WASHINGTON — There is a growing recognition across party lines that Congress will need to spend more money, soon, to continue to prop up the US economy during the coronavirus recession.
But there is little consensus on what that next aid package will look like and how quickly it will arrive before the end of summer, and there is a sense among Republicans and Democrats that the next bill will spend far less to help people and businesses than the nearly $3 trillion that Congress approved in March in a series of rapid-fire bills.
Some economists say lawmakers are risking further damage to an already fragile recovery by not moving more quickly. The unemployment rate has dropped from its April peak but was still at 11.1 percent in June. Forecasters at the Congressional Budget Office expect the economy to shrink by 5.6 percent this year, a contraction that would be more than twice as large as the one the United States experienced during the Great Recession in 2009.
Federal Reserve officials are worried that a possible “second wave” of the pandemic would further depress economic growth in a way that would be “more severe and protracted” than the current forecast, according to minutes from their most recent meeting published Wednesday.
Virus cases have begun to surge across much of the country. Real-time indicators of shopping patterns and business openings suggest that a once-brisk economic rebound stalled in June as the virus began spreading more rapidly in Texas, Florida, and other states. Even the most encouraging signs of recovery — such as the report Thursday that the economy added 4.8 million jobs in June — underscore how far the recovery still has to get back to what was normal before the virus: Nearly 18 million Americans remain unemployed.
Lobbyists and lawmakers say the Trump administration, which has lost several economic advisers in recent weeks, is not deeply engaged in devising another rescue package. Officials have hinted for weeks that they would formally propose tax cuts, infrastructure spending, and other initiatives, but they have not followed through. President Trump has asserted that the economy is rebounding but has expressed support for additional tax cuts and government spending.
“Today’s announcement proves our economy is coming roaring back,” he said Thursday after the jobs report. “It’s coming back extremely strong.”
Treasury Secretary Steven Mnuchin, appearing with Trump, said: “Our work is not done. Our work won’t be done until every single American that lost their job due to COVID is back to work.”
Senators are expected to leave Washington on Thursday after making only incremental progress toward an agreement to extend further relief to businesses and laid-off workers who are about to lose or have already exhausted federal assistance. Congress this week unanimously agreed to extend an aid program for small businesses through August, a move that small business groups called a good but insufficient step to help prevent bankruptcies. But the Senate’s Republican majority rejected a Democratic attempt to extend supplemental benefits for the unemployed until the economy has more fully recovered.
“I don’t understand how a senator can go home and not have delivered supercharged unemployment along the lines we’re talking about,” said Senator Ron Wyden, Democrat of Oregon, who introduced legislation Wednesday that would allow expanded unemployment benefits to continue as long as the economy was weak.
But as is their tendency just before funding and programs are set to expire, several lawmakers expressed optimism that Senate Republicans could rapidly reconcile their divisions and deficit fears with the $3 trillion measure that House Democrats approved in May.
Senator Mitch McConnell of Kentucky, the majority leader, told reporters Tuesday that the focus of any legislation taken up in the Senate would be “kids, jobs, and health care” as well as liability protections for hospitals, doctors, nurses, businesses, colleges, and universities.
Senator Roy Blunt, Republican of Missouri, said he had asked lawmakers and staff on the committee responsible for overseeing health, education, and labor spending to begin compiling a package that “will ensure we have more testing, that we continue to work on therapeutics, and we have the money we need to move forward with a vaccine.”
A bipartisan group of lawmakers is also homing in on a deal to revamp the government’s efforts to help small businesses, likely including at least a partial shift from offering what were essentially grants to companies that kept workers on their payrolls to offering low- or no-interest, long-term loans.
Other issues are much further from resolution, including whether to extend, possibly with modifications, the $600-a-week supplemental unemployment benefit that was passed in March and expires at the end of July. Top Republicans are also pushing to grant some form of immunity from lawsuits to companies, schools, and businesses that reopen or have remained open while the virus continues to spread. And lawmakers will need to decide how much, if any, money to send to struggling state and local governments that have already begun laying off employees as tax revenue plummets.
Some conservatives continue to push congressional leaders and Trump to resist any additional government spending. Many economists disagree, saying further aid is needed to support the economy through what could be a long and slow recovery.
Federal spending has been “very important” to preventing an even steeper economic nosedive, said Aneta Markowska, chief economist at the investment bank Jefferies. But it is at risk of running out long before the economy is ready to stand on its own.
“The stimulus was very short-lived,” she said. “This problem is going to persist long beyond July.”