Sen. Majority Leader Mitch McConnell (R-Ky.) watched his economic stimulus bill fail Sunday in the U.S. Senate, with Sen. Minority Leader Chuck Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.) sabotaging the GOP plan that gave more benefits to corporations than ordinary workers. Needing 60 votes to pass, the GOP-backed Senate bill stalled out 47 pro to 47 con, prompting Pelosi to introduce her own stimulus bill tomorrow. Hearing the collapse, Wall Street already has circuit breakers in place to halt trading if markets tank tomorrow as expected. There’s little reassurance coming from the White House, other than empty promises that the economy’s going to bounce back once the government gets the coronvirus epidemic under control. No matter what happens tomorrow in the House and Senate, expecting a V-shaped recovery is highly unrealistic.
So much damage has been done to 2020 Gross Domestic Product [GDP], that it’s inconceivable investors will just jump back in, not knowing the extent of economic carnage. Most economists expect a Great Recession much like what happened with the 2008 mortgage-backed securities collapse. Far worse than that, today’s shutdown of small-and-large businesses are going to throw record numbers of workers into unemployment, with many businesses expected to go under. Federal Reserve Board Chairman Jerome Powell figured it out March 15 when he slashed the Federal Funds Rate to zero. Former Fed Chairman Ben Bernanke did the same thing Dec. 16, 2008, when major U.S. banks and industries ran out of cash in the Financial Collapse. Elected officials are kidding themselves thinking that it’s better this time around, when more businesses have already shut their doors.
Schumer and Pelosi want more cash to keep ordinary workers collecting paychecks, not just giving them extended unemployment benefits. Whatever the fix, it’s going to cost the Federal Reserve trillions, adding to the $23 trillion National Debt. “We’ll see what happesns. It think we’ll get there,” said 73-year-old President Donald Trump at the White House. ”We have to help the worker, we have save the companies,” knowing that the cost to the National Debt was staggering. Trump went against his best instincts shutting down large-and-small businesses to slow the cornovirus from spreading. Trump knew shutting down businesses would cause catastrophic damage to Wall Street and the U.S. economy. With his reelection on the line, the last thing Trump wanted was to see the economy tank. Democrats have been taking political shots at Trump, blaming him for bungling the crisis.
McConnell acted dumbfounded that Democrats wouldn’t go along with a largely GOP bailout plan. Then, all of a sudden the Democratic leader [Chuck Schumer] and the Speaker of the House [Nancy Pelosi] shows up and we’re back to square on,” McConnell said, blaming the Democrats for “obstruction.” McConnell knew there would be horse trading with Democrats to get a compromise bill passed. Democrats want more guarantees to ordinary workers, unable to hold on unless they get their salaries continued. “Early this morning Leader McConnell presented to us a highly partisan bill written exclusively by Republicans. And he said he would call a vote to proceed to it today. So who is being partisan? He knows damn well for this bill to pass it needs both Democratic and Republican support,” Schumer said. When Democrats and Republicans conference tomorrow, something will get done.
Pelosi said “we need a bill that puts workers first, not corporations,” demanding more benefits to American workers that lost jobs due to the novel coronavirus. Pelosi and Schumer didn’t like the fact that corporations could keep bailout money while, at the same time, firing workers. Democrats want more provisions that stop evictions, foreclosures or forbearance, extending unemployment insurance beyond its three month window. Knowing the gravity of the situation, McConnell promised to hammer out something on Monday. “But make no mistake about it, we’ll be voting tomorrow. I mean the wheel has to stop at some point,” McConnell said, expressing a willingness to negotiate—to a point. McConnell insisted that the final legislation would be bipartisan, incorporating Democratic concerns. “There’s still some elbowing and maneuvering . . “ McConnell confessed to get things done.
News that Sen. Rand Paul (R-Ky.) contracted coronavirus after exposing many of his Senate colleagues accentuated the urgency of completing a bill. Sen. Bernie Sanders (I-Vt.) proposed giving furloughed American workers $2,000 a month until the crisis ends, something bound raise red flags. McConnell’s proposal would give every American taxpayer $1,200 with an income under $75,000, zeroing out at $99,000. McConnell’s plan would cut in half payments for individuals who paid no taxes, adding $500 per child. Whatever the final package, $1 trillion is a drop in the bucket for the millions of citizens unable to work because of the coronavirus epidemic. Treasury Secretary Steven Mnuchin expressed optimism that once the virus was under control, the economy would snap back quickly. No economist at this point believes that the road back will happen quickly.
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