President Trump is pushing a nearly $1 trillion fiscal stimulus that some economists say would not be well targeted to offset damage from the coronavirus.
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The next stimulus plan could include more checks for Americans. Here's what else DC power players want to cram into the bill — and who would benefit most.
Soon after President Donald Trump passed a momentous $2.2 trillion stimulus package, he and House Speaker...Soon after President Donald Trump passed a momentous $2.2 trillion stimulus package, he and House Speaker Nancy Pelosi said another relief bill might be necessary. Pelosi and House Democrats passed a $3 trillion proposal in mid-May, but Republican leaders including Mitch McConnell and President Trump immediately dismissed its chances of becoming law. The package included another round of direct payments to Americans and nearly $1 trillion of aid to state governments. Here's what might end up in a final bill that actually could become law. Visit Business Insider's homepage for more stories. The federal government made history in March when it passed into law a $2.2 trillion stimulus package, including an unprecedented expansion of unemployment benefits and a massive $349 billion small-business-lending program. The law was the third stimulus package designed as relief for the coronavirus pandemic — but it might not have been enough. In mid-May, House Democrats passed a fourth stimulus package — this time to the tune of $3 trillion. Senate Majority Leader Mitch McConnell said in a floor speech on May 12, the day the House bill was introduced, that it had "no chance of becoming law," Business Insider reported. The outbreak, which has infected more than 1.8 million Americans, has shuttered nonessential businesses in most states, including many in hospitality and food services, and led to a record amount of jobless claims: more than 42 million over 11 weeks. House Speaker Nancy Pelosi was an early voice saying that even the massive third stimulus package wasn't big enough. She advocated for another round of direct payments to Americans like the $1,200 checks sent to people as part of the "phase three" package. The phase-four "Heroes Act" would also extend the $600 bonus to unemployment benefits through January, which appears to be something Republicans won't tolerate. President Donald Trump, who is seeking reelection, had also said in March that he was eyeing more spending, tweeting his support for an infrastructure-focused relief bill to the tune of $2 trillion. By June, reports indicated neither McConnell nor Trump wanted to exceed $1 trillion. Meanwhile, the states and cities that have shouldered much of the economic impact of the pandemic — from bidding on PPE and ventilators in the absence of a coordinated national effort to administering the exploding number of unemployment claims — are asking for relief that was missing from phase three. The National Governors Association asked for $500 billion of federal aid on April 11, and the National League of Cities and US Conference of Mayors asked for another $250 billion on April 16. But that's not all: public education systems asked for $200 billion on April 28, and departments of transportation asked for $50 billion on April 6. Here's where a "phase-four" package stands after passage in the House — and what major stakeholders want it to include.SEE ALSO: The pandemic is giving the US a chance to fix its embarrassing unemployment benefits. Top economists tell us what the future of this crucial system could look like. Pelosi wants a retroactive SALT rollback and more money for states and local governments as part of a $3 trillion package. The House bill, which Democrats are calling the Heroes Act, would provide nearly $1 trillion in additional aid to states and cities who have services essential workers like first responders and healthcare workers during the pandemic. Other measures include providing $75 billion for coronavirus testing and tracing, doling out more $1,200 direct payments to individuals (up to $6,000 per household), extending weekly $600 federal unemployment benefits through January 2021, and giving renters and homeowners $175 billion in aid. Pelosi told The New York Times in March that her preference for a phase four would include some kind of retroactive rollback of the limit on the state and local tax deduction. Part of the tax cut passed in 2017, the SALT policy change especially hurt high earners in states like New York and Pelosi's California. Rolling it back would increase tax rebates for about 13 million households, according to The Times' estimates, nearly all of them earning at least $100,000. This provision apparently made it into the Heroes Act, the Huffington Post's Tara Golshan noted. Trump has mentioned an infrastructure investment and a 'sanctuary city' trade-off — as well as a size between $1 trillion and $2 trillion. In a tweet, Trump said infrastructure should be the focal point of the phase-four stimulus package. "With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill," the president wrote on March 31. "It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4." Tweet Embed: //twitter.com/mims/statuses/1245000074167541761?ref_src=twsrc%5Etfw With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill. It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4 Roughly four weeks later, at a White House event with Florida Gov. Ron DeSantis, Trump suggested he would only support federal aid for beleaguered state and city governments in exchange for a relaxation of "sanctuary city" policies. Trump has long sought to punish sanctuary cities and states that have policies to limit or refuse cooperation with the federal government's immigration enforcement. He said in March that he would withhold federal funds to them. On May 5, Trump returned to an idea he had suggested in March: a payroll tax cut. "The elimination of Sanctuary Cities, Payroll Taxes, and perhaps Capital Gains Taxes, must be put on the table," he tweeted. On May 20, after the Heroes Act passed in the House, Trump reportedly joined the Republican chorus of voices opposing an extension of the $600 bonus unemployment benefit, with potentially large implications for the future of the American safety net. Trump and several senators and congressmen had rejected the idea as a disincentive for workers to return to a reopening economy. The last week of May, senior White House economic advisor Larry Kudlow, the director of the National Economic Council, proposed "back to work" cash bonuses for unemployed Americans instead of extending the unemployment bonus. And in early June, The Wall Street Journal reported that administration officials were weighing a cut to the $600 bonus down to $250 or $300 per week, or setting the bonus as a share of workers' salaries. One official said it's also considering a tax deduction or credit connected to a family or individual taking a vacation somewhere in the US in the next three to six months. In early June, Bloomberg reported that administration officials envisioned the next stimulus being as much as $1 trillion, citing people familiar with the matter, who added that a meeting on the matter scheduled for that week had been removed from the calendar. Earlier that week, administration officials had told the Journal that they weren't trying to stall to kill the bill. They did say the size and scope of the bill wouldn't be finalized until July. According to the Journal, the White House's efforts were being led by Treasury Secretary Steven Mnuchin, National Economic Council Director Larry Kudlow, economic adviser Kevin Hassett and Chief of Staff Mark Meadows as of early June. McConnell has sent mixed signals, and at one point supported allowing states to declare bankruptcy. Senate Majority Leader Mitch McConnell was initially cold to the idea of a phase-four package but acknowledged in early April that there would be a "next measure." McConnell told The Associated Press on April 4 he would prioritize healthcare spending, particularly for finding treatment and vaccines. McConnell also said he'd shy away from passing anything unrelated to the emergency, saying that Democrats were pushing "unrelated pet priorities" in their urging for a phase four. Another McConnell demand emerged during an appearance on Hugh Hewitt's radio show on April 22, when he said he would "certainly" be in favor of allowing states "to use the bankruptcy route." States are not currently allowed to file for bankruptcy. As noted by David Frum in The Atlantic, American bankruptcy is "overseen in federal court, by a federal judge, according to federal law," an attractive prospect given that the federal judiciary has "shifted in conservative and Republican directions" during McConnell's tenure, Frum wrote. Governors from both parties disagreed with McConnell's bankruptcy suggestion, including New York's Democratic Gov. Andrew Cuomo and Maryland's Republican Gov. Larry Hogan. By April 29, McConnell spoke on a private call about a new must-have, according to The Wall Street Journal: a provision that would shield companies from liability over lawsuits related to the pandemic. With Republican states leading the partial reopening of the economy, this potential provision would appear to be an admission that companies are endangering their employees by resuming normal business activity. On May 12, when Pelosi introduced the Democrats' proposal for phase four in the House, McConnell delivered a floor speech indicating it would not likely get passed in the Senate. He called it a "big laundry list of pet priorities" that represented an "extreme makeover of our country," Business Insider's Kimberly Leonard reported. In early June, The Wall Street Journal reported that McConnell privately told Trump he didn't want the next bill to exceed $1 trillion. Some congressional Democrats want additional relief for people most affected by the coronavirus pandemic. Some House Democrats have been advocating stimulus measures separate from a bigger phase four. On April 14, a group led by Reps. Tim Ryan and Ro Khanna introduced legislation that would provide payments of $2,000 per month for at least six months to Americans 16 and older and making less than $130,000 per year. Rep. Pramila Jayapal had previously laid out legislation that would have the government cover 100% of employees' wages and benefits up to $100,000 (a similar idea was proposed by Republican Sen. Josh Hawley). The Niskanen Center's Samuel Hammond noted in early May that the Heroes Act includes a payroll rebate that more closely resembles Hawley's proposal than Jayapal's. Karen Bass, the chairwoman of the Congressional Black Caucus, said she hoped the phase-four stimulus package would address the racial disparity among coronavirus infections. An early May report from the Centers for Disease Control and Prevention said 33% of the US' hospitalized COVID-19 patients are black, even though black people make up 18% of the overall US population. Some congressional Republicans hope to help low-income families — and some are supporting McConnell's idea of a business liability waiver. Republican lawmakers — including House Minority Leader Kevin McCarthy — have echoed McConnell's sentiments on not immediately passing another stimulus package. The Hill reported that Senate Republican Policy Committee Chairman Roy Blunt said he would wait until May before deciding what Congress needs to add in subsequent relief bills. But other Republicans have supported more relief to low-income families and rural families. Some in both the House and Senate joined Democrats in advocating for measures to increase access to broadband internet for low-income families. Sen. Lisa Murkowski told The Hill that she hoped the next package would offer mental-health relief to struggling families. And Sen. Mitt Romney, who pushed for immediate cash assistance in the phase-three stimulus, said he could see phase four targeting local businesses and laid-off workers. In late April, McConnell's regular interviewer, Hugh Hewitt, outlined a full wishlist for phase four in a Washington Post op-ed. It included longtime Republican goals like recapitalizing the "defense industrial base" and making sure that high-tech companies would be an "open book" to US intelligence regarding Chinese matters. Hewitt did say that states should get additional aid, with "strings" that "might reasonably be attached," such as "possible bankruptcy reorganization solutions for cities and counties." By early May, The Washington Post reported, Sen. John Cornyn was working on a bill that would shield companies from liability over pandemic-related lawsuits. Colleges, hospitals, and nonprofits want protections, too, Business Insider reported. Major banks predict at least another $1 trillion is coming — and the Federal Reserve agrees more might be necessary. On April 22, Bank of America predicted in a research note that Congress will pass another large stimulus worth up to $1.5 trillion that extends on provisions in the "phase three" package and provides aid to state and local governments. Following the introduction of the Heroes Act, BofA said Congress will "more likely than not" pass additional aid before the end of September. And on May 13, Morgan Stanley said its "base case" expectation was that Congress would extend certain phase-three provisions to the tune of $700 billion to $1.1 trillion, potentially up to $2.4 trillion. June was seen as the likeliest time for the bill to pass, the bank said, adding that it expected no further action before the election. And Federal Reserve Chairman Jerome Powell agreed in comments dated May 13, although he didn't mention a specific amount. "More fiscal help may be needed," he said, adding that it would be "worth it" if it helped prevent long-term economic damage. The current recession is "significantly worse" than any other since World War II, with a scope and speed that have no modern precedent. Powell continued to sound similar notes after the Heroes Act passed in the House, testifying remotely before the Senate Banking Committee on May 19 that "we may have to do more and it could also be something that Congress would want to do," The Washington Post reported. Treasury Secretary Steven Mnuchin, who did not make similar comments when he testified before that committee with Powell, subsequently told The Hill that there's a "strong likelihood" more stimulus will be needed. The Congressional Budget Office's projections as of May found that real GDP wouldn't get back to pre-coronavirus levels until 2029 — absent further stimulus, that is.
House Democrats and Trump officials neared a deal on a bill to help American businesses and...House Democrats and Trump officials neared a deal on a bill to help American businesses and workers affected by the coronavirus outbreak.
Policymakers can’t prevent economic damage from the outbreak, but they can limit it and make a...Policymakers can’t prevent economic damage from the outbreak, but they can limit it and make a quick rebound more likely.