Huge Gap Between the GOP and the Democrat Stimulus Plans

Mish

More details emerge in the GOP stimulus plans. A video explains the key differences.

Bickering Over Price

Republicans want to spend about $1 trillion with strong internal divisions. 

The Democrats are united behind Pelosi. They propose $3 trillion.

A video courtesy of The Street has key details.

Clock Just Ran Out on $600 in Weekly Unemployment Benefits

As noted on Sunday the Clock Just Ran Out on $600 in Weekly Unemployment Benefits.

Calendar Quirk

The last full week in July ends Saturday July 25 for most state UI programs. And that is when the benefits expire, not July 31.

Rubio proposes taking up the lapse in insurance "by the first week in August."

That would be too late.

Republicans Propose a Means Test Instead of $600 Weekly Benefits

On Sunday, I commented Republicans Propose a Means Test Instead of $600 Weekly Benefits 

Republican Proposal Details

  1. Eliminate the $600 weekly benefit and replace that with a means test to rejigger benefits so that they replace roughly 70% of a worker’s former wages.
  2. Another round of direct $1,200 payments to would be sent to the same group of Americans as the last round—$1,200 to individuals with adjusted gross incomes below $75,000 and married couples making less than $150,000. Payments would be gradually reduced for incomes above those levels before they are phased out entirely.
  3. $100 billion in aid to schools and universities and additional money for coronavirus testing.
  4. State and local governments would get no additional aid, but more freedom on how to spend previous money.
  5. The Republican bill would make it harder to successfully sue businesses, schools and health-care providers in coronavirus-related cases.
  6. Estimated total cost of about $1 trillion

More Details On Point 1

  • The GOP proposes to cut the enhanced unemployment benefit from $600 to $200 per week through September. That is in addition to what recipients get from states unemployment insurance.
  • The GOP also proposes to set the maximum assistance at 70% of a worker’s previous wages, with a cap of $500 per week.

These are huge cutbacks that Pelosi is unlikely to agree with quickly if at all. 

Senate Majority Leader Mitch McConnell (R., Ky.) has said he expects to take at least a few weeks.

If so, that is three weeks of missed $600 checks. In addition the benefits stopped flowing completely in states with minimal weeks of unemployment insurance.

Advantage Democrats

Because of Republican delays, Democrats can hold out for more and blame Republicans for all of it.

Under this scenario, they would agree to a deal after a couple of weeks, then blame Trump and the Republican Senators for the difference 

Philosophically Speaking

Philosophically, people should not make more being unemployed than employed.

Politically speaking, the Republicans just stepped on a landmine.

Weeks or Longer Delay

Via MarketWatchThe Republican proposal on unemployment benefits, simply put, is unworkable. It will delay benefits for weeks if not months as we slide into a greater degree of recession,” said Chuck Schumer, Democratic Senate Minority Leader.

Democrats Favored to Win the Senate

Please note that the Democrats are Now Favored to Win the Senate.

This update will not help the Republican cause. 

Trump Will Lose to Biden

For analysis of why Trump will lose to Biden, please see Only 13 Percent of Voters are Still Undecided

Republican bickering can easily turn things into a Democrat tidal wave.

Mish

Comments (39)
No. 1-12
Tony Bennett
Tony Bennett

"Under this scenario, they would agree to a deal after a couple of weeks, then blame Trump and the Republican Senators for the difference"

...

I bet Democrat strategists are salivating. Do just this ... won't be enough to kick economic can past November ... ensuring Blue Wave this Fall ... next year(s) epic deficit(s) as US becomes entrenched in Nanny State-itis.

Bam_Man
Bam_Man

They are now throwing $TRILLIONS around like it's confetti.
Gold will go ballistic and the US can kiss Global Reserve Currency status goodbye.

mkestrel
mkestrel

The Democrats want a huge bailout for their public unions. The bay area rapid transit (BART) admitted their ridership is off 90% from their budget. Given the collapse in tourism, personal/business expenditure its my guess every city in California is in serious trouble. They do not want to share in the consequences served up by their psychotic oligarch Gavin Newsome.

The only democrat tidal way is of socialism. I doubt the average conservative democrat will by into turning the US into Cuba 2. As in 2016, trumps odds are being underestimated both here and in the media circus.

Lance Manly
Lance Manly

Well, the GOP proposal also includes a billion or so for a new FBI headquarters right where it is so competition does not adversely affect the Trump hotel. Likewise it restores Pentagon funding that Trump used for his pet border wall project.

Jmurr
Jmurr

Law of all types of budget negotiations - Republicans always cave.

Casual_Observer
Casual_Observer

I think the Dems should cave and give Trump and Republicans whatever they want. The economy will only get worse with Republican "solutions".

Sunriver
Sunriver

The birthpains of a gauranteed income for all Americans. It was inevitable. The virus just sped up the process. Like it or not, socialism is here to stay. Lest there be civil unrest.

Realist
Realist

It appears as though many prominent Republicans are already against their own proposals, so I don’t know how they are going to negotiate a final agreement with Democrats.

Grifo
Grifo

This is a lot of money, and I am concerned it will not solve the problem and save the economy until virus problems go, likely another YEAR, especially given how the US has repeatedly flubbed responding intelligently and with a plan.

But if they are going to pass this package, the money should flow bottom up, efficiently lubricating the economy where unemployment is about to wreak havoc. That is the Democrats' approach much more than the Republicans.

The Senate bill also includes a lot unrelated to helping the economy - significant military purchases, increases in business tax deductions for entertainment, provision to prevent a competitor building a hotel across from the Washington Trump, etc.

ToInfinityandBeyond
ToInfinityandBeyond

The outlook for this country is not promising if the gap between the “haves” and the “have nots” gets larger and larger. The “have nots” are beginning to catch on to the fact that the bailouts are primarily for the rich. This will undoubtedly spur social unrest if the gap continues to grow.

ToInfinityandBeyond
ToInfinityandBeyond

I would be surprised if we don’t hear more people calling for a national guaranteed income. This relates back to my previous post about the wealth gap in this country. There is something inherently wrong when CEOs make $31M per year and pay starting salaries of $37,000 per year for an entry level bank teller in California. That is not much better than minimum wage. The CEOs company also benefited from the recent US tax cuts to the tune of $3.8 billion in 2019.

Cocoa
Cocoa

why are they basing the 1200 checks on LAST YEAR'S ADJUSTED INCOME???That's totally irrelevant to THIS year...that assumes you still have your old salary or any salary at all!