Negotiations over a new coronavirus relief package in the US are at a standstill

Negotiations over a new coronavirus relief package in the US are at a standstill
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Congress cannot agree on the details for a new stimulus package even as millions of Americans face the prospect of eviction and unemployment.

The coronavirus pandemic in the United States prompted an unprecedented level of government intervention into the economy as businesses, offices and factories all shut down to contain the virus, leaving millions of Americans out of work.

This stimulus package was not intended to last long and even as signs of growth are slowing and the coronavirus continues to spread around the country, the US remains without further economic aid.

The US is alone among other major economies in not having a second stimulus package or economic response planned out. As a result, some economists are forecasting that the US faces an even greater economic backlash than it did at the beginning of the pandemic.

Unemployment assistance for millions of Americans is at an end and the one-time US$1,200 check issued to taxpayers has long since run out. Despite this, negotiations for new economic assistance appears to be at a standstill.

Both Democrats and Republicans are locked in a stalemate over the provisions of any new stimulus, with both parties gridlocked over seemingly irreconcilable differences and priorities.

Congress cannot agree on the details for a new stimulus package even as millions of Americans face the prospect of eviction and unemployment.

Initial response

The US$2 trillion CARES Act, passed by Congress in March 2020 as the virus was making its presence increasingly felt in the US, sent a one-time check of US$1,200 to every taxpaying American and allocated some US$250 billion for an extended unemployment insurance program, among other measures.

Though the US economic stimulus package certainly had its flaws and did not prevent unemployment figures from reaching historic highs of 14.7% in April 2020, the stimulus was largely welcomed by economists and ordinary Americans alike.

Many expected that support would continue as long as the virus was circulating in the population and preventing a full return to normality.

But now the US is alone among major world economies in not having extended economic stimulus packages to its citizens.

Germany recently extended a multibillion dollar program to support those out of work as a result of the pandemic, while France has unveiled a further US$120 billion, on top of billions already spent, to help get its economy back on the road to recovery.

Is a new stimulus a necessity?

There is certainly a valid argument for more stimulus.

Some economists, including White House economic adviser Larry Kudlow, placed their faith in a “V-shaped recovery” that would be fueled by reopening states and encouraging a retail comeback. Whatever hope there was for such a recovery now appears to be dwindling.

Recent data shows that retail sales are growing at a slower rate than previous months, with just a 0.6% growth in sales in August. Much of this growth is also distributed unevenly, with many industries, particularly hospitality and tourism, having recovered little since the onset of the pandemic.

Growth in jobs also slowed and unemployment, though continuing to fall from its previous heights, remained at a staggering 8.4% in August, with that month displaying the weakest job growth since the pandemic began.

For many Americans, the failure to pass any new stimulus package could have dire consequences. With the current unemployment numbers, the lack of any new stimulus means that “we can expect poverty rates to rise and climb higher than those observed in the Great Recession,” according to Zach Parolin, a researcher at Columbia University.

Similarly, millions of Americans are stating that they are going without adequate food and millions of renters have reported that they are behind on rent and facing eviction as a result.

It is for these reasons that many economists, including Paul Krugman, have claimed that the US faces an even “greater recession” than that already experienced in 2020, with the impact of evictions and further unemployment having untold effects on the US economy should no new stimulus be agreed.


The lack of a new stimulus package has not necessarily been for want of trying.

Democrats in the House proposed a second stimulus package as early as May, when the initial package was then less than two months old. That package included a second round of US$1,200 checks for every taxpayer, with the total package amounting to another US$3 trillion in spending.

Republican lawmakers rejected that plan, preferring a slimmed-down US$1 trillion package that had little aid to local governments that are struggling as a result of the pandemic’s fiscal impact.

As a result of their disagreements, Congress entered recess in August without having made any headway on a new stimulus package.

Despite the Republican plan recently being voted down in the Senate, all hope is not lost for a new stimulus package.

Though they cannot agree on the specifics of a stimulus plan, both sides appear to agree in principle that further stimulus is needed to rejuvenate a lagging economic recovery.

Speaker of the House Nancy Pelosi has stated that the House would not leave for elections in November before securing an additional stimulus package, telling lawmakers privately in September that “we have to stay here until we have a bill.”

Contradicting his own Republican lawmakers, President Donald Trump himself has stated that a bigger stimulus package may be necessary. Trump has claimed that he can “convince” Republicans to support a larger stimulus as he wants to “see people get money.”

For many Americans, actions, not words, are needed as a new stimulus package remains up in the air amid a potential second, “greater,” coronavirus recession.

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