A New Attempt to Kickstart Stimulus Talks

Plus, why Joe Biden wants to go big on stimulus  [The Fisc](   By Yuval Rosenberg and Michael Rainey Pelosi Says House Must Stay in Session Until Covid Relief Deal Reached; Moderates Try to Kickstart Talks Speaker Nancy Pelosi (D-CA) said Tuesday that the House, just back in session after its summer recess, won’t leave for the November elections until a deal is reached on another coronavirus relief package. “We have to stay here until we have a bill,” Pelosi reportedly told House Democrats on a conference call. The House is scheduled to adjourn on October 2, but Pelosi faces pressure from rank-and-file members reluctant to head home for the final stretch of the campaign season without being able to show action on the pandemic and its economic effects. But “stay here” doesn’t necessarily mean “stay here.” Democratic Majority Leader Steny Hoyer of Maryland [reportedly]( said Tuesday that lawmakers would be on stand-by next month to vote on any deal and wouldn’t be required to stay in town. Some lawmakers press for action: The Problem Solvers Caucus, a bipartisan group of some 50 House members, put out its own [framework]( for a Covid relief deal Tuesday, saying it was aiming to get negotiators talking again. The roughly $1.5 trillion package — it’s ultimate price tag could vary depending on the course of the pandemic — calls for another round of stimulus checks; additional unemployment aid; $500 billion for state and local governments; $400 billion for election assistance; $290 billion for small business loans; $145 billion for schools and child care; and $100 billion in funding for virus testing and other health care. The Problem Solvers' plan would set supplemental federal unemployment payments at $450 a week for eight weeks and then up to $600 a week, but with those payments not to exceed the person’s previous wage, addressing Republican concerns that jobless people were making more in benefits than they were at work. The lawmakers say their framework is meant to provide enough support for six months, with the state and local funding lasting for a full year. The plan reportedly developed over six weeks with the knowledge of the White House and bipartisan congressional leadership, but it appears unlikely to gain much traction. The Washington Post reports that the proposal “is likely to meet sharp resistance in the Senate, where Republicans are expected to balk at the price tag,” which is much higher than the roughly $650 billion the GOP provided in its last bill. Eight Democratic House committee chairs quickly rejected the proposal, too. “When it comes to bolstering the public health system, supporting state and local governments, and assisting struggling families, the Problem Solvers’ proposal leaves too many needs unmet,” the Democrats said in a [statement](. “With the general election just 49 days away and the Postal Service sabotaged by the Trump administration, their proposal also abandons our responsibility to protect the life of our democracy.” What’s next: There are still no signs of renewed talks between congressional Democrats and the White House. Pelosi continues to press for a roughly $2.2 trillion package and to insist that a “skinny” bill like those proposed by Republicans would be insufficient. And Jared Kushner, senior adviser and son-in-law to President Trump, told CNBC on Tuesday that a deal may have to wait until after the election. “At the same time,” The Washington Post’s Erica Werner [reports]( “if it becomes clear in coming days that no comprehensive deal is in reach, Pelosi may start holding votes on individual issues such as funding for coronavirus testing, to show House Democrats trying to address the problem.” An Economic ‘Wasteland’ Without More Stimulus? Economists worry that the U.S. economic rebound will weaken without a new round of stimulus, creating more long-lasting damage, fueling further inequality and weighing on the global economy, too. “What they are doing now, or rather what they are not doing now, is raising the risk that large bits of the economy will be a wasteland by the time a [Covid-19] vaccine comes through,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, tells the [Financial Times](. “That doesn’t mean it can never recover but it does mean that the recovery will be longer and harder and more painful and there’ll be a lot more misery in the meantime. It seems very counterproductive to me.” But getting another relief deal is about more than just pumping money into the economy. As Axios’s Caitlin Owens [writes]( continued gridlock in Washington will make it harder to get the virus under control. “The U.S. containment strategy, as flawed as it is, depends on people who may have the virus getting tested and staying home until it's safe to come into contact with others again,” Owens writes. “But staying home is harder for people living paycheck-to-paycheck, and for those who don't have homes.” Brown University's Ashish Jha tells Owens: “No doubt about it, the failure to pass this will make it much harder to contain the virus in the fall, and that means we will see larger outbreaks, more people getting sick, more schools closed and more economic devastation across the nation." Why Joe Biden Wants to Go Big on a Stimulus Package Some Democratic economic policy wonks have long believed they made a serious mistake during the Great Recession: The $787 billion stimulus package President Barack Obama signed into law in 2009 just wasn’t big enough relative to the size of the crisis at hand. According to Politico’s Ben White, former Vice President Joe Biden is determined not to make the same mistake twice. “Should Biden take the White House and get a Democratic Senate,” White [said]( Tuesday, “it will likely all translate into an immediate push to roll back President Donald Trump’s corporate tax cuts, slap significantly higher taxes on wealthy Americans and push through a multitrillion-dollar stimulus spending package aimed at fighting the Covid-19 virus, sending cash directly into people’s pockets, renewing enhanced unemployment benefits, rescuing struggling state budgets and investing in new infrastructure projects.” One reason for Biden’s change in perspective, White says, is the influence of a team of economic advisers — including Sen. Elizabeth Warren (D-MA) and economists Heather Boushey, Raj Chetty and Jared Bernstein — who come from the left wing of the Democratic Party, and who are less concerned with “appeasing budget hawks and Wall Street bankers who tend to worry about soaring deficits.” Additionally, some of the key centrist advisers from the Obama administration Biden has been consulting, such as former Treasury Secretary Larry Summers, have moved left in recent years, adding weight to more progressive policy proposals. A major concern for the Biden team is the possibility that, without substantial further stimulus, the economy will get stuck in low gear and perform below potential for years. Another worry is that without more aid, state and local governments will serve as a drag, much as they did after the Great Recession, as they maintain austerity budgets that hinder the recovery. How big is big? Biden hasn’t released a detailed proposal for a stimulus package, saying much depends on what kind of deal Congress can make in the coming weeks and what happens with the economy between now and January. But he said earlier this year that the stimulus should be “a hell of a lot bigger” than the $2 trillion Cares Act Congress passed in March. Separately, Biden has proposed more than $3 trillion in new spending on a variety of programs, including clean energy, infrastructure and education, and those could conceivably be folded into an eventual stimulus package. Debt less of a concern. The Obama administration’s undersized stimulus package was driven in part by concerns about running up the national debt, and by fears about sparking a political war with conservatives over spending levels. But a growing chorus of debt skeptics has pushed back against those centrist concerns, and they appear to have Biden’s ear, at least at the moment. “The idea that the U.S. faces any major risk from our debt burden is simply wrong,” Dean Baker of the progressive Center for Economic Policy and Research told White. “If for some reason private investors became more reluctant to hold U.S. debt, the Fed could simply step in and buy it. If the U.S. is struggling to recover from this recession, there is no reason to be concerned about running large deficits.” More Uninsured Last Year, Even as Poverty Shrank to Record Low Nearly 30 million people lacked health insurance at some point in 2019, the U.S. Census Bureau [said]( Tuesday, an increase of about 1 million from the year before. The number of uninsured increased for the third year in a row. “The number of Americans uninsured increased by 2.3 million from 2016 to 2019, after dropping by 20 million in the years following passage of the Affordable Care Act in 2010,” Larry Levitt of the Kaiser Family Foundation [tweeted]( Tuesday. Levitt said the “nicks and cuts inflicted on the ACA” by the Trump administration are a likely cause of the increase in the number of uninsured, and cited “massive cutbacks in outreach, leeway given to states to restrict their Medicaid programs, and repeal of the individual mandate penalty.” The health insurance numbers stand in contrast to the data on income and poverty also reported by the Census. A record low share was living in poverty in the U.S. in 2019, the government [said]( with 10.5% of the population in poverty, down from 11.8% in 2018 — the lowest figure since 1959, when estimates were first published. Median household income rose to $68,700, the highest level recorded in the data series, which stretches back to 1967. Poll of the Day: Changing Focus in the Election Back in February, health care was the top issue for voters in the upcoming presidential election. Seven months later, with a pandemic killing more than 190,000 people and the unemployment rate still at alarmingly high levels, the economy and the coronavirus outbreak are now the top two issues, according to a [new poll]( from the Kaiser Family Foundation. There is a strong partisan divide, however, with Republicans far more focused on the economy and Democrats more concerned about the coronavirus. Other interesting data points from the tracking poll: Most voters don’t expect to see a vaccine before the election, and about 60% are worried that the Food and Drug Administration will rush the process due to pressure from the Trump administration. 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 - [Amid Stimulus Impasse, Bipartisan Group Offers $1.5 Trillion Compromise]( – New York Times - [As Lawmakers Point Fingers Over Stimulus Stalemate, Experts Say Americans Need More Aid Now]( – CNBC - [U.S. Poverty Hit a Record Low Before the Pandemic Recession]( – New York Times - [Richest Americans Got Richer in Past Decade, Far Outpacing Poor]( – Bloomberg - [Fed’s Lifeline to Main Street Flops With 99.8% of Cash Untapped]( – Bloomberg - [Shelby: GOP Wants Mid-December Stopgap Funding Bill]( – Roll Call - [Senate Joins House in Not Deferring Payroll Taxes for Staff]( – Roll Call - [Democrats Back Away From Quick Reversal of Trump Tax Cuts]( – The Hill - [Kushner Defends Plan to Cut Drug Prices, Says Americans Should Pay the Same as Europeans]( – CNBC - [Reports Suggest Politicization of Trump Coronavirus Response]( – Axios - [HHS Chief Overrode FDA Officials to Ease Testing Rules]( – Politico - [Top HHS Official Apologizes for Saying Scientists Are Politically Motivated, Considers Medical Leave]( – The Hill - [Medicaid Rolls Swell Amid the Pandemic’s Historic Job Losses, Straining State Budgets]( – Washington Post - ['I Was Floored': Coronavirus Test Prices Charged by Some Hospitals and Labs Stun Consumers, Spur Questions]( – USA Today - [Trump Administration Shelves Plan to Sharpen Scrutiny of State Medicaid Arrangements]( – Wall Street Journal - [Survey: Majority of U.S. Physicians Report Pay Cuts Due to COVID-19]( – Fierce Healthcare Views and Analysis - [Trump’s Last-Ditch Drug Pricing Moves Could Help Him in November. But They Likely Won’t Save Americans Money]( – Nicholas Florko and Lev Facher, STAT - [Washington Gridlock Could Make the Pandemic Much Worse]( – Caitlin Owens, Axios - [The G.O.P. Plot to Sabotage 2021]( – Paul Krugman, New York Times - [Stop Expecting Life to Go Back to Normal Next Year]( – Aaron E. Carroll, New York Times - [Why Fed Officials Are Begging for More Stimulus From Lawmakers]( – Nick Timiraos, Wall Street Journal - [Wall Street Economists Channel Powell's Fiscal Vision]( – Brian Chappatta, Bloomberg - [If Biden Wins, Democrats Must Lean In to Partisanship]( – Paul Waldman, The American Prospect - [How the Pandemic Has Boosted a Green Economy]( – David Von Drehle, Washington Post - [Why Aren’t Voters Blaming Donald Trump for the Bad Economy?]( – Alex Shephard, New Republic - [I Never Considered Voting for Trump in 2016. I May Be Forced to Vote for Him This Year]( – Danielle Pletka, Washington Post - [Unemployment Benefits Are Taxable Income: That May Reduce EITC Refunds Next Spring]( – Elaine Maag, Tax Policy Center - [Vaccine Fairness Will Make Us All Safer]( – Bill and Melinda Gates, Financial Times - [The First 100 Days of Biden-Harris: A Battle for Second Place on the Agenda]( – Scott Mulhauser and Bridgett Frey, Morning Consult - [Time to Put Patients Ahead of Politics: PBM Mail-Service Pharmacy Vital to Consumer Health During Pandemic]( – JC Scott, Morning Consult Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, [thefiscaltimes.com]( or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](