$1 Trillion? $2 Trillion? Trump White House Can’t Agree on Next Stimulus
At the beginning of the week, we pointed out that White House trade adviser Peter Navarro had said in a couple of television interviews last Friday and Saturday that President Trump wants a manufacturing-focused stimulus package “on the order of at least $2 trillion.”
But this is Trumpworld, where fractious infighting is more than norm than planned and coordinated policy rollouts, so The Washington Post’s Jeff Stein reports that Navarro’s comments came as a surprise to other administration officials and “appeared to be a sharp departure from what other White House officials were considering.” Stein reports that congressional Republicans and administration officials downplayed Navarro’s television comments. “Navarro speaks for Navarro,’ one unnamed senior administration official said. Another offered this simple explanation: “Peter went rogue.”
Two unnamed senior administration officials told the Post that the administration is more likely to support a stimulus plan costing around $1 trillion.
‘Widening White House fissures’ over a recovery plan: Navarro’s apparent freelancing, and the “startled” reaction to it, illustrate just how far the White House has yet to go to overcome what Stein calls “widening White House fissures” over the economic recovery and a next stimulus plan.
“A number of advisers want to reconsider the tremendous amount of spending that they are pumping into the economy, but they face growing demands from economists and Federal Reserve Chair Jerome H. Powell to spend more to prop up the economy,” Stein writes. “President Trump and his senior economic advisers have said they want to pass additional stimulus legislation, but jockeying over that package has intensified as ideological rivals within the administration vie to shape it.”
Among those efforts, acting budget director Russell Vought and Mick Mulvaney, the former acting chief of staff, have reportedly proposed measures that would require long-term reductions in the deficit to be part of any plan.
Negotiating over the negotiators: The jockeying reportedly includes some pressure from conservative GOP lawmakers and activists to have Vice President Mike Pence or Chief of Staff Mark Meadows take on a bigger role in the dealmaking, amid complaints that the packages negotiated thus far with Treasury Secretary Steven Mnuchin as the administration’s point person “have been too generous to Democrats and allowed spending and other policy changes that run counter to GOP priorities.”
The bottom line: At a point when many economists say the economy still needs significant additional support, we’re still a long way away from a next stimulus package. Many of the White House’s priorities for the next bill aren’t clear, and those that are face substantial resistance.
“At this point, there is not a concrete White House proposal, in part because different economic advisers keep floating different — and at times contrasting — ideas,” Stein writes.
“The White House has not reached a final decision on whether it supports an infrastructure package; aid to state and local governments; another round of $1,200 stimulus checks; delaying the tax filing deadline beyond July 15; and a fix to the coming expiration of additional unemployment benefits, among other issues. Although it is clear Trump is eager to pass a payroll tax cut, a cut to taxes on capital gains, and deductions for the restaurant and entertainment industries, the administration has not formulated a concrete proposal, and these ideas have largely been dismissed by congressional lawmakers.”
Read more at The Washington Post.
Not Much Help for Small Business, Local Government From $500 Billion Relief Fund: Report
A $500 billion program intended to provide businesses and state and local governments with low-interest loans and grants during the coronavirus crisis has mostly benefited large companies so far, a congressional oversight group said Thursday.
Congress authorized the relief program in the CARES Act in March and put the Treasury Department and the Federal Reserve Bank in charge of disbursing the funds. The program includes $454 billion for emergency lending facilities targeting cash-starved companies, nonprofits and state and local governments, as well as $46 billion for airlines and national security contractors.
The latest report from the Congressional Oversight Commission says that the Fed has announced how it plans to use $195 billion of the funds in five lending areas, part of an effort that could support $2 trillion in loans. But most of the lending facilities are not operational, and only $6.7 billion of the total package has been spent so far.
Bond market rebound: The Fed’s plan to buy corporate bonds has boosted the market, as investors snapped up corporate debt now backed by the Fed. But the market rebound seems to be the only significant outcome from the program so far, leaving smaller businesses and governments out in the cold.
“In some areas of the economy, such as the ability of larger companies to issue debt to continue operations, the agencies’ actions have had a clear and powerful impact,” the commission wrote. “But there is less evidence that the actions of the Treasury and the Federal Reserve have been as beneficial for small and mid-sized businesses and state and local governments.”
The commission questioned whether the Fed should continue to purchase corporate debt, given the more robust health of larger businesses, and suggested that the central bank should focus more on other entities that need help.
Little help for governments: The lending program targeting state and local governments, called the Municipal Liquidity Facility (MLF), has only recently begun to operate and has made just one loan so far. The Treasury is putting $35 billion into the fund, which will back as much as $500 billion in lending by the Fed. But the only loan so far has been in Illinois, where the Fed purchased $1.2 billion in notes.
Small business program has only just begun: The Fed is using $75 billion from the Treasury to back as much as $600 billion in lending to small and mid-sized businesses, defined as those with as many as 15,000 employees or up to $5 billion in annual revenues. But the Main Street Lending Program just started taking applications this week, and has yet to extend any loans.
Will Congress Provide More Support for Small Businesses?
The Paycheck Protection Program, the $660 billion rescue program for small businesses, is set to stop accepting applications at the end of the month after having approved more than $510 billion in forgivable loans to more than 4.6 million applicants.
The question is what comes next, as lawmakers, economists and small business advocates say more help may be needed, especially for vulnerable industries like restaurants and hotels. Politico’s Zachary Warmbrodt reports:
“While there is still $130 billion left unspent in the so-called Paycheck Protection Program, lobbyists say that's because there were onerous restrictions — chiefly that businesses are prohibited from borrowing a second time, so if they're out of money, they're out of luck. Others say that many potential borrowers were largely left out of the process, including minority employers, who often don’t have relationships with bankers.”
“Still others are looking for a longer-term solution: There is emerging bipartisan support for new government-backed lending that would last much longer than lawmakers first envisioned with the Paycheck Protection Program, which was designed to delay mass layoffs in the early days of the pandemic.”
The bottom line: PPP critics are pushing for stricter limits and better targeting for funds provided through the program, but support is reportedly growing for letting businesses apply for a second round of loans. The PPP may yet be revived, but if it is it could be with some sizable changes.
“It really does feel like the U.S. has given up.”
– Siouxsie Wiles, an infectious-diseases specialist at the University of Auckland in New Zealand, in a Washington Post piece on the many health experts in countries with falling coronavirus case numbers watching the U.S. response “with a growing sense of alarm and disbelief.”
Coronavirus Will Likely Lead to Thousands More Cancer Deaths: Norman “Ned” Sharpless, director of the National Cancer Institute, warned Thursday in an editorial in the journal Science that delays in screenings, diagnoses and treatment resulting from the pandemic will lead to an estimated 10,000 more deaths from breast and colorectal cancer over the next decade, or about a 1% increase over what would have been expected otherwise. “Cancers being missed now will still come to light eventually, but at a later stage (“upstaging”) and with worse prognoses,” he wrote. Sharpless added that the estimate may be too conservative. (Washington Post)
Trump Administration Has Paid $7.3 Million for Unusable Mini Soda Bottles: The Trump administration has paid a first-time federal contractor $7.3 million for test tubes used in tracking the coronavirus, and the deal could still grow to cost $10.16 million. But the company, Fillakit LLC, has supplied FEMA with more than 3 million plastic tubes made for bottling soda — tubes that are medically unusable because of their size and shape, and likely contaminated to boot. “The Fillakit deal shows the perils of the Trump administration’s frantic hiring of first-time federal contractors with little scrutiny during the pandemic,” write J. David McSwane and Ryan Gabrielson. (ProPublica)