No end to the stimulus stalemate
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The presidential election results didn't change much in the calculus for a new economic relief package, said Sarah Hansen at Forbes. Though President-elect Joe Biden has already advocated for extending expanded unemployment insurance, student loan forgiveness, and more stimulus checks, the failure of Democrats to take control of both the House and Senate raises the prospects of a smaller, targeted stimulus bill favored by Republicans — or no agreement at all. In the lame-duck session, "there's no indication that a defeated Trump will be willing to sign another stimulus bill, and there's always a chance he could walk away from the effort completely." The other factor is a looming Dec. 11 budget deadline, when the continuing resolution passed in September to fund the government expires. "Keeping the lights on" in Washington will be the top priority; passing an omnibus bill that bundles relief legislation will be a tall order.
There's a reason Republicans are reluctant to sign on to another stimulus bill, said Brad Polumbo at Washington Examiner: "The economy is recovering just fine." The country added 638,000 jobs in October, surpassing expectations and lowering the unemployment rate to 6.9 percent. This is not yet a full recovery. But we don't need "trillions more in bailouts and stimulus." The $2.2 trillion CARES Act in March already "blew a hole in our budget that will leave future generations drowning in debt."
You are misreading the jobs data if you think we don't need more federal aid, said Catherine Rampell at The Washington Post. In reality, the latest numbers show "exactly why more fiscal stimulus is needed, ASAP." More than 10.1 million people remain out of work, and if the pace of rehiring continues as it did in October, "it would take 16 additional months before U.S. companies employ as many people as they did before the pandemic began." The hiring data will get worse as new coronavirus cases soar and businesses that have already struggled — such as restaurants and hotels — have to close again. Waiting until January could be devastating, said Zachary Karabell at Time. America has "recovered about as much as it can" until a vaccine can be distributed. Employment gains have stalled; businesses spent their payroll protection loans months ago. "Right now, the economic system is perched at the apex of a fulcrum," and Congress should act before it's too late for airlines, the hospitality industry, and millions of small businesses.
"Joe Biden will be inaugurated in January amid an economy that is likely to be slowly recovering from collapse," said Neil Irwin in The New York Times. This is almost exactly the situation faced by Barack Obama 12 years ago. The difference is that we'll also likely have a divided government, as the U.S. had in the last six years of the Obama administration. The markets seem to expect we'll get little that's "transformative" on taxes and regulation, not much stimulus, and a Federal Reserve that continues to play a key role with low interest rates. That's been enough to buoy the markets, but it points to a recovery that will look much like the Obama years: "a long slog back to health."
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.