Biden to inherit US economic policy deadlock

Biden to inherit US economic policy deadlock

Wednesday, November 25, 2020

Print this page Email A Friend!


WASHINGTON, United States (AFP) — From the Federal Reserve to the trading houses of Wall Street, economists and analysts agree the US economy needs more stimulus to bounce back from the novel coronavirus downturn.

But Democrats and Republicans in Congress have been deadlocked for months, a disagreement that is showing no sign of easing even with President-elect Joe Biden set to take office in January after defeating incumbent Donald Trump.

Here is what is on the table — and what is at stake — in the long-running stimulus negotiations:

HOW MUCH TO SPEND?

At the end of March, Democrats and Republicans set aside their differences to pass the US$2.2 trillion CARES Act that expanded unemployment payments and supported small businesses.

They followed it up with another US$500-billion measure to further support small-and medium-sized enterprises.

But much of that money has expired, and Democratic House Speaker Nancy Pelosi wants to pass another massive bill, costing somewhere between US$2 trillion and US$2.4 trillion.

Republicans who control the Senate have meanwhile said they prefer to pass smaller measures, with the chamber's Majority Leader Mitch McConnell proposing US$500 billion in spending.

The massive gap is driving a stalemate that has persisted since the summer, but it appears Biden, a Democrat, may be leaning towards getting something rather than nothing, with The New York Times reporting Democrats were considering a vote on the US$500-billion proposal.

THE ECONOMY WORSENS

Many analysts now fear the US economy is set to get worse as COVID-19 cases surge, raising the possibility of a wave of foreclosures, evictions and bankruptcies.

A study from progressive think tank The Century Foundation estimates that nearly 12 million workers will be receiving benefits from two unemployment programs paid for by the CARES Act when funding expires at the end of the year.

“If Congress doesn't move quickly, it can get much more severe, and it doesn't necessarily get easier to solve,” Edward Alden of the Council on Foreign Relations said.

Gregory Daco of Oxford Economics forecasts that without aid, the economic situation “will be precarious at the dawn of 2021, which will jeopardize the country's economic dynamism”.

“Politicians are going about things the wrong way around: we need a supportive plan to prevent the situation from getting worse, not waiting for it to get worse before voting on a plan,” he said.

In an open letter released Monday, Nov 23, more than 120 economists called for a renewed round of stimulus cheques like those sent out under the CARES Act.

“We urge policymakers to use all the tools at their disposal to revitalise the economy, including direct cash payments, which are one of the quickest, most equitable, and most effective ways to get families and the economy back on track,” the group wrote.

OTHER IDEAS

Besides a stimulus bill, Biden has also proposed a massive infrastructure spending plan, a long-overdue investment that could further aid the economy's recovery during the pandemic.

But if Republicans retain the Senate, which will be decided by two elections in Georgia set for January, such a plan could face opposition.


Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaper-login


ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT