Show an ad over header. AMP

The price of Washington's stimulus failure

America's elected representatives have failed America.

Why it matters: The bipartisan inability to deliver economic stimulus could impede economic growth for months to come. It will create widespread damage across America — from small businesses to large industries to schools and day cares — and leave many Americans without jobs or homes.


State of play: The initial economic stimulus, called the CARES Act, was only designed to last through the summer. Since then, congressional leaders have become too entrenched in their partisan positions to reach a deal on anything else.

  • The House passed a large package in May that went nowhere. Senate Republicans tried, but failed, to pass a skinnier bill earlier this month. A bipartisan effort by the Problem Solver Caucus seems unlikely to reach the floor.

Before Supreme Court Justice Ruth Bader Ginsburg's death Friday, most lawmakers and Hill staff believed there was little chance of passing a new stimulus package before the election. Now, they privately admit there’s virtually no shot.

  • We turned to Axios' subject matter experts to examine the damage created by Washington's inaction.

The unemployed

Under the CARES Act, unemployed Americans received an extra $600 per week in enhanced benefits. But those benefits expired at the end of July.

  • Democrats assert the extra money is necessary to keep working Americans afloat, while Republicans largely think it's a disincentive to work.

Last month, President Trump signed an executive order supplementing unemployment benefits at $400 per week. But it stated that the federal government would only pay $300, while cash-strapped states must pitch in the rest. Last week, Florida announced it was dropping the program due to the cost.

Why it matters: 30 million Americans are still receiving unemployment benefits.

Small businesses

Both Democrats and Republicans agree there's urgent need for a second round of stimulus loans for small businesses, which employ nearly half of all Americans. Yet there's been no movement to reauthorize the Paycheck Protection Program as a standalone, nor to pass a separate proposal aimed at restaurants and bars.

  • The National Federation of Independent Businesses reports that its "uncertainty index" in August hit its second-highest reading since 2017.
  • The original PPP lent over $500 billion to nearly 4.9 million small businesses, including independent contractors.
  • At this point, however, almost all of those PPP loans have been exhausted, even though many businesses remain closed.

What to watch: A renewed PPP, were it to happen, likely would be more targeted at even smaller businesses than was the initial effort.

  • The overall restaurant industry is on track to lose $240 billion in sales this year, with nearly one in six having already closed permanently or long-term, per the National Restaurant Association.
  • Nearly 3 million restaurant workers remain out of work, long after expanded unemployment benefits expired.
  • A group representing America's 500,000 independent restaurants estimates that more than 80% of them could go out of business without some sort of direct aid from Congress.

Elections

State election officials of both parties from across the country have begged Congress for stimulus funds to help ensure the November elections run efficiently and fairly, Stef Kight reports.

  • Some states have extra costs related to the pandemic, and many will need to manage unprecedented numbers of mail-in votes.
  • In the face of Congress' failure, charities have stepped in to donate hundreds of millions of dollars to state and local election officials, according to the AP.

Airlines

The clock is ticking for tens of thousands of anxious airline employees, who face mass reductions when the government's current payroll support program expires on Sept. 30, Joann Mueller reports.

  • Airline CEOs met last Thursday with White House Chief of Staff Mark Meadows, who said President Trump would support $25 billion in new stimulus.
  • There isn't large congressional appetite for a standalone airline bailout. The last standalone stimulus bill, $25 billion for the U.S. Postal Service, passed the House but wasn't even brought up for a vote in the Senate.

Schools

Schools and day cares are bleeding out without much-needed federal dollars. A generation of kids could get left behind, particularly those in economically disadvantaged neighborhoods, and many parents will struggle to work.

  • Between hiring more staff to allow for socially distant classes, getting PPE for teachers, and adding tech tools for remote learning, schools face around $100 billion in additional costs this year, the American Federation of Teachers estimates. That’s close to $2,000 per public school students, Erica Pandey writes.
  • Economists say the child care industry needs around $10 billion a month to survive. Without the aid, some 50% of centers could shutter.

Health care

The hospital industry is pushing Congress for more relief, even though some health systems are reporting huge profits, Caitlin Owens reports.

  • Safety net hospitals, which provide services regardless of a patient's ability to pay, are struggling to stay afloat just when they’re needed most.
  • Consumer spending impacts health service providers, including hospitals. It is likely that more Americans would visit doctors if they had another $1,200 check in their pockets.
  • Others will forgo health care, or following public health recommendations, in favor of paying rent or grocery bills.

The norms around science and politics are cracking

Crafting successful public health measures depends on the ability of top scientists to gather data and report their findings unrestricted to policymakers.

State of play: But concern has spiked among health experts and physicians over what they see as an assault on key science protections, particularly during a raging pandemic. And a move last week by President Trump, via an executive order, is triggering even more worries.

Keep reading... Show less

Apple sets September quarter sales record despite pandemic

Apple on Thursday reported quarterly sales and earnings that narrowly exceeded analysts estimates as the iPhone maker continued to see strong demand amid the COVID-19 pandemic.

What they's saying: The company said response to new products, including the iPhone 12 has been "tremendously positive" but did not give a specific forecast for the current quarter.

Keep reading... Show less

Podcast: The vaccine race turns toward nationalism

The coronavirus pandemic is worsening, both in the U.S. and abroad, with cases, hospitalizations and deaths all rising.

Axios Re:Cap digs into the state of global vaccine development — including why the U.S. and China seem to going at it alone — with medicinal chemist and biotech blogger Derek Lowe.

How central banks can save the world

The trillion-dollar gap between actual GDP and potential GDP is a gap made up of misery, unemployment, and unfulfilled promise. It's also a gap that can be eradicated — if central banks embrace unconventional monetary policy.

  • That's the message from Eric Lonergan and Megan Greene, two economists who reject the idea that central banks have hit a "lower bound" on interest rates. In fact, they reject the idea that "interest rates" are a singular thing at all, and they fullthroatedly reject the idea — most recently put forward by New York Fed president Bill Dudley — that the Fed is "out of firepower."

Why it matters: If Lonergan and Greene are right, then central banks have effectively unlimited ammunition in their fight to increase inflation and employment. They are limited only by political will.

Keep reading... Show less

Leon Black says he "made a terrible mistake" doing business with Jeffrey Epstein

Apollo Global Management CEO Leon Black on Wednesday said during an earnings call that he made a "terrible mistake" by employing Jeffrey Epstein to work on personal financial and philanthropic services.

Why it matters: Apollo is one of the world's largest private equity firms, and already has lost at least one major client over Black's involvement with Epstein.

Keep reading... Show less

Jeremy Corbyn suspended by U.K. Labour Party over anti-Semitism report

The U.K. Labour Party has suspended its former leader, Jeremy Corbyn, after a watchdog report found that the party failed to properly take action against allegations of anti-Semitism during his time in charge.

Why it matters: It represents a strong break by Keir Starmer, Labour's current leader, from the Corbyn era and one of the party's most persistent scandals.

Keep reading... Show less

U.S. economy sees record growth in third quarter

The U.S. economy grew at a 33.1% annualized pace in the third quarter, the Commerce Department said on Thursday.

The state of play: The record growth follows easing of the coronavirus-driven lockdowns that pushed the economy to the worst-ever contraction — but GDP still remains well below its pre-pandemic level.

Keep reading... Show less

Investors have nowhere to hide

The massive losses in oil prices and U.S. and European equities were not countered by gains in traditional safe-haven assets on Wednesday.

Why it matters: The unusual movement in typical hedging tools like bonds, precious metals and currencies means they are not providing investors an asset that will appreciate in the event of a major equity selloff.

Keep reading... Show less

Insights

mail-copy

Get Goodhumans in your inbox

Most Read

More Stories