Brief #102

Congress Finally Agrees to a Tepid Stimulus and a Federal Budget

Rosalind Gottfried        

December 20, 2020


A sustained disparity in the goals of Congressional Democrats and Republicans has ended in a compromise bill which leaves many Americans still vulnerable to the effects of the corona virus economy while providing a stopgap measure to avoid the worst case scenario.  The 900 billion Stimulus bill is tied to a government spending plan which avoids a last minute government shutdown.

The stimulus includes a $600 direct payment to persons earning under $75,000.  It includes money for people using Taxpayer Identification Numbers, making undocumented immigrants eligible who were barred for participation in the March stimulus.  This figure represents a lower amount than proposed by the Democrats and more than that initially supported by the Republicans; it also had the support of President Trump.   It also provides $600 per child.  Direct infusion is necessary to help strapped citizens but insufficient for the 8 million who have fallen into poverty since June.  It also may not be enough to help the unemployed avoid some of the consequences of long term unemployment.

The plan also provides for $300 a week of federal subsidies for regular unemployed benefits.  It also extends the access of gig and freelance workers though these will expire in less than three months.  Without the new stimulus, an additional 12 million workers would have lost their benefits at the end of the year.  Both the direct cash payments, and the unemployment subsidies, are half of what was provided in the March stimulus.

The stimulus also covers $285 billion for businesses in Paycheck Protection Programs of forgivable loans; $20 billion in federal loans for small businesses, extension of aid to nonprofits, local news sources; and $15 billion for entertainment venues including independent movie theaters.  The bill provides $82 billion in aid to colleges and schools; $13 billion in nutritional supplements; funding for tracing, testing, and vaccine distribution; $7 billion for broadband access; 25 billion in rental assistance; and an extension of the moratorium on evictions which had been set to expire at the end of the year.

In reaching this agreement, the Democrats dropped demands for aid to state and local governments which face large layoffs.  They also won an extension for spending funds remaining from the March stimulus.  The Republicans dropped demands for liability protections for hospitals and businesses.  The two parties agreed on language limiting the power of the Federal Reserve to make loans and emergency funding for businesses, municipalities, and other institutions to prohibiting copycat programs passed in the March stimulus; the Republicans wanted to make a more sweeping limitation on the power of the Fed.

The government spending bill, scheduled to begin at 12:01 Tuesday (with a one day emergency provision for Monday) will see funding for twelve major federal departments, and the safety net, sustained to the end of the fiscal year (September 30, 2021).  The spending bill contains a provision to ban supplemental bills form out of network providers, forcing the providers to work with the insurance companies, as promoted by the Democrats.  The budget will also expand federal Pell grants for tuition to low income students and revoke a ban on grants to prisoners pursuing education while incarcerated.  Provisions for clean energy to counter climate change and to reduce hazardous chemicals in refrigeration and air conditioning are also in the spending plan for the first time in ten years.  These are seen as a hit on President Trump’s administration.


In the end, the program represents a huge step down from the over 2 trillion plan the Democrats supported and the more stingy plan proposed by the Republicans.  Nancy Pelosi has called the current agreement an “initial step” and Biden sees it as a down payment on the stimulus plans he hopes to implement in his initial weeks as President.

The current program may help the most desperate situations from occurring in families with unemployed and curtailed workers but it comes too late for many workers and businesses.  Research indicates that half of the businesses that shut down in the spring failed to reopen or did so but then shuttered again.  The ultimate fate of these businesses is hard to predict.  Biden’s commitment to provide more aid is highly likely to falter with the expectation of  economic recovery anticipated by the availability of vaccination programs.

Long terms effects of the recession are disproportionately felt by the lower income workers who are more likely to be women and persons of color.  The racial income gap has widened and women are leaving the labor force in greater numbers.

Time will tell whether President-elect Biden will successfully infuse more aid into the struggling economy but if the debacle of the prolonged debate on the current stimulus is any indication, he appears unlikely to meet the challenge, especially with the Republicans touting the return of commerce that the vaccine promises.

Learn More References

Resistance Resources

Organization to get out the vote in Georgia where two pivotal Senate seats will be elected in early January

Subscribe Below to Our News Service

Pin It on Pinterest

Share This