A host of alarming new signs suggest that the U.S. economy is on track to deteriorate even faster than had been forecast. A huge reason: A year-end COVID rescue package now looks unlikely.
Why it matters: One of the biggest failures of the current administration and Congress will be a Day One problem for President-elect Joe Biden — and an urgent test of his theory that Republicans will be more willing to work with him once President Trump is gone.
State of play: Republican and Democratic lawmakers have agreed for months that the economy would suffer without stimulus, but things may soon deteriorate faster than they forecast.
- COVID-19 cases, hospitalizations, and deaths are up throughout the country, in the absence of any national containment strategy.
- Some state and local governments are reinstituting, or talking about reinstituting, lockdowns. Including for schools.
- Many restaurants that survived via outdoor eating will soon be forced to take down their tents as cold weather arrives.
- It wouldn't quite be like March, when scientists knew much less about how the virus was transmitted, but it could cause many businesses to yearn for the halcyon days of summer 2020.
Reality check: Biden spoke to House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer on Thursday about the need to pass a stimulus bill during the lame-duck session of Congress. But the reality is that the Republican Senate and the Democratic House remain very far apart on priorities.
- The Senate Republican conference is pushing for a highly-targeted bill, while House Speaker Nancy Pelosi maintains she won't compromise on anything smaller than $2.2 trillion.
- “That snag that hung us up for months is still there,” Senate Majority Leader Mitch McConnell said earlier this week.
- Meanwhile, January's two Senate runoff races in Georgia will pull more attention from stimulus talks, and also could cause each side to hold out longer — hoping for post-election leverage, even though Americans will suffer in the meantime.
- There's been a change in top negotiators, with the more conciliatory Treasury Secretary Steven Mnuchin replaced by McConnell.
The bottom line: Many Republicans have indicated that they plan to return to their traditional orthodoxy of fiscal responsibility, despite driving up the national debt by trillions of dollars under Trump. This could make Biden's job much harder.
- But one massive plus for Biden is that lawmakers will no longer be held hostage by the politics of an upcoming election, and members may be more willing to concede with a new leader in the White House.