Second stimulus check: why could Georgia be decisive?
The Senate has prevented the Democrats from passing the HEROES Act for months, but wins in the Georgia runoff races would allow Biden to pass a new economic relief package that includes another round of stimulus checks.
As we approach the end of 2020 a second large-scale coronavirus stimulus package is still yet to be agreed. The additional unemployment benefits provided by the CARES Act back in March will officially run out on the 26 December and Americans have received no direct support, in the form of stimulus checks, since the first wave of payments.
In recent months much of President Trump’s attention has been focused on the election but his successor, President-elect Joe Biden, will address the matter of stimulus checks as a top priority. Soon after his election victory was confirmed, Biden tweeted calling for Congress to “come together and pass a COVID relief package like the HEROES Act”.
The inability to pass a new bill is caused by a deadlock in Congress, with the Republican-held Senate and the Democrat-led House of Representatives a long way apart in their aims. However the Senate majority is still undecided with a runoff election required in Georgia to decide which party will control the Upper House. If the Democrats can flip the Senate, Biden should be able to pass a much more generous stimulus package.
Senate refuses to pass the HEROES Bill
Although a major economic relief bill has not been agreed since 27 March, there have been attempts to pass something similar. House Democrats proposed the $3 trillion HEROES Act in May but they have twice seen it dismissed in the Senate. Both included a second round of stimulus checks, something the Republicans have been unwilling to provide.
Majority Leader of the Senate Mitch McConnell has repeatedly said that he would not be willing to pass anything of a similar scale as the CARES Act, arguing that a smaller package is sufficient. He has repeatedly tabled a ‘skinny’ bill, worth around $500 billion, which does not include any direct payments to Americans. After retaining his seat in the Senate, McConnell told reporters: "I don't think the current situation demands a multitrillion-dollar package. So I think it should be highly targeted”
Georgia runoff gives Biden hope of unified power
With McConnell intent on preventing another round of stimulus checks the Georgia Senate runoff election is crucial for Americans awaiting more financial support. A unique electoral system in Georgia means that a second, ‘runoff’ race is held if the margin in the first election is too narrow. This year both of the state’s seats were up for re-election, and both triggered a runoff.
The two seats for Georgia are the last two to be decided in the Senate, with the Republicans currently holding a 50-48 advantage in the Upper House. If the Democrats were to win both outstanding seats they would essentially gain control of the Senate because in the event of a tie, the deciding vote will go the Vice President, Kamala Harris.
How will the Georgia runoff race affect the stimulus package?
If the Democrats do manage to reclaim the Senate then Biden would begin his presidency in a much stronger position. Assuming that all Democrat Senators vote with the party, he will be able to pass a much more generous stimulus package than the Republicans would have allowed. He will not be able to sign anything into law until he officially takes office at noon on 20 January 2021, but an announcement on stimulus checks could soon follow.
Even before the election, Deutsche Bank warned that the fate of a second large-scale economic relief bill could be decided by who controls the Senate. In their study into potential economic consequences of the election, they found that a Biden victory with a Republican-held Senate would be “the most negative for 2021 growth”. They added that “fiscal stimulus is likely to be far more marginal” with “a prolonged period of uncertainty about fiscal policy prospects”.
On the other hand they rank a ‘Blue sweep’ (Biden victory with a Democrat majority in the Senate) as the outcome which would “provide the most fiscal stimulus to the economy in 2021”. Their simulations show that “an additional $2tn stimulus package could significantly boost the economy next year… adding 3 million jobs, and lowering the unemployment rate by nearly 2 percentage points.” Whatever the result, the Georgia Senate runoff race will have huge implications for Biden’s presidency.