After more than a month of stalled stimulus negotiations, House Speaker Nancy Pelosi (D-CA) will move to introduce a new $2.4 trillion stimulus package. The package would be narrower than the $3.4 trillion Heroes Act passed by the House in May. While still more costly than Republicans have been willing to accept, the new stimulus proposal would likely restart negotiations with the White House.
According to The Washington Post, Pelosi asked House committee chairs to begin assembling a bill. The relief package is expected to include a second stimulus check, aid to state and local governments, airlines and small businesses. It will also include rental assistance, additional unemployment benefits and funds for the Postal Service and election security.
Pelosi’s abrupt change came as some Democrats were pushing for a narrower deal that could pass. Several weeks ago more than 100 House Democrats signed letters to Pelosi urging her to move forward on various relief proposals.
One of those letters came from Rep. Cindy Axne (D-Iowa). In that letter she urged Pelosi to “bring up a simplified, straightforward COVID-19 relive package.” This week Axne was collecting signatures from lawmakers on a second letter to Pelosi that according to The Washington Post read: “We write to you now to implore you to brig a revised and streamlined COVID-19 relief package to the floor next week. Americans are counting on us; they cannot wait any longer.”
Last week, a bipartisan group of 50 lawmakers released a stimulus package framework calling for $1.5 trillion in relief. President Trump has expressed his support for this framework.
The new stimulus package is expected to include $2.4 trillion in relief. That’s more than the $2.2 trillion Pelosi had offered during negotiations. As such, it raises the question whether the new package will move the parties closer to a deal. House Minority Leader Kevin McCarthy (R-CA) criticized the news of a new stimulus bill, saying that it “shows again she’s not serious about a Covid relief bill, that she’s just playing politics.”
There is good reason, however, to believe that the new package could move the parties closer to a deal. While the total aid package is $200 billion more than Pelosi’s earlier offer, the details of the new bill will be critical. Republican negotiators have been frustrated by Pelosi’s insistence on $915 billion in state and local aid and $600 a week in extra unemployment benefits If the new package shows a willingness by Pelosi to compromise on these issues, it could be a positive step towards a stimulus deal.
On state and local government aid, experts believe that $500 billion is needed, far less than Pelosi has demanded to date. Likewise, the demand for $600 a week in extra unemployment benefits has come under pressure. While there is some dispute over whether such an amount discourages individuals from returning to work, it’s clear that $600 pays many people more than they made working.
The bipartisan framework introduced last week compromised on both of these issues. It called for $500 billion in aid to state and local governments and $450 to $600 in extra unemployment benefits. If the new package embraces this bipartisan framework, it would signal a significant shift in Pelosi’s position.
Another factor that could bring the parties together this month is aid for the airline industry. Payroll protections under the Cares Act expire on October 1st, and airlines have threatened to lay off thousands of workers if additional aid is not forthcoming.
Massive layoffs in the airline industry would come as the economic recovery struggles to take hold. In testimony before Congress, Federal Reserve Chair Jerome Powell testified that more stimulus is needed. He added that he expects the economy to have a harder time sustaining growth.
Previous stimulus negotiations involved Pelosi and Senator Chuck Schumer (D-NY), White House Chief of Staff Mark Meadows and Treasury Secretary Steven Mnuchin. In testimony before Congress, Mnuchin agreed that “comprehensive relief” was necessary and that he was available “any time” to resume negotiations.
Rob is a Contributing Editor for Forbes Advisor, host of the Financial Freedom Show, and the author of Retire Before Mom and Dad–The Simple Numbers Behind a Lifetime of
Rob is a Contributing Editor for Forbes Advisor, host of the Financial Freedom Show, and the author of Retire Before Mom and Dad–The Simple Numbers Behind a Lifetime of Financial Freedom.
He graduated in 1992 from law school and has written about personal finance and investing since 2007.
News – Stimulus Talks May Resume As Pelosi Plans New $2.4 Trillion Covid-19 Relief Package