WASHINGTON — There is a growing recognition across party lines that Congress will need to spend more money, and soon, to continue to prop up the American economy during the coronavirus recession.
But there is little consensus on what that next aid package will look like and how quickly it will arrive before the end of summer, and there is a sense among Republicans and Democrats that the next bill will spend far less to help people and businesses than the nearly $3 trillion that Congress approved in March in a series of rapid-fire bills.
Some economists say lawmakers are risking further damage to an already fragile recovery by not moving more quickly. The unemployment rate has dropped from its April peak but was still at 11.1 percent in June. Forecasters at the Congressional Budget Office said on Thursday that they expected the economy to shrink by 5.9 percent this year, a contraction that would be more than twice as large as the one the United States experienced during the Great Recession in 2009.
Federal Reserve officials are worried that a possible “second wave” of the pandemic would further depress economic growth in a way that would be “more severe and protracted” than the current forecast, according to minutes from their most recent meeting published on Wednesday.
Virus cases have begun to surge across much of the country. Real-time indicators of shopping patterns and business openings suggest that a once-brisk economic rebound stalled in June as the virus began spreading more rapidly in Texas, Florida and other states. Even the most encouraging signs of recovery — such as the report on Thursday that the economy added 4.8 million jobs in June — underscore how far the recovery still has to get back to what was normal before the virus: Nearly 18 million Americans remain unemployed.
Lobbyists and lawmakers say the Trump administration, which has lost several economic advisers in recent weeks, is not deeply engaged in devising another rescue package. Officials have hinted for weeks that they would formally propose tax cuts, infrastructure spending and other initiatives, but they have not followed through. President Trump has asserted that the economy is rebounding but has expressed support for additional tax cuts and government spending.
“Today’s announcement proves our economy is coming roaring back,” he said on Thursday after the jobs report. “It’s coming back extremely strong.”
Treasury Secretary Steven Mnuchin, appearing with Mr. Trump, said: “Our work is not done. Our work won’t be done until every single American that lost their job due to Covid is back to work.”
Senators are expected to leave Washington on Thursday after making only incremental progress toward an agreement to extend further relief to businesses and laid-off workers who are about to lose or have already exhausted federal assistance. Congress this week unanimously agreed to extend an aid program for small businesses through August, a move that small-business groups called a good but insufficient step to help prevent bankruptcies. But the Senate’s Republican majority rejected a Democratic attempt to extend supplemental benefits for the unemployed until the economy has more fully recovered.
“I don’t understand how a senator can go home and not have delivered supercharged unemployment along the lines we’re talking about,” said Senator Ron Wyden, Democrat of Oregon, who introduced legislation on Wednesday that would allow expanded unemployment benefits to continue as long as the economy was weak.
But as is their tendency just before funding and programs are set to expire, several lawmakers expressed optimism that Senate Republicans could rapidly reconcile their divisions and deficit fears with the $3 trillion measure that House Democrats approved in May.
Senator Mitch McConnell of Kentucky, the majority leader, told reporters on Tuesday that the focus of any legislation taken up in the Senate would be “kids, jobs and health care,” as well as liability protections for hospitals, doctors, nurses, businesses, colleges and universities.
Senator Roy Blunt, Republican of Missouri, said he had asked lawmakers and staff on the committee responsible for overseeing health, education and labor spending to begin compiling a package, while Representative Kevin McCarthy of California, the minority leader, said he had been meeting with Mr. McConnell to prepare a legislative measure by the end of the month.
“It’s just a matter of figuring out kind of what those levers and dials are on the various programs where we need to do more,” Senator John Thune of South Dakota, the No. 2 Republican in the Senate, told reporters. “We, Senate Republicans, are doing this assessment, determining where we think the greatest needs are going to be, watching what’s happening in the economy as it opens up.”
A bipartisan group of lawmakers is also homing in on a deal to revamp the government’s efforts to help small businesses, likely including at least a partial shift from offering what were essentially grants to companies that kept workers on their payrolls to offering low- or no-interest, long-term loans.
A coalition of industry associations, led by the Economic Innovation Group, an entrepreneurship-focused think tank, called on lawmakers this week to give small businesses sufficient aid “to survive a prolonged period of lower consumer demand, ongoing operational disruption, and continued uncertainty until the availability of a vaccine and effective therapeutic treatment eliminate Covid-19 as a severe public health concern” — including simple, zero-interest loans.
“As the shutdowns have grown longer, it has become clear that millions of small employers need additional help if they are to keep their heads above water and survive,” said Senator Susan Collins, Republican of Maine and one of the architects of the emerging plan to help businesses. “I believe that we are very close to reaching bipartisan agreement, and I know that for small businesses that are struggling, such an agreement cannot come soon enough.”
Other issues are much further from resolution, including whether to extend, possibly with modifications, the $600-a-week supplemental unemployment benefit that was passed in March and expires at the end of July. Top Republicans are also pushing to grant some form of immunity from lawsuits to companies, schools and businesses that reopen or have remained open while the virus continues to spread. And lawmakers will need to decide how much, if any, money to send to struggling state and local governments that have already begun laying off employees as tax revenue plummets.
Industries that have been particularly hard hit, like entertainment venues, continue to push for more generous and targeted aid to keep them afloat, like tax credits for a portion of refunded tickets.
“I think we need more now, more than ever to keep the momentum — I want to pour on the gas, right?” said Senator Lindsey Graham, Republican of South Carolina, who added that he still objected to maintaining the $600 unemployment benefit. “I want a package that will keep the economy moving forward, more people being employed.”
Some conservatives continue to push congressional leaders and Mr. Trump to resist any additional government spending. Many economists disagree, saying further aid is needed to support the economy through what could be a long and slow recovery.
Federal spending has been “very important” to preventing an even steeper economic nose-dive, said Aneta Markowska, chief economist at the investment bank Jefferies. But it is at risk of running out long before the economy is ready to stand on its own.
“The stimulus was very short-lived,” she said. ‘This problem is going to persist long beyond July.”