Lots of chatter has been circulating concerning the next round of stimulus payments. It is unclear how federal and state governments have allowed the economy to stay mostly closed with no stimulus package for average Americans. The delays and discussions over a follow-up stimulus bill have been grinding on for months with no resolution; meanwhile Americans, having long since exhausted their paltry $1200 stimulus aid, are getting desperate for further federal assistance. This has caused extraordinary pain for businesses that were experiencing a booming economy pre-shutdown. Thankfully, there are finally some potentially positive developments on this front. Today, many news agencies are reporting on a bipartisan bill to pass the next round of stimulus aid. There will be many debates and squabbles, but we believe the next round of stimulus aid is fast approaching. So…should we expect a second stimulus check by Christmas?
According to a recent Forbes article:
On Tuesday, a bipartisan group of senators unveiled a stimulus package in the $900 billion ballpark. The bipartisan package proposed by senators including Republicans Susan Collins and Mitt Romney, as well as Democrats Joe Manchin and Mark Warner, would clock in around $908 billion.
That is well below the $2.2 trillion price tag sought by House Speaker Nancy Pelosi, yet far greater than the $500 billion packages voted on this fall by Senate Republicans, though the specifics of the deal are still subject to change.
While this is potentially good news, the total value of the bill and the time it may take is concerning.
Time Is Running Out
As we have written and discussed previously, businesses are going out of business.
The Yelp data from this article back in September shows a disturbing trend among businesses.
According to their platform data:
As of Aug, 31, 163,735 businesses have indicated on Yelp that they have closed, a 23% increase since mid-July.
According to Yelp data, permanent closures have reached 97,966, representing 60% of closed businesses that won’t be reopening.
Keep in mind, this article was written back in September. More lockdowns and restrictions have been announced since then.
Businesses are closing as hundreds of thousands of people continue to file for unemployment every week.
If you really want to lose sleep, here is a chart of weekly unemployment claims via TradingEconomics.
What is Congress thinking?
Although the stock market continues to make new all time highs, the people suffer.
This is not a positive development, as the recovery from this debacle appears to be extremely one sided.
As we have stated, businesses are shutting down as employees are forced to file for unemployment.
But is there hope of a second stimulus by Christmas?
Or at the very least before New Year’s day as President Trump’s final act before presumably leaving office?
From a CBS article on the subject:
Time is running out for the U.S. government to approve a second coronavirus relief package. So where does that leave Americans anxiously awaiting a second federal stimulus check — the cash payments that were distributed earlier this year? There are signs that a scaled-down deal might be in the works, although the popular stimulus checks may not be part of another round of aid.
Lawmakers could still pass a stimulus bill before the Senate adjourns for its holiday recess on December 18, but most economists believe it’s unlikely to match the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act that was signed into law in March and provided $1,200 checks to most Americans.
According to this article, there are actually two bills being debated in Congress.
First, a bipartisan bill that is roughly $900 Billion dollars, championed by Democratic Senator Joe Manchin of West Virginia.
This bill would funnel money to “protect” small businesses by adding more funds to the Paycheck Protection Program.
Additionally, hundreds of billions will be theoretically set aside to help individuals filing for unemployment benefits.
See tweet thread below for more details:
Today I'm announcing a bipartisan, bicameral framework for a COVID-19 relief package. This proposal would direct more than $900B to help small biz, healthcare providers, & unemployed Americans who need help now. It’s time to put politics aside & do what’s best for our country. pic.twitter.com/XkTGvWNdrw— Senator Joe Manchin (@Sen_JoeManchin) December 1, 2020
The second stimulus proposal is from Senate Majority Leader Mitch McConell.
According to the same CBS article:
On Tuesday, McConnell unveiled a proposal for a “targeted relief package,” which is far less comprehensive than the bipartisan effort from Manchin and other lawmakers. It would direct about $330 billion toward a one-month extension of two unemployment programs that expire on December 26, the Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs, as well as provide aid for the Paycheck Protection Program.
Both sound mildly helpful for the American people.
However, printing money out of thin air is not really a solution, it is a band aid at best.
Hope Springs Eternal
We remain hopeful that one of these will pass by mid December, just in time for the holidays.
Remember, both stimulus packages, combined with the first iteration, will weigh heavy on the future economy.
These bills are not just the initial price tag, but the interest and time that it will take to repay them.
This is also combined with the fact that less businesses will be around to make up for the tax bill.
As Warren Buffett has said:
“Nothing can stop America when you get right down to it. Never bet against America.”
Despite the seemingly grim prospects for the future, we all like to remind ourselves at AFN that America will pull through, probably even stronger.
Will Americans be receiving the second stimulus round by Christmas?
It is very likely — if Congress can get their act together.
However, neither solves the primary issue facing businesses and average Americans…government lockdowns.
It appears that the government has granted itself the permanent power of shutting down American operations at will.
We believe this is an extraordinarily dangerous prospect for current and future generations.
Nonetheless, we remain optimistic, especially on the US economy, considering there is really only up to go from the depths of the Covid lockdowns.
Subscribe to AFN and stay tuned for future news on political and financial affairs in the United States!
Check out our politics section for more great stories here.