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Election results, vaccine news could shake up the outlook for a coronavirus stimulus package. What you need to know about the aid that may be coming

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Aviation workers hold a protest organized by the Association of Flight Attendants outside the U.S. Capitol in Washington, D.C., on Sept. 9, 2020.

Saul Loeb | AFP | Getty Images

Washington lawmakers have worked to come to an agreement on the next coronavirus relief package for months.

Post-election, those talks could get shaken up by new developments on Capitol Hill.

That includes the election of Democratic candidate Joe Biden to the Oval Office. But it will likely also be shaped by shifting power in the Senate and the near-term prospects for a Covid-19 vaccine.

Those factors could influence how much aid is sent out and when.

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The federal government has not authorized a large stimulus package since the $2.2 trillion CARES Act was passed in March. Without an update, certain types of aid related to unemployment benefits and renters’ protections will expire at the end of this year.

“This is a red alert and all hands on deck, but it should have been a long time ago,” House Speaker Nancy Pelosi, D-Calif., said last week of the government’s efforts to help Americans.

The challenge continues to be reaching a compromise between House Democrats, Senate Republicans and the White House administration. Currently, those talks don’t seem to be getting any closer.

“We’re not hundreds of millions of dollars apart,” said Ed Mills, Washington policy analyst at Raymond James. “We’re not billions of dollars of apart.

“We’re arguably trillions of dollars apart,” he said. “To get additional relief, we really have to see a forcing mechanism.”

Meanwhile, several new developments could change the dynamics of those ongoing negotiations.

Changing White House administrations

President-elect Joe Biden discusses protecting the Affordable Care Act and his health-care plans during a news conference in Wilmington, Delaware, Nov. 10, 2020.

Jonathan Ernst | Reuters

Leading up to the election, the stimulus compromise discussions predominantly included Pelosi and Treasury Secretary Steven Mnuchin.

Just before the election, those talks seemingly fell apart, with both parties resorting to sending each other letters. Post-election, Mnuchin and the rest of President Donald Trump’s administration have mostly let Senate Majority Leader Mitch McConnell, R-Ky., take the lead.

That has prompted the question as to whether or not more coronavirus aid will come together before Biden’s inauguration.

“It’s very unlikely there’s going to be a new approach between now and Jan. 20,” Mills said.

The Dec. 11 deadline to avoid a government shutdown could prompt action on the stimulus. To date, those dates have not been an incentive, Mills said.

Trump tweeted on Saturday to urge Congress should do another relief bill now. “Make it big and focused,” he said.

Biden’s presidential campaign included a plan for more coronavirus stimulus relief, including enhanced unemployment, money for small businesses and additional $1,200 stimulus checks. He also calls for emergency paid sick leave, forgiving at least $10,000 in federal student loans per person and increasing monthly Social Security checks by $200 per month for the duration of the pandemic.

“The fact that he will be president on Jan. 20, and not Donald Trump, I think does have some effect on the discussions now,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

Shifting Senate power

U.S. Senate Majority Leader Mitch McConnell, R-Ky.

Erin Scott | Reuters

House Democrats’ HEROES Act was initially proposed in May at $3.4 trillion. Since then, it has been brought down to $2.2 trillion.

The White House started at $1 trillion and agreed to go up to about $2 trillion.

The Senate started at $1 trillion when it introduced the HEALS Act, but has since come down to about $500 billion.

“We’ve seen movement in the House. We’ve seen movement with Mnuchin negotiating on behalf of the administration,” Mills said.

“We have seen backtracking in terms of the dollar amount from the Senate,” Mills added.

Vaccine prospects

Source: BioNTech

One wild card in the coronavirus stimulus debate is how soon there could be an effective Covid-19 vaccine.

If a vaccine gets emergency use authorization and the distribution of it allows the economy to return to normal, that could reduce the need for another stimulus package.

“There is a chance that we never get any more fiscal stimulus,” Mills said.

Hopes for an effective vaccine were bolstered on Monday by news from Moderna that its vaccine was found to be more than 94% effective in preliminary trial data. Pfizer and BioNTech have said their vaccine was more than 90% effective.

“The improvement in the labor market, the improvement in the economy, the improvement in vaccine development all take pressure off of Congress from delivering,” Mills said.

What fiscal relief could include

Small-business owners and community activists demonstrate for rent relief in the Bushwick neighborhood of Brooklyn, New York.

Erik McGregor | LightRocket | Getty Images

Millions of Americans are still hoping the federal government will come through with more aid.

Congress could yet be prompted to compromise on a deal.

“The increase in cases, the need for more funding for the most impacted industries, unemployment deadlines, all put pressure on Congress to act,” Mills said.

To some economists, the help can’t come soon enough.

“It’s been a political game,” said Elise Gould, senior economist at the Economic Policy Institute. “The answer is obvious.

“It’s not a question of what should we do?” he added. “It’s a question of do it.”

Certain CARES Act provisions including extended unemployment benefits and eviction protections are due to run out in December, Gould noted.

We saw people’s incomes drop off a cliff in August. The lack of doing anything has huge implications.

Elise Gould

senior economist at the Economic Policy Institute

Meanwhile, enhanced federal unemployment benefits of $600 per week ran out in the July. While Trump signed an executive order allowing for a $300-per-week federal increase, that has run out and, in some cases, was never paid.

“We saw people’s incomes drop off a cliff in August,” Gould said. “The lack of doing anything has huge implications.”

State and local aid, which also helps schools, is crucial, she said.

But providing federal help to states and local areas continues to be the biggest hang-up between lawmakers, Mills said. House Democrats have called for providing $1 million to those areas. White House Chief of Staff Mark Meadows has said the proposal is “not based on reality.”

Areas that both parties agree on now include more Paycheck Protection Program loans for small businesses, aid for education and health care, and unemployment benefits, Mills said.

Enhanced unemployment benefits

Hundreds of unemployed Kentucky residents wait in long lines outside the Kentucky Career Center for help with their unemployment claims on June 19, 2020 in Frankfort, Kentucky.

John Sommers II | Getty Images

A lot of people who were receiving unemployment benefits starting from the beginning of the pandemic are no longer eligible for checks, Gleckman said.

Now is the time to extend jobless payments for those people and to restore the federal bump up, he said.

“If you could do $400, that would be very helpful for a lot of people,” Gleckman said.

It would be an efficient form of stimulus due to the fact that recipients of unemployment tend to spend that money, which in turn helps the economy, Gould said.

Fears that those payments would discourage people from finding working are not necessarily well founded, she said.

“There are just simply not enough jobs out there, even if all the unemployed workers went out there,” Gould said.

Second $1,200 stimulus checks

President Donald Trump’s name appeared on coronavirus economic assistance checks that sent to citizens across the country April 29, 2020.

Chip Somodevilla | Getty Images

More one-time $1,200 payments could still be on the table, though the possibility is less certain now.

The first set of checks sent out by the government in the spring cost approximately $300 billion. Now, in an effort to keep the cost of a new coronavirus stimulus package down, those payments could end up on the cutting room floor.

The $1,200 checks were sent when the economy stalled in the spring and were effective in prompting more consumer spending.

Now that the government has more people’s information on file, second payments could get out more efficiently, Gleckman said.

“The Treasury and the IRS did a great job getting that out and they could do it again and get it out pretty quickly, probably even faster than they did the first time, because they have the experience,” he said.

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