Looking at another round of stimulus, 74-year-old President Donald Trump hinted today that there would be more cash on the way to ordinary citizens but, more importantly, in this next round are payments to cities, counties and states that have run out of money. California’s 48-year-old Gov. Gavin Newsom announced May 14 that the state burned through its’s $21 billion rainy day fund, now faces a $54 billion deficit. Newsom has one of the strictness governors placing numerous roadblocks to reopening the economy. Newsom asked Washington for $1 trillion for California, Oregon and Washington State, something that got nowhere with federal officials. Newsom only prays that Trump works with 80-year-old House Speaker Nancy Pelosi (D-Calif.) to bail out the state that’s getting dangerously close to default.
Trump confirmed Scripts reporter Joe St. Georges that he backs more stimulus to everyday Americans, cities, counties and states. “We will be doing another stimulus package,” Trump said. “It’ll be very good. It’s be very generous,” hinting that 57-year-old Treasury Secretary Steve Mnuchin was already working on it. Faced with a daunting reelection challenge, Trump wants another stimulus to show working families that he’s got their backs. “I think we’re going to seriously look at whether we want to d more direct money to stimulate the economy,” Mnuchin said, testifying June 10 before the Senate Committee on Small Business and Entrepreurship. Trump wanted to push for a payroll tax cut but it’s fallen of deaf ears in Congress. More direct payments like the March 25 CARES Act in the only way go go.
Pelosi has already passed the $3 trillion HEROES Act, giving American workers another $1,200 payment for individuals earning $75,000 or less, up to $ 6,000 to families with dependent children. HEROES Act gives $1,200 to unemployed teens, something that Trump would likely oppose. Trump opposes more aggressive measure advocated by Sen. Kamala Harris (D-Calif.), Biden’s likely VP pick, Sen. Bernie Sanders (I-Vt.), Rep. Ed Markey (D-Mass.) who wants to issue $2,000 a months payments to all workers until the coronavirus AKA SARS CoV-2 or Covid-19 global pandemic slows. That proposal is dead on arrival to Trum;p. With 46,000 Americans unemployed, raising the unemployment rate to Depression-era 15%, Trump and Mnuchin expressed concern about continuing the $ 600 a week added unemployment compensation.
Texas Rep. Kevin Brady (R-Tx.), ranking member of the tax-writing House Ways and Means Committee, suggested giving $1,200 incentive payments to individuals returning to full-time employment. So far, there’s not much support for Democrats or Republicans to continue the $600 weekly unemployment benefit because it discourages laid-off workers from returning to work. Given the prospects for a slow economic recovery, another round of economic stimulus is needed for individuals, cities, counties and states. No one wants to see cities, counties and states declare bankruptcy because tax revenues have shrunk due to record unemployment. Anyway you cut it, Trump’s caught in his reelection bid between a rock-and-a-hard place with most citizens voting their pocket books in the November presidential election.
Trump has no choice but to negotiate with Pelosi on some version of the HEROES Act, making cities, counties and states whole before it’s too late. While the coronavirus continues to spike around the country, news of a possible vaccine keeps investors buying stocks. At some point, the economic reality of poor earnings, bankruptcies, foreclosures will sink in to Wall Street, prompting a new round of short selling. Trump wants to reform the unemployment compensation under the March 25 CARES Act. He sees the $600 weekly add-on as actually discouraging laid off workers from returning to full-time employment. Sen. Rob Portman (R-Ohio) suggested that laid-off workers returning to work should get $450 a week until the current $ 600 unemployment compensation bonus runs out on July 31, unless it’s extended.
Trump faces some big choices heading into what looks like an uphill battle for reelection. Striking a deal with Pelosi on a second bail-out would be a good step in showing voters that he has empathy for ordinary workers now that the economy turned sour. Whatever stimulus bill comes out of Congress and the White House, it must address, above all else, financial distress in cities, counties and states. Without fiscally sound local and state governments, the chaos now seen in the country in the wake of George Floyd’s death could get a lot worse. “We’ve got to reward individuals for coming back to work,” said White chief economic adviser Larry Kudlow. “I think it’s going to be bipartisan. I think it’s going to me over the next couple of weeks,” Trump said, feeling the urgency, even though the Senate returns from recess July. 20.
