Negotiations for a new stimulus package are back in Washington.
A group of bipartisan lawmakers announced this Tuesday a new $908 billion stimulus plan hoping to break the monthslong deadlock negotiations in Congress as the coronavirus pandemic surges in the U.S.
Some of the main points of the proposal:
- $288 billion in small business aid
- $180 billion to fund a $300 per week supplemental unemployment benefit through March
- $160 billion in state and local government relief
- $82 billion into education
- $45 billion into the transportation sector
Some Democrats consider this proposal an “interim package” to provide support to the economy until President-elect Joe Biden takes office on January 20.
It’s expected that the new administration will try to pass a broad and ambitious new stimulus bill, but this depends on which party will control the Senate.
Georgia is holding runoff elections for both U.S. Senate seats on January 5, and the outcome will determine which party holds control of the Senate.
For now, Republicans hold the majority at 50-48. If Democrats win both seats, both parties will have 50 senators each, with Vice President-elect Kamala Harris serving as the tie-breaker in any party-line votes.
The first stimulus, the CARES Act, approved in March, injected $2 trillion in the economy — that’s about 10% of the US annual GDP from last year.
The Democrats initially defended a second aid package that would cost $3 trillion. Afterward, they lowered it to $2.2 trillion.
Senate Majority Leader Mitch McConnell is advocating for a $500 billion aid bill.
Talks between both sides have been frozen since October, before the election.
It is unclear whether congressional leaders will support, and even if they do so if it would be approved before the end of the year, when many aid programs will expire.
Federal Reserve Chair Jerome Powell has been asking for more stimulus to boost the economy, arguing that the coronavirus remains an economic threat.
In the next ten days, though, legislators also have another priority: preventing a government shutdown. A temporary spending bill expires on December 11. If a massive government-fund bill is not approved by then, many federal agencies will be forced to close their doors temporarily.
Some believe the stimulus package can be added to the spending bill to force quick approval. Others, though, fear that this could create a new standstill in the negotiations.
After the news of the stimulus package proposal, the mains U.S. stock indexes reacted with optimism in the morning, boosting the S&P 500 and the Nasdaq Composite trading at intraday record highs while the Dow was just below its previous peak.