Chances for a deal in Congress on a new, comprehensive stimulus package before September diminish with each passing day, leaving the U.S. economy limping and many businesses and millions of consumers coming up short.
Democrats and Republicans are focused on their party presidential nominating conventions this week and next. House Speaker Nancy Pelosi headed to California after rebuffing an overture from President Donald Trump’s Treasury secretary, Steven Mnuchin, to restart talks on a virus relief package without concessions.
Both chambers of Congress left Washington and had been scheduled to be gone until mid-September. But a financial crunch and political controversy involving the U.S. Postal Service prompted Pelosi to announce Sunday that the House would return later this week to vote on legislation that would prohibit the Postal Service from cutting service.
Some Democrats have been pushing Pelosi to vote on boosting funding for the post office, and White House Chief of Staff Mark Meadows is continuing to press for a small-scale rescue package that would include stimulus checks for individuals and aid for small businesses. He said the GOP would back $10 billion in funding for the post office that Democrats have been seeking.
“We will pass it tomorrow,” Meadows said Sunday on CNN’s “State of the Union” program. “The president will sign it. And this will all go away.”
However, Pelosi announced no other plans for votes, and she has repeatedly rejected any piecemeal deal on stimulus. A spokesman for Senate Majority Leader Mitch McConnell referred to the Kentucky Republican’s previous statement that Senators get 24 hour notice if they need to return to Washington.
The deadlock has persisted despite warnings from Federal Reserve officials, economists, governors and mayors that, with much of the earlier stimulus exhausted, the risk to the economy grows every day that goes by without a deal.
“If the economy has to wait until to the end of September, it will come to a virtual standstill between now and then, and vulnerable to anything else that goes wrong,” said Mark Zandi of Moody’s Analytics. “And given that we are in the middle of a pandemic, there is a lot that can go wrong.”
He estimates that delaying a new stimulus package would reduce gross domestic product at least 0.5% over the course of September, making it more likely that there will be increased unemployment by the end of that month.
Wall Street has been banking on a deal eventually being reached, but signs that the recovery is slowing have tamped down market enthusiasm. The S&P 500 slumped after fluctuating near all-time highs for much of the day on Friday and closed the week just 0.4% below its all-time high on Feb. 19, 2020.