House press secretary Kayleigh McEnany signaled they might compromise.
Federal funding for state and local governments. Democrats allocated $1.13 trillion for state and local governments in their proposal, but Republicans remain opposed to any aid. They point to unspent funds from the CARES Act and want to loosen restrictions about how governments can spend the money.
The two sides have agreed on allocating billions of dollars for schools and another round of direct stimulus payments to Americans despite lingering criticism that those payments do not target the people most in need. Both parties also want to use the negotiations to fund unrelated priorities: Republicans want billions for the military and a new FBI building, while Democrats want money for highway repair, state election administration, and the U.S. Postal Service.
While negotiations drag on, Rachidi said the risk of economic ruin increases for those who “typically are not low income but are on the margin, but now have lost employment income and may not have any income in their household.”
Shutters can attest. He’s been scraping by with a few odd jobs, including helping a friend build a deck. He does not have another AV job until the end of August, and he’s months behind on his rent.
“The irony, of course, is once [COVID-19] struck, everybody started Zooming, so you’d think business would be booming,” Shutters said. “But no company wants to spend money on projects during this time, and they didn’t want to have strangers on their property, either.”
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