(CBS Detroit) — Talks on a broad stimulus package came to a screeching halt Tuesday when President Trump ordered an end to negotiations. (He later backtracked and changed direction.) But another round of stimulus checks remains possible. With the election drawing near, and households bending under the weight of a depressed job market brought on by coronavirus, the best hope now is for standalone packages that offer limited, targeted aid.
That aid could come in the form of stimulus checks, $25 billion for the airline industry and $135 billion in new small businesses loans, passed as individual measures. President Trump and the Republicans favor this targeted approach.
House Democrats prefer a more all-encompassing approach and have long been against addressing the ailing economy with standalone legislation. Last week they passed the $2.2 trillion HEROES Act, a slimmed-down version of the same act passed in May. It includes $1,200 checks and an extension of the Paycheck Protection Program, which would help employees of small businesses.
Wednesday, on The View, House Speaker Nancy Pelosi was dismissive of the president’s idea of targeted relief, saying, “it’s hard to see any clear, sane path in anything that he is doing.”
However, Pelosi and Treasury Secretary Steven Mnuchin resumed talks on Wednesday with a new roadmap. Both sides generally agree on the need for stimulus checks of up to $1,200 and aid to small businesses. But will they agree to pass limited measures that don’t address enhanced unemployment benefits, eviction protections and other important issues?
For now the topic of recent conversations has been the airline industry, which recently began extensive layoffs. Trump has also indicated that the $1,200 stimulus payment is again part of the discussion, days after ending negotiations. Pelosi has not signaled that stimulus payments are back on the table. And she has long resisted sending out more checks outside of a larger relief package.
The odds are long that a bill gets passed before the election and even longer that those checks start to arrive before November 3.
The consensus in the wider economic community is that a broader stimulus package is still needed to save the economy. Federal Reserve Chairman Jerome Powell said earlier this week that “too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
In his estimation, government support, in the form of direct payments to households, more generous unemployment insurance and help for small businesses, has kept the situation from worsening further. But a downward spiral of job losses begetting more job losses through reduced spending is still a very real possibility without further government support.
Economic recovery has slowed of late with the expiration of the CARES Act. Last month, domestic employers added only 661,000 jobs, almost 150,000 below expectations and over 800,000 fewer than in August. The unemployment rate fell to 7.9 percent, largely because of people leaving the workforce. Consumer spending, which accounts for 70 percent of the economy, increased one percent in August, far below the double-digit increases from earlier in the recovery. Meanwhile, personal income fell almost three percent.
Mass furloughs began a U.S. airlines last week, with 32,000 employees affected, including 13,000 at United Airlines. American Airlines and United are open to reversing course should they receive more aid. The restaurant industry also fears the loss of more businesses as cold weather makes outdoor dining untenable in large parts of the country. States and cities, which face massive budget shortfalls, may soon be forced to lay off large numbers of employees as well.