After haggling for months over a new stimulus bill, 80-year-old House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Mitch McConnell (D-Ky.) and Senate Minority Leader Chuck Schumer (D-N.Y.) have a new attitude with 74-year-old President Donald Trump out of the picture. While the details remain the same in terms of more Payroll Protection Program [PPP], extended unemployment compensation and direct payments to workers and families, the attitude changed once 78-year-old President-elect Joe Biden beat Trump Nov. 3. No other factor can account for the sudden Christmas spirit and good well to get on the same page for the benefit the U.S. economy. Federal Reserve Board Chairman Jay Powell, 67, urged Congress and the White House to create new stimulus to help the sputtering U.S. economy. Powell has done everything possible to stimulate the economy with monetary policy.
Pelosi, McConnell and Schumer put their differences aside for another day and found $900 billion on which to agree, continuing PPP, limited extended unemployment compensation [$300 a week] and direct checks to taxpayers earning $50,000 a year, down from the$75.000 limit from the March 27 $2.2 trillion CARES Act. When you consider the new attitude by Pelosi and Schumer, it’s clear they didn’t want new stimulus before the election to give Trump any possible advantage heading into Nov. 3. Once Trump was defeated, regardless of his legal protests, Pelosi and Schumer changed completely. Gone are the contentious atmosphere that put a dark cloud over Capitol Hill for the last four years. All warring factions are smoking the same peace pipe now that Trump’s on his way out the door. When you take politics out of the picture, it’s amazing how enemies start agreeing on things.
McConnell compromised to from his original offer of $500 billion, seeing the benefits of compromise. “We made major headway today toward hammering out a targeted pandemic relief package that will be able to pass all chambers, with bipartisan majorities,” McConnell said, optimistic that would get Trump’s signature. Pelosi and McConnell decided for the time being to take bailout of cities and states out of the current stimulus bill, kicking the can down the road after Biden’s inauguration. Trump and McConnell strongly object to bailing out primarily blue states, who, for whatever reason, decided to maintain economic shutdowns, causing large budget deficits. After Biden’s sworn in Jan. 20, 2021, Congress will have to take up bailouts for cities and states that witnessed revenue shortfalls since the Covid-19 epidemic. Dealing with cities and states is inevitable when Trump’s gone.
Trump objected to city and state bailouts, claiming blue states mismanaged the Covid-19 crisis, keeping businesses shut down for too long. In today’s stimulus package, McConnell and Pelosi wanted to provide emergency funds for vaccine distribution, testing and contact tracing, all designed to help expedite the end of the Covid-19 crisis. Also in the new $900 bill are funds for rental assistance and student loan forbearance, both needed to keep the economy rolling. “The meetings signified a good faith effort of negotiations to reach consensus before the holidays,” said Gordon Gray, director of fiscal policy for the American Action Forum conservative think tank. “That’s only been possible because they’ve been willing to compromise on issue that were bright lines in the past,” ignoring the main reason for new cooperation: Trump’s departure. Trump’s defeat opened the door for more bipartisanship.
Everything before Nov. 3 was about making Trump look bad to voters, including not giving him any win on stimulus talks. Pelosi and Schumer’s tough talk before Nov. 3 demanding $2.4 trillion or nothing, was all about making Trump look bad before the election. When you think that politics doesn’t play a part in economic policy, think again. Pelosi and Schumer did everything possible to defeat Trump, even if it meant letting cash-strapped U.S. workers wait for their money. Whatever extra cash Democrats want for states and cities, they agreed to postpone $748 billion more until after Biden’s inauguration. McConnell suggested that we “set aside liability and set aside state and local and pass those things we agree on.” Everything hinges on what happens to the composition of the U.S. Senate Jan. 6, when Georgia votes in two runoff Senate elections to decide who controls the Senate.
Getting more stimulus should help reassure Wall Street that’s been going sideways for about a month, not knowing whether to buy or sell. Fed Chairman Powell acknowledged today the his Federal Reserve Open Market Committee decided to keep interest rates at zero for the foreseeable future, agreeing to continue buying up treasury bonds in a new round of quantitative easing. Powell has done everything the Fed can do to stimulate the economy, now its up to Congress to provide fiscal stimulus. “Make no mistake, we will work in the future to proved additional relief, as the country requires, but we need to prove a platform to build on,” Schumer said, hopeful that the new stimulus bill could be done today. “We need to address this emergency right now,” urging both sides to provide cash-strapped workers with relief. Getting Trump out the picture closed the deal.
