While some markets are banking on a Democratic sweep of next month’s elections to quickly inject a multi-trillion dollar coronavirus relief package, one economist is cautioning against the odds.
Senior U.S. Economist Andrew Hunter noted in an October 21 update that the legislative window to pass a stimulus bill before Election Day is winding down. Negotiators have fixated for months on several key issues, including Democrats’ calls for substantial state and local government funding and Republicans’ desires for employer liability shields, according to the Chicago Tribune.
Although Democrats are favored to win back control of the Senate, their chances for a filibuster-proof majority are slim, Hunter said.
“The eventual bill could take some time to implement and amount to a smaller overall fiscal expansion than is often claimed,” he wrote on Capital Economics.
“We agree that a Democratic clean sweep would probably result in additional fiscal stimulus next year, which would probably be bigger than if the Republicans hold the Senate,” Hunter continued. “Nevertheless, with that process unlikely to be as straightforward as some appear to be hoping, a major fiscal boost to the economy early next year is far from guaranteed.”
House representatives are already on break, according to the Chicago Tribune. The Senate is slated to leave on Monday, October 26, following a confirmation vote for President Donald Trump’s Supreme Court nominee Amy Coney Barrett, the newspaper continued.
Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin are continuing their talks for a package in the range of $1.8 trillion to $2.2 trillion, including extended unemployment benefits and another round of stimulus checks, The Washington Post reported.
Here’s what you need to know:
Without a Filibuster-Proof Majority, Democrats Would Have to Rely on the Budget Reconciliation Process
Without a filibuster-proof majority in the Senate, Democrats would have to rely on “the budget reconciliation process to pass a bill with only Democratic support,” Hunter wrote in his Capital Economics article.
“That would impose several restrictions – most notably, the procedure can’t be used to increase the Federal budget deficit beyond a 10-year horizon and only one reconciliation bill covering taxes and spending can be passed each year,” the economist expressed.
A party must have at at least 60 members in the Senate to be considered a filibuster-proof majority, according to the U.S. Senate’s website. The Senate may end a filibuster, a political procedure used to delay legislation by allowing members to debate, with a three-fifths majority vote, the page continues.
Democrats Would Likely Face 2 ‘Competing Fiscal Priorities,’ Hunter Says
If Democratic presidential hopeful Joe Biden takes office, Democrats would likely face two “competing fiscal priorities,” Hunter continued.
The lawmakers could pursue a short-term stimulus bill with targeted assistance for stimulus checks, enhanced federal unemployment benefits, Paycheck Protection Program loans for small businesses and state and local government funding, the economist disclosed.
The second option would incorporate a short-term bill into a broader package “alongside some of Biden’s proposals,” Hunter explained. The presidential candidate has called for a sizeable increase in federal spending on longer-term measures, he continued, such as healthcare, infrastructure, education and climate change.
“The upshot is that passing a quick stimulus bill to counter the pandemic would force the Democrats to wait to implement Biden’s broader economic agenda at a later date,” Hunter wrote. “That’s certainly possible, but it’s hard to imagine the progressive wing of the party agreeing that tackling climate change can wait another year.”
Pelosi Said She Is Hopeful to Narrow Her Differences With the White House Soon
Pelosi expressed on Sunday, October 25, that she is hopeful to reach a middle ground with the administration on key stimulus measures, including national testing, school funding and unemployment benefits.
“We are waiting for the final yes,” the House Speaker told Jake Tapper on CNN’s State of the Union.
Pelosi criticized the White House of “moving the goal posts.” So far, two self-imposed deadlines for stimulus on Capitol Hill have come and gone, with members on both sides of the aisle casting blame for political games, CNET said.
“Let’s just, let’s be hopeful,” Pelosi concluded on CNN. “We are nine days before an election.”
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