The stock market went up last week because the economy is stalling out, more people are getting sick and dying, and empoloyer hiring dropped like a rock in November, while 12 million people are still unemployed because of Covid-19. Why? Because investors think the shitty economy will force Congress to pass more Covid-19 relief. I’m not betting my money on that.
Do I think there will be more relief from Congress? Nearly everyone on Wall Street thinks so, but those folks have an optimism bias (few people make money from a falling stock market, although a couple of Republican senators apparently did). I’m skeptical, but not ruling it out. At this point, Trump is a non-factor; he’ll sign anything that passes, or if he doesn’t, his successor will in fairly short order. The bottleneck is GOP senators, and specifically McConnell, who can block a floor vote for a bill some members of his caucus would vote for.
The main reasons for the optimism about a relief bill are (1) there’s a bipartisan bill that can pass the House, and (2) the GOP Senate leader is making noise about allowing something to pass. For months, Democrats led by House Speaker Pelosi held out for $2.2 trillion of additional relief; so why are they signing off on much less now? Time magazine asked her, “What changed? Two things, said the Speaker. A vaccine appears nearing delivery. And Joe Biden won the White House.” To read more that, and the political calculus on both sides, click here.
The problem is that while the parties may finally have compromised on dollars, they’re still at odds over what the money will go for. In particular, Republicans want NO help for state and local governments. On top of that, Republicans want liability immunity for businesses if workers get Covid-19 from returning to work. McConnell calls that “a red line,” while Democratic Senate leader Schumer calls it “a deadly poison pill.” Read that story here.
That conflict takes place in a context of Republicans trying to force the economy to reopen despite Covid-19 risks, and force workers back into workplaces without adequate protections. In short, Republicans want to sacrifice workers’ health and lives for business profits, and Democrats can’t be expected to go along with that.
As I’ve written before on this blog, that impasse need not be insurmountable. There’s an obvious solution: Require employers to provide reasonable protections, and integrate Covid-19 claims into existing worker’s comp programs, with Congress providing the funding to state programs for those claims.
In the interest of brevity, I’m omitting the usual laundry list of offers and counteroffers in the stalemate to make room for a chart showing what these differences are.
Current Status of Proposals
House Compromise Bill — $908 billion
McConnell — $500 – $650 billion (maybe)
But … the devil is in the details:
