How could the U.S. elections affect a new round of second stimulus checks?
Many Americans are hopeful that new stimulus relief will be approved after this week's presidential election to help them get through the winter months.
What will be the next steps the government must take for a possible second round of stimulus relief spending? Such a package is of course expected to include a long-awaited second stimulus payment to bolster the finances in individual Americans as they cope with the economic fall-out of the Covid-19 crisis.
With just two days to go before the election on 3 November, it is impossible that a deal will be struck until the new government is in place. The negotiations between House Speaker Nancy Pelosi and White House point man Treasury Secretary Mnuchin have dragged on for what seems an eternity. The White House has given some ground to inch closer to the $2.2 trillion HEROES 2.0 bill passed by the House at the start of October. But recriminations have flown from both sides as to why there hasn’t been a final compromise, with the last hitch being language over how the money will be spent on coronavirus testing and schools.
If, and that’s a big if, a deal was to be backed by President Trump, Senate Majority Leader Mitch McConnell has given his word that he would put it up for a vote. The White House has said that they can pull together the 12 Republican votes needed to get the bill passed but their optimism may be false hope with several Republican Senators in hotly contested races. There may not be the stomach for their part to pass the legislation with such a high price tag which means, in reality and as of now, any stimulus relief will have to wait until after the election.
What will happen to the stimulus negotiations after the election?
There are a few different scenarios that could occur after the election for any progress to be made on passing any new stimulus package. The scenario that currently has the most odds of happening is that the Democrats sweep the presidency, gaining control of the Senate and keeping control of the House according to FiveThirtyEight forecasting. However accurate the polling though there can always be a last-minute surprise.
Traders in recent weeks have been piling into bets that a “blue wave” election will produce an economy-juicing blast of fresh fiscal stimulus of $3 trillion or more that carries the U.S. into a more normal environment for markets https://t.co/zfYsWP53OR— POLITICO (@politico) October 27, 2020
If a blue wave washes over Washington
Ms. Pelosi said on CNN’s State of the Union on Sunday that she wouldn’t wait until after the 117th Congress is seated to get a deal on new round of stimulus relief but that doesn’t mean it will be within her control. Members of her party may want to wait and push for an even bigger deal once they have control of both chambers and the White House. But that could run the gambit of Republicans flexing their muscles from the minority.
Covid-19 will be a major factor for putting lawmakers' feet to the fire. Infection rates look likely to increase causing shutdowns and if no legislation is passed before 20 January the economic impact may get dire. The structural damage caused may not be easily remedied by larger economic stimulus measures once the Democrats have full control.
More moderate members of her caucus have been pushing to get some kind of funding out the door now as their districts suffer. Hopefully with the knowledge that a more comprehensive package could be passed in early 2021, something Wall Street is betting on, some patches could be put into place now. The chance may come when Congress reconvenes to pass funding for the federal government before the stopgap spending bill expires on 11 December.
However, whether or not anything could get done before early 2021 will ultimately have to go through Mr. McConnell. He may be more focused on getting as many federal judicial seats filled while he still has the gavel at his disposal. Mr. Trump on the other hand will have less incentive to get anything done other than assure he won’t be in legal trouble with his taxes that the Manhattan D.A is looking into.
Biden wins but the GOP holds the Senate
This scenario would be probably one of the worst outcomes for any hope of stimulus checks as Senate Republicans could use the filibuster to obstruct any large packages that the Democrats might want to pass. If the economic situation gets particularly dire, it is possible legislation along the lines the Democrats are presenting could get to the floor in the Senate but reaching the 60-vote threshold due to filibustering will be difficult. A number of Republican Senators will be jockeying for position to present themselves as fiscal hawks with a view to the presidential elections in 2024.
Trump repeats his November upset
In this scenario, and if Mr. Trump gets the Senate too, he will have huge leverage over Republican lawmakers to push for a bigger stimulus package should he decide to. Depending on the economic consequences of the worsening coronavirus pandemic however, action may delayed until after inauguration as there won’t be the political impetus to get much done until the new Congress. This could be the case as well even if the Democrats gain control of the Senate under a second Trump presidency.
A contested election
This would be the worst-case scenario as it would throw a wrench into any on-going negotiations as the two sides focus their energy into the fight over the results. Nothing would be able to be done until the final make-up of the federal government is in place.
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