(CBS Detroit) -- A second round of stimulus checks would help prop up the sagging U.S. economy. But Democrats and Republicans couldn't agree on a deal that would make those stimulus payments and additional unemployment aid a reality. Then, on Tuesday, President Trump "instructed my representatives to stop negotiating until after the election."
So stimulus checks would have to wait until at least November, if not longer. Or not...
Later Tuesday, President Trump expressed support for a standalone bill issuing $1,200 stimulus checks to Americans.
He also tweeted his support for other elements of the broader stimulus package that had been part of recent talks until he shut down negotiations earlier Tuesday.
In recent months, the economy has showed signs of recovery, with stimulus money from the CARES Act filtering its way through the economy. Millions of individuals received $1,200 payments, and millions of unemployed received $600 in weekly unemployed benefits on top of whatever their states provided. But the CARES Act ran out at the end of July. And that money is no longer flowing through the pockets of consumers and out into the economy.
The Current Economy
Economic growth is starting to slow. In September, domestic employers added only 661,000 jobs, almost 150,000 below expectations and over 800,000 fewer than in August. The unemployment rate fell to 7.9 percent, but most of the drop resulted from people leaving the workforce. Consumer spending, which accounts for 70 percent of the economy, increased one percent in August, far below the double-digit increases from earlier in the recovery. Meanwhile, personal income fell almost three percent. The loss of the additional stimulus from the CARES Act is affecting consumers.
Mass furloughs began a U.S. airlines last week, with 32,000 employees affected, including 13,000 at United Airlines. American Airlines and United are open to reversing course should they receive more aid. The restaurant industry also fears the loss of more businesses as cold weather makes outdoor dining untenable in large parts of the country. More federal assistance could come as part of another round of stimulus, which should also include checks to consumers and additional unemployment benefits. Any aid will now have to wait until after the election, as the Senate, at the urging of the White House, shifts its focus to confirming Supreme Court nominee Amy Coney Barrett.
State of Stimulus Talks
Stimulus talks between Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin continued daily since last week through Tuesday. Both sides saw developments as promising, even as talks moved "very slowly." But Pelosi also expected a deal to be reached this week "one way or another." Time was already running out to deliver money to the pockets of struggling Americans ahead of the election when President Trump's latest tweet storm abruptly put them on hold. Whether his follow-up tweets will jumpstart negotiations again remains to be seen.
So where do the two sides stand when/if talks resume?
Both Democrats and Republicans support another stimulus payment to consumers. The CARES Act distributed $1,200 to individuals whose Adjusted Gross Income (AGI) didn't exceed $75,000, with declining payouts up to an AGI of $99,000. It's likely that $1,200 will remain the maximum individual payout. Eligibility for dependents will likely change. Both sides now support $500 payments for dependents, regardless of their ages.
Both sides agree that additional weekly federal unemployment payments are necessary. The House included a $600 payment in the $2.2 trillion HEROES Act they passed last week. The White House included a $400 payment in the $1.6 trillion measure they floated. They will have to come to some sort of agreement on this amount.
Both sides, at least until Tuesday, supported aid for city and local governments, which have suffered declining tax revenues that could lead to extensive layoffs given their balanced-budget requirements. The Democrats were offering $400 billion, while the Republicans were offering $250 billion. Reconciling that difference was a key sticking point in negotiations.
President Trump framed that last point a little differently in his tweets, inaccurately describing "$2.4 Trillion Dollars [sic] to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19."
Most of the money Democrats' proposal isn't earmarked for helping state and local governments. And the portion of it that is would be used to save jobs and services, in state and local governments, in blue and red states, that would otherwise be cut given COVID-19-induced declines in tax revenue.
When Your Next Stimulus Check Might Reach You
It's still uncertain when the two sides might continue negotiating on another round of stimulus. While both sides support another stimulus check, likely for $1,200, some distance remains between Democrats and Republicans on the additional unemployment payouts and aid to state and local governments. And then there's the matter of voting and signing a bill into law.
Here are a couple possible timelines that would have another round of stimulus reaching some Americans this year.
- If the House passes a bill Tuesday, December 1, and the Senate December 2, the President could sign it into law on December 3. Direct deposits would start being sent the week of December 7 and paper checks the week of December 14.
- If the House passes a bill Monday, December 7, and the Senate December 8, the President could sign it into law on December 9. Direct deposits would start being sent the week of December 14 and paper checks the week of December 21.
If the two sides act on a standalone bill that addresses only stimulus checks then these timelines could move up into November. But Democrats have long resisted addressing COVID-19 economic relief in the piecemeal form the President is urging.
All of this is also playing out against the background of an election season that is entering its final weeks. A Trump win is far from assured, given his current standing in polls, particularly in battleground states. Election results across the House and Senate could also play a role.
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