How a Quick Stimulus Has an Increased Chance in Divided Government

WASHINGTON — The slow resolution of the presidential election, and the growing chance that Democrats and Republicans will divide power in Washington next year, has revived lawmaker interest in reaching an agreement on a new economic rescue package before Christmas.Senator Mitch McConnell of Kentucky, the majority leader, said on Wednesday that reaching a deal on a stimulus bill would be “Job 1” when lawmakers return for the lame-duck congressional session after the elections. It is possible that some type of stimulus package could be attached to a bill that would fund the federal government past Dec. 11 — legislation that will be necessary to avoid a government shutdown.The chance of a stimulus deal may be rising, but it is unlikely to result in as large a package as Democrats and President Trump were discussing before the election.Democratic leaders, including Speaker Nancy Pelosi of California, had been talking with the White House about a nearly $2 trillion package that would include direct payments to households, loans for small businesses and money for schools and state and local governments, as well as expanded coronavirus testing. Senate Republicans were pushing a bill that would have cost well under $1 trillion, possibly as little as $500 billion.Business groups are mounting a renewed push for a sizable bill, possibly around $1.7 trillion. “There’s no reason to wait,” Neil Bradley, the executive vice president and chief policy officer at the U.S. Chamber of Commerce, said on Wednesday. Mr. Bradley said chamber members hoped to see legislation resembling a bipartisan proposal in the House that would have included aid for people and businesses, as well as triggers to continue aid or cut it off depending on how the economy fares.Whether a stimulus package becomes reality will depend on several variables, including whether Mr. Trump, whose re-election prospects are fading, is willing to sign a bill. The stakes of the negotiations are also expected to remain murky until it becomes clear which party will control the Senate.Trump administration officials believe that Ms. Pelosi overplayed her hand in negotiations during the summer and fall and that Republicans will be even less likely to go along with a $2 trillion package now that the election is over and the Senate appears less likely to shift to Democratic control.Larry Kudlow, the director of the National Economic Council, said this week that he expected the White House and Congress to agree on another short-term extension of government funding in mid-December. He reiterated that the White House would like to see additional money allocated to the Paycheck Protection Program for small businesses and a reinstatement of supplemental benefits for the unemployed.Mr. McConnell on Wednesday called for Congress to act on another stimulus package before the new Congress takes office in January, telling reporters at a news conference that “I think we need to do it, and I think we need to do it before the end of the year.”He signaled openness to addressing Democratic demands, including providing billions of dollars to state and local governments, in part because of the political realities of divided government. But he provided a caveat, saying he would like to see it “done a little more skillfully than simply providing borrowed money for everyone regardless of their need.”Speaking at a virtual event hosted by The Washington Post, Senator Roy Blunt, Republican of Missouri and a member of the Senate Appropriations Committee, said he hoped a relief package could clear Congress before January. But he voiced some reservations, noting that “the lame duck is always a more challenging moment than we think it’s going to be.”After the election, at least one moderate Democrat, Representative Cindy Axne of Iowa, called for quick action on a bill. “There is no campaigning left to distract and detract from negotiations,” Ms. Axne wrote in a letter to Ms. Pelosi and Mr. McConnell. “Americans cannot wait longer for aid.”If Mr. Trump is declared the loser in the election, there would be competing political pressures on the lame-duck session. Mr. McConnell could be eager to reach a deal with Democrats before a Democratic president, Joseph R. Biden Jr., would take office, and before runoff elections in Georgia that could decide control of the Senate. Mr. Trump may be less focused on stimulus and more on the legal challenges his campaign is waging in a handful of states over election results.Stephen Moore, a member of the president’s economic task force, said that if Mr. Trump loses he could envision the president still backing a stimulus package so that he could take credit for handing off a relatively healthy economy to his successor. However, he said that it would probably be more targeted than the “go big or go home” pitch that Mr. Trump made before the election.“If he loses, it’s inadvisable for Trump’s last act as president to pass a $2 trillion stimulus,” Mr. Moore said. “That’s not what Republicans do. Let Biden own it.”Henrietta Treyz, an analyst at Veda Partners, suggested that the Republican stimulus proposals that were offered over the summer were primarily pre-election messaging efforts and that a new package would most likely be even more limited. She said that Mr. McConnell could seek to top up the small-business lending program with unused funds from the March legislation and to provide relief for the airline industry, which could be helpful in propping up the Republican Senate candidates in Georgia who could be facing runoff elections.“I think we should probably wipe the slate clean of all the proposals we’ve seen from Republicans since July,” she said. “Most of those were designed around the election.”


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