With less than two months to go before existing COVID relief programs expire, millions of working class Americans are counting on lawmakers to approve another stimulus package.
House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin had been negotiating a relief package for months, but their efforts were derailed by partisan disagreements over state aid and other details. The negotiations were further complicated by the General Election and by the confirmation of Supreme Court Justice Amy Coney Barrett.
Approving another stimulus package will be “job one” when senators return to Washington, DC this week, said Senate Majority Leader Mitch McConnell (R-KY).
We can expect lawmakers to pursue a package that includes direct payments to Americans as well as an extension of boosted unemployment benefits, money for small businesses, and funding for a COVID testing and tracking program.
If lawmakers fail to produce a stimulus package by the end of the year, we could see a flood of bankruptcy claims as Americans do whatever it takes to avoid being evicted during the winter months.
As it stands, these provisions included in the CARES Act will expire at the end of the year:
- A $300 increase in weekly unemployment benefits
- Extended unemployment benefits including opportunities for self-employed workers, contractors, and gig workers
- Protections from evictions
- Student loan deferrals
“We’ll have a stronger recovery if we can just get at least some more fiscal support,” says Jerome Powell, Chairman of the Federal Reserve.
The US economy has recovered somewhat faster than expected, but there are still millions of Americans out of work. That means millions of people are burning through their savings just to make ends meet.
To make matters worse, the recent surge in COVID infections coupled with colder temperatures threatens to cause another round of layoffs in hospitality, leisure, and other industries that are just beginning to recover from the initial lockdowns.
“In the United States, even if you don’t have Draconian lockdowns like they’re going to have in Europe,” the pandemic is making companies and families “more risk-adverse, more uncertain, they spend less, they save more,” says economist Nouriel Roubini.
Without adequate fiscal support from the government, the situation “could be bearing negatively on the market over time, not in the short-run, but over time once we realize that we have a ‘V’ that becomes more like a ‘U’ with a risk of a double-dip recession.”
When companies do decide to rehire, warns Roubini, they may decide to replace full-time positions with part-time employees, freelancers, and gig workers – meaning lower wages and fewer benefits for American workers.
Author’s Note: We need another stimulus package.