The same experts argue that more fiscal stimulus is urgently needed, but the prospects of getting another bailout package through before election day are poor. Congressional leaders and the White House have been in complete disarray for months, and little progress has been made on some of the most controversial issues, such as funding for state and local governments.
House Democrats are pushing for at least another $ 2.2 trillion in the next stimulus package, while the White House stands firm at $ 1.8 trillion. Senate Republicans plan to vote on a nearly $ 500 billion bill next week, with no appetite for a higher price in the weeks leading up to the election. The measure is unlikely to find democratic support.
Meanwhile, several unemployed aid programs expire on December 31, breaking a critical lifeline for millions of unemployed Americans. Tens of thousands of airline employees are unemployed. Unemployment claims and infection rates are rising across the country and the economic recovery has so far been dramatically mixed.
How the administration plays it: Both Treasury Secretary Steven Mnuchin and the Office of Management and Budget Secretary Russ Vought made rosy statements alongside the new financial data predicting a rapid economic recovery that most experts believe has not materialized.
“Thanks to President Trump’s pro-growth policies and the bipartisan CARES bill, we are seeing a strong economic recovery,” said Mnuchin. “The government remains fully committed to supporting American workers, families and businesses and ensuring our resilient economic recovery continues.”
Vought said, “President Trump built the best and most resilient economy in the world with historic tax cuts, deregulation and fair trade deals. As the country continues to open up and this administration continues on its growth agenda, our economy will continue to recover strongly, get Americans back to work, and improve our financial picture. “
Too much is not enough: Debts and deficits skyrocketing aside, Congress can’t provide too much money in yet another round of relief, Federal Reserve Chairman Jerome Powell said last week.
Powell stressed that another round of aid will not be free and warned of a “tragic” scenario with no further support in which “a long period of unnecessarily slow progress could further exacerbate existing disparities in our economy.” Too little support from policymakers would “lead to a poor recovery and create unnecessary trouble for households and businesses,” he said.
Even household hawks like the CRFB argue that the federal government’s unprecedented borrowing was warranted. But Congress and the White House have been tax-free up to that point, CRFB President Maya MacGuineas said in a statement Friday.
“Loans to fight the pandemic and the economic crisis make sense,” MacGuineas said. “But that’s no excuse for the massive tax cuts and spending hikes prior to the pandemic, or for failing to control the rising costs of our health and retirement programs once normal is restored.”