Senate Leaves Town Without a Stimulus Deal, Gone Through Labor Day

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Key Points:
  • Two weeks after the stimulus benefits provided to Americans as part of the CARES Act expired, Congress has yet to come to terms on a new bill.
  • Despite 40 million residents facing eviction and another 29.3 million reporting to “sometimes or often do not have enough to eat,” the Senate officially adjourned on Thursday, going on recess through Labor Day.
  • Negotiations on the next round of stimulus are stalling over the continuation of $600 weekly enhanced unemployment payments, roughly $1 trillion in aid to state and local governments, and additional financial assistance to services such as the ailing US Postal Service.

Whenever I think Congress can’t get any more callous and irresponsible, they find a way to lower the bar a little more. Never have America’s public officials shown a more blatant disregard for their constituents – or the republic as a whole.

The Senate adjourned on Thursday after another week of fruitless negotiations over the next stimulus package. On July 31, crucial measures included in the CARES Act expired, leaving tens-of-millions of people made jobless by the coronavirus pandemic in the lurch. Not only did the weekly $600 enhancement payments to unemployment insurance end, but eviction moratoriums did as well.

Economic experts warn that failing to put cash into American’s hands in the next few weeks could set into motion a downward spiral that will have dire and lasting consequences for the nation.

In an earlier article about President Trump’s recently signed executive orders, I shared the following distressing statistics:

Bad Signs for the Economy
  • 40-million Americans are now facing eviction;
  • in states like Florida, Texas, Nevada, and New York, an estimated 50% of tenants will soon be unable to make their rent;
  • 29.3 million households reported to the Census Bureau in July that they “sometimes or often do not have enough to eat;”
  • state and local economies devastated by a lack of tourism and spending are being forced to cut payrolls, putting another five million or so jobs at risk; and
  • substantially less cash reaching unemployed people’s hands means significantly less spending, which will spiral into more job loss and more suffering.

Assuming leaders of the Democratic and Republican parties don’t come to terms during Congress’s summer recess, the US will likely be in the midst of a brutal depression.
 

Political Gridlock

As citizens’ lives are turned upside-down, members of Congress are squabbling over government spending – a concern that didn’t seem to exist back in March, when these same actors managed to fork over several trillion dollars to Wall St, banks, and big business in a matter of days.

The two sides are currently hung up on the size of the weekly unemployment enhancement, how much state and municipal aid to provide (if any) to keep services going, and several other measures relating to things like food assistance.

Democrats rejected what they called “piecemeal” offers to extend previous CARES Act provisions such as unemployment insurance, student loan deferments, and eviction moratorium – hoping to leverage the fast-approaching economic collapse into more of the measures they want in the bill.

Republicans are obsessing over the $600 add-on payments, claiming they are giving people more money than they made previously and are thus disincentivizing recipients from returning to work. Research studies show the opposite – application submissions per vacancy have gone up – but GOP ideologues won’t budge.

Both sides are locked in a game of chicken – with their political futures and American’s lives riding on the outcome.

Now that the Senate has adjourned, the probability of passing a new bill before Congress returns to Washington on September 8 is lower than ever.

“If the speaker of the House and the minority leader of the Senate decide to finally let another rescue package move forward for workers and for families, it would take bipartisan consent to meet for legislative business sooner than scheduled,” Senate Majority Leader Mitch McConnell said Thursday.

McConnell said that if a deal is reached during the Senate’s recess, members will get at least 24 hours notice to return to the Capitol for a vote.

The problem is any senator can block the vote before the upper chamber is officially back in session. Roughly half of the Republican caucus has been emphatic that they will vote against any additional stimulus spending, making a deal before Labor Day unlikely.

“From my standpoint, the breakdown in the talks is very good news,” said Sen. Ron Johnson, a spending hawk from Wisconsin. “It’s very good news for future generations.”
 

Trump’s Executive Orders

Workers who have been laid off, furloughed, or permanently lost their jobs due to the pandemic lockdowns are now relying on Donald Trump’s executive orders to keep them afloat.

Unfortunately, there’s very little the President can do unilaterally when it comes to spending, and the orders he passed aren’t expected to offer much assistance. In an article about the executive orders, I explained the following:

Trump’s extension of the unemployment enhancement dropped the payment from $600 to $400.

Except, it’s actually only $300 – he wants states to cover that last 25% of the cost.

State and local governments are hemorrhaging money and looking at widespread layoffs and loss of public services; there’s no way they can afford to pick up that extra $100 per week, per jobless resident!

He also ordered the treasury department not to collect payroll taxes from those making less than $100,000 annually, until next year.

So, workers – who are lucky enough to have a job still – may see a slight increase in their take-home funds through December, but then that money will still be owed…

His order to cancel federal student loan interest and defer principal payments for the rest of the year may help somewhat.

Still, it’s a drop in the bucket compared to the economic calamity we’re facing.

Even the eviction moratorium is flimsy.

It’s not a moratorium at all; it merely orders administration officials to look into the matter and asks courts to consider suspending or delaying evictions.”

Bad Optics & Political Betting

In the court of public opinion, the Senate’s hardline approach to spending and decision to leave their posts for almost a month is playing horribly. As people’s financial situations become increasingly desperate, their political alignments will melt away. Keep talking about things like the deficit, debt, and irresponsible spending.

Once people are losing their homes and their ability to feed their families, their political allegiances will fall by the wayside.

When that happens, I wouldn’t want to be on the side negotiating for less stimulus aid.

Assuming Trump’s executive orders don’t pick up the slack, November could be a nightmare for Republicans. In recent election cycles, we’ve already seen a trend of longtime incumbents being unseated by anti-establishment candidates – both from outside and within their own parties.

If a deal isn’t made before September, I am extremely bullish on betting on the Democrats taking over the Senate. I’d even consider taking Amy McGrath to unseat Mitch McConnell in Kentucky!

How the growing economic crisis impacts the presidential election will depend on Donald Trump’s response. If the executive orders don’t help, he can play that off to the public as having tried, despite the limitations of the White House.

What he can’t do – and still be reelected – is carry the Republican line.

If he doesn’t break from GOP leadership, they’ll drag him down with them. His only hope is going public with a message of dissatisfaction and populism. Whether he still has that in him remains to be seen.

Will Cormier / Author

Will Cormier is a sports and political betting writer living in downtown Las Vegas, Nevada. When he’s not wandering around the streets of the Arts District aimlessly, a lifetime of pessimism and paranoia has made Will perfectly suited for handicapping politics. Cormier tries to analyze current events as objectively as possible – a strategy that often enrages loyalists on both the right and the left. When he’s not covering major upcoming elections, Will enjoys writing about basketball, football, and MMA from a betting perspective. He also loves dogs, ice cream sundaes, the movie “Stomp the Yard,” and long walks on the beach.