Democrats Deny Using Stimulus As Appropriations Leverage
This is my stimulus update for Monday, August 31.
History of Second Stimulus Negotiations
Just to catch you up, here is a brief history of how far apart Democrats and Republicans have been on a stimulus relief bill.
On July 27, Republicans released their HEALS Act to the tune of $1 trillion, which when compared when the Democrats’ $3.4 trillion HEROES Act that was passed on May 15 presented a difference between the two parties of a whopping $2.4 trillion, that difference alone was bigger than the entire CARES Act. They were a CARES Act apart!
On August 7, when stimulus negotiations broke down, Pelosi said she would be willing to go down to $2.4 trillion, making the difference at that point $1.4 trillion.
Republicans did not budge at that point, but on August 27 after the phone call with Meadows, Pelosi bumped her number down to $2.2 trillion, making the difference $1.2 trillion, and the next day Meadows said the President would be willing to sign something at $1.3 trillion, making the difference between the two parties $900 billion.
So, in the span of almost exactly a month, we’ve reduced a $2.4 trillion difference between the parties for the next stimulus bill by $1.5 trillion to $900 billion.
And that $900 billion sounds a lot like the nearly $1 trillion that the Democrats wanted in the HEROES Act for state and local government funding, I suspect that this remains the major point of contention in these negotiations, with perhaps unemployment a distant second.
So what if in September states do are projecting a quicker recovery? What if that sales tax revenue does start going up because slowly but surely people are going back to businesses, going out, of course practicing social distancing and all that, what if these states’ projections are better than they were a few months ago when the Democrats were drafting the HEROES Act?
And we have the jobs report coming out later this week, let’s not forget that.
Republicans can’t go too much higher because there are a lot of fiscal hawks in the GOP Senate who are concerned about the debt, maybe the election and Trump will cause them to rethink their principles, but we’ll see.
So maybe, and this is speculation, maybe the Republican strategy is to get states to the point, due to reopenings, that they are not in as dire straits, the situation is still tough for many states, but not as dire as perhaps people thought it would be three or four months ago, perhaps making the Democrats willing to yield significantly in terms of state and local funding, and maybe the thought process is the same with unemployment, of course we’re all eagerly awaiting the August jobs report that is scheduled to be released this Friday.
What’s Next for Congress
Let’s talk appropriations bills, in my August 26 stimulus update I showed you the clip where Mark Meadows was on Politico stating that he suspects that Nancy Pelosi wants to use the stimulus relief bill as leverage for the appropriations bills that Congress will be debating next month, I went into some detail how that works in my August 26 update, if you want more details you can watch that video, but the deal is the government’s fiscal year begins on October 1, and because Congress has the power of the purse, Congress has to say how much each agency in the federal government gets for the next fiscal year, in this case the fiscal year beginning October 1, 2020, and ending September 30, 2021.
If Congress isn’t able to agree on these appropriations, we get a government shutdown.
So typically they aren’t able to agree on everything in the few short weeks they have after the August recess ends and before early October, when the House leaves town, they generally pass continuing resolutions, also called C.R.s, that basically say, you know what, for the next couple months, we’re just going to continue the funding for these agencies as it was for the previous fiscal year.
And Meadows was on Politico saying that he thinks Nancy Pelosi wants to use the next stimulus bill as negotiating leverage in the Congressional debates over these continuing resolution bills.
However, Democrats have denied such a thing.
A spokesperson for the #2 Democrat in the House, Steny Hoyer, House Majority Leader, said that Hoyer “believes these bills should be kept separate, and he believes that swift action is needed to both fund the government and provide COVID relief for American families.”
And this makes sense, it’s just common sense, we couldn’t even agree on the stimulus bill in and of itself, why would we want to muddy the waters by also throwing in these appropriations bills which are going to have their own sets of disagreements, do we want to stall both COVID-19 relief and have a government shutdown on top of it because we’re arguing about too many things at once?
But the reality is that the House is only in session three short weeks in September, the Senate is back in town longer than that, but we need both, we need both the House and the Senate to agree, of course members of Congress can be called back to vote on urgent matters, but we just don’t have a lot of time, three weeks in September, and then it’s October when the House is out, and then what? Then it’s November 3, Election Day, there’s just so much going on politically during this time.
But the good news is that Democrats and Republicans are $1.5 trillion closer now than they were a month ago with respect to the next stimulus package.
Unemployment Update
In terms of unemployment, no new FEMA approvals, Nebraska and the District of Columbia remain the only two eligible jurisdictions that have not indicated whether they will apply for a FEMA grant, they would have until September 10 to apply, but for whatever reason they haven’t indicated what they’re going to do, and people are pressuring them to do so.
I expect the remaining eight states, the ones in blue on this map, that have applied or are applying for the FEMA grants to pay the $300 weekly will be approved this week, and hopefully we’ll see some more purple throughout the week on this map as well, indicating which states are paying or have paid out the benefit.
As I told you last week, tomorrow I will obviously be watching Mnuchin’s testimony before a House subcommittee about stimulus relief.
Hopefully there will be some things in there and not just another blame game.
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