Washington’s deadlock on coronavirus relief threatens U.S. economy

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White House officials and Democratic leaders have ended a week of negotiations with no agreement on the next coronavirus aid package, or even a clear way forward, amid growing fears the talks may collapse completely.

“We’re still a long way off,” White House Chief of Staff Mark Meadows said Thursday after meeting with Treasury Secretary Steven Mnuchin, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer.

Time is running out for both sides to meet their Friday deadline. If they miss it, Meadows suggested that there was “no sense” in continuing the discussion.

MCCONNELL OPENS DOOR TO EXTEND $ 600 UNEMPLOYMENT INCREASE

“I have become extremely doubtful that we will be able to reach a deal if it goes well beyond Friday,” said Meadows, a founding member and former chairman of the conservative House Freedom Caucus who joined the White House this year.

The deadlock in negotiations puts billions of dollars in aid to families, businesses and the U.S. economy at risk, including a new round of $ 1,200 stimulus checks, additional unemployment aid for millions of Americans out of work, $ 100 billion to help reopen schools and relief for cash-strapped state and local governments.

“Without more stimulus, the bottom could fall to the US economy,” said Josh Lipsky, director of programs and policy at the Atlantic Council. “Millions of unemployed people, renters across the country, small business owners and all state governments are asking for help in times of crisis. We can worry about the price later. When your house is on fire, you don’t ask the firefighter how much the hose costs. ”

The question of whether to extend the additional $ 600 per week in unemployment assistance has proven to be a key sticking point in the negotiations. Democrats maintained the softened benefits were to be extended until the end of the year, while Republicans argued it deters Americans from returning to lower paying jobs, a notion disputed by economists.

GOP lawmakers have proposed a replacement of $ 200 per week instead.

REACH THREATS TO TAKE EXECUTIVE ACTION IF THE CORONAVIRUS STIMULUS BILL IS NOT REACHED SOON

When the federal benefit of $ 600 per week expired last Friday, the typical unemployment check fell back to an average of $ 330 per week, a significant reduction in benefits for those receiving assistance. More than 30 million Americans, or about one in five workers, receive unemployment benefits, according to data from the Department of Labor.

The end of the $ 600 benefit drains about $ 15 billion a week from the economy, according to a Century Foundation estimate, raising fears of a “fiscal cliff” that will hurt both individual households and the recovery of the economy. ‘economy.

Consumer spending accounts for about two-thirds of the country’s GDP, the broadest measure of goods and services produced in the country.

A separate study by the Economic Policy Institute found that expanding unemployment assistance had increased personal income by $ 842 billion in May; extending the increased benefits until mid-2021, the nonprofit said, would provide an average quarterly boost to GDP of 3.7%.

NEARLY HALF OF JOBS IN THE UNITED STATES LOST TO CORONAVIRUS COULD BE PERMANENTLY, POLL FOUND

“Every day congressional delays increase the risk of a double-dip recession,” Lipsky said.

Over the past 20 weeks, jobless claims have consistently exceeded one million; before the pandemic, the record was 695,000, set in 1982.

The Labor Department’s July employment report released on Friday showed employers added 1.8 million jobs in July, pushing the unemployment rate down to 10.2%.

Although it marked the third consecutive month of employment growth by the millions, the economy has so far added less than half – about 42 percent – of the 22 million jobs it has lost during the pandemic. There are about 10.6 million more Americans out of work than in February.

Federal Reserve Chairman Jerome Powell warned during testimony to Congress in June that recent economic improvements could be jeopardized if Congress deactivates federal support for workers and businesses.

Both sides are under increasing pressure to reach an agreement following the end of unemployment and several other provisions of the CARES Act, dealing a financial blow to the millions of Americans who lost their jobs during the pandemic.

President Trump threatened to act unilaterally, bypassing Congress if he was unable to strike a deal. In a tweet, the president said he was considering executive decrees to continue to expand unemployment benefits, reinstate a moratorium on evictions, cut payroll taxes and continue with the suspension of student loan repayments.

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