Still Scrambling for a Stimulus Deal

By Yuval Rosenberg

Scramble for a Stimulus Deal Will Likely Drag
Into the Weekend

Congress is still scrambling to finalize another Covid relief
deal, with negotiators haggling over elements of the legislation
and billions in spending ahead of a Friday night deadline, when
lawmakers had hoped to pass a $900 billion aid package paired with
a $1.4 trillion omnibus government spending bill.

Senate Minority Leader Chuck Schumer (D-NY) said Thursday that,
while a deal is close, “a few final issues must be hammered out.”
Senate Majority Leader Mitch McConnell (R-KY) said members of
Congress were now “highly likely” to be working through the weekend
to pass the rescue package and that lawmakers may have to buy some
more time by passing a stopgap government-funding bill to prevent a
partial government shutdown when current funding lapses at 12:01
a.m. ET on Saturday.

The sticking points on a Covid rescue deal reportedly include
which Americans would be eligible for direct relief payments and
disagreements over an extending an eviction moratorium and health
care and disaster relief funds as well as money for entertainment
venues. Republicans are also pushing to formally end the emergency
Federal Reserve lending programs created by the CARES Act passed in
March.

As Emily Cochrane reports in
The New York Times:

“Democrats were making a last-ditch effort to provide
emergency aid to states, which they argued was critical to helping
states weather the pandemic and avoid huge layoffs and cuts in
services that could reverberate through the economy. Republicans
were working to limit the power of the Federal Reserve to bail out
businesses, municipalities or other institutions in the
future.”

Republicans including Sens. Pat Toomey on Pennsylvania and Mike
Crapo of Idaho are reportedly pressing for language that would
prevent the Treasury Secretary from restarting the Fed lending
programs for small and midsized businesses as well as state and
local governments. Those programs are set to end this month.

“In the future, if some kind of dire emergency occurs, at that
point the Fed and Treasury should come to Congress if they believe
any kind of extraordinary program is needed,” Toomey
told reporters Thursday. “What this does is that
nobody can revive or create a duplicate of the programs that
received Cares Act money.”

Democrats warn that the proposal would limit the incoming Biden
administration’s paths for promoting economic recovery. “They are
trying to take away some options for the new president to deal with
some challenges to the economy,” Senator Ron Wyden, the top ranking
Democrat on the Senate Finance Committee, told reporters, according
to Bloomberg News.

Toomey told reporters that his push was not meant to hamstring
the Biden administration or hurt the economy, noting that he’s
sought to ensure that the programs end this year since well before
November’s election.

A short government shutdown might be possible: Any
senator could block quick passage of a stopgap spending bill, and —
in what could be seen as a sign of how Congress now works, or
doesn’t —Democrats are wary of a measure that would ease pressure
on negotiators to finalize a Covid relief package, according to

Politico.

"I know people who are going to object to that, that want to
keep pressure on the process until we get a deal," Senate Majority
Whip John Thune (R-SD) told Politico. "Government shutdowns are
never good. If it's for a very short amount of time on a weekend
hopefully it's not going to be something that would be all that
harmful."

The bottom line: Congressional leader
remain optimistic that they’ll get a deal done, but the process is
likely to spill over into the weekend.

Economy Sending More Distress Signals: Layoffs Jump, Personal
Income Drops

The resurgence of the coronavirus is weighing heavily on the
labor market, with more than 1.3 million people making new
unemployment claims last week, an unexpected increase of 63,000
from the week before.

About 885,000 people applied for initial unemployment benefits
at the state level, the Labor Department
announced Thursday, the highest weekly total since
September. Another 455,000 made initial claims for Pandemic
Unemployment Assistance, the federal program that aids
self-employed and gig workers — and that is scheduled to expire at
the end of the month if Congress fails to renew it in the relief
package currently under negotiation.

All told, more than 20 million people were receiving some kind
of unemployment aid as of November 28, the Labor Department
said.

Some comments on the report (with emphasis added):

  • “The labor market is showing clear signs of
    deterioration. ... We expect the trend to persist amid a sharp
    rise in virus cases and subsequent business restrictions weighing
    on employment conditions.” – Eliza Winger,
    Bloomberg
  • “U.S. weekly jobless claims continue to head in the
    wrong direction. The labor market outlook is bleak as the
    winter wave of the virus is going to lead to more shutdowns.″ –
    Edward Moya of the currency trading firm OANDA, via
    AP
  • “[L]ast week was the 39th straight week total initial
    claims were greater than the worst week of the Great Recession.
    – Heidi Shierholz of the
    Economic Policy Institute
  • “Bottom line: Unemployment claims are rising again, a key
    sign the economic recovery is in trouble. ... 14 million
    unemployed Americans will lose unemployment aid by January 1 unless
    Congress acts swiftly.” – Heather Long,
    Washington Post

In another sign the economy is headed in the wrong direction,
the Bureau of Economic Analysis announced Thursday that personal
income fell in every state during the third quarter. “State
personal income decreased 10.0 percent at an annual rate in the
third quarter of 2020, after increasing 35.8 percent in the second
quarter,” the agency
said. “Personal income decreased in every state
and the District of Columbia, ranging from –29.9 percent in West
Virginia to –0.6 percent in Georgia.”

A huge reduction in Covid-related relief payments drove the
decline, the BEA said, with transfer receipts for programs related
to unemployment and health care falling by $1.3 trillion, following
a $2.4 trillion increase in the quarter before.

“The data highlight the benefits of economic stimulus at a time
when unemployment is high and a spike in U.S. coronavirus cases
coupled with fresh restrictions keeping businesses closed are
weighing on hiring,” Bloomberg’s Katia Dmitrieva
wrote.

Trump Again Vows to Veto Annual Defense Bill

President Trump said again Thursday that he will veto the annual
defense bill passed by Congress, which authorizes $741 billion in
spending and sets military policy.

Trump has cited
various reasons in vowing to veto the defense
bill, which has been passed for 59 straight years. He has insisted
that it include an unrelated repeal of Section 230 of the
Communications Decency Act, which protects tech firms from being
held legally liable for content posted on their platforms, and
objected to a provision renaming military bases named after
Confederate leaders. He has also claimed that the bill would
benefit China.

“I will Veto the Defense Bill, which will make China very
unhappy. They love it,” Trump
tweeted Thursday. “Must have Section 230 termination,
protect our National Monuments and allow for removal of military
from far away, and very unappreciative, lands. Thank you!”

Trump reportedly will veto the bill directly rather than by
employing what’s known as a “pocket veto,” which would involve
allowing the bill to expire by refusing it sign it within 10 days.
It’s not clear when Trump may exercise his veto, but once he does,
Congress would have to vote again to override him. Both the
Democratic-controlled House and the Republican-led Senate passed
the defense bill with majorities larger than would be needed to do
so.

Russian hack makes defense bill a ‘must-sign piece of
legislation’: Thomas Bossert, a former homeland security
adviser to Trump and deputy homeland security adviser to President
George W. Bush, warned Thursday that the recently uncovered

Russian hack of the U.S. government and hundreds
of private companies, makes it all the more important that the
annual defense bill is enacted — and makes presidential leadership
critical at this moment.

“Among other important provisions,” Bossert wrote in a
New York Times
op-ed, “the act would authorize the Department of
Homeland Security to perform network hunting in federal networks.
If it wasn’t already, it is now a must-sign piece of legislation,
and it will not be the last congressional action needed before this
[cybersecurity breach] is resolved.”

What’s next: A veto override would be
the first of Trump’s presidency, and the timing could present some
problems for Congress.

“Democrats and Republican alike fear that Trump will drag
out his opposition to the National Defense Authorization Act until
the last possible moment, which, by law, would be Dec. 23, when
lawmakers expect to be long gone from Washington,” Politico

reports. “If Trump runs out the clock, it would
give the House and Senate just a handful of days in late December
to deliver the historic rebuke of his veto. If they fall short,
lawmakers could quickly pass the bill in the next Congress, but it
would be a humiliating failure after the law has been enacted each
year for nearly six decades.”

Send your tips and feedback to yrosenberg@thefiscaltimes.com.
Follow us on Twitter:
@yuvalrosenberg,
@mdrainey and
@TheFiscalTimes. And please tell your
friends they can
sign up here for their own copy of this
newsletter.

News

Views and Analysis