House Speaker Nancy Pelosi, D-Calif., abruptly shifted course Thursday and moved to assemble a new and smaller coronavirus relief bill to form the basis for renewed talks with the White House, amid mounting pressure from moderates in her caucus and increasingly alarming economic news.
The parameters of the new legislation were not immediately clear but it’s expected to be narrower in scope than the $3.4 trillion Heroes Act the House passed in May. Pelosi has more recently focused on the need for $2.2 trillion in aid—a figure Republicans say is still too high.
Pelosi on Thursday asked key committee chairmen to get to work on putting together the bill, according to several Democratic aides with knowledge of the developments who spoke on condition of anonymity to discuss them. House Democratic leaders were meeting Thursday afternoon to discuss how to move forward.
News of Pelosi’s new push lifted the stock market slightly higher, with the Dow Jones industrial average gaining more than 200 points, or 0.8%. The Dow had slumped badly so far in September, losing nearly 9% in just three weeks.
“I think we’re headed towards a resurgence of the virus in the fall, and until we defeat the virus, you’re not going to have a full economic recovery,” House Ways and Means Committee Chairman Richard Neal, D-Mass., said Thursday. He said a vote could come as soon as next week.
Up until now Pelosi has resisted demands from moderates in her caucus to narrow her ambitions or put a new bill on the floor, insisting that Republicans should be the ones to offer new concessions. But her stance has become increasingly problematic as endangered House Democrats demanded action, with some threatening to sign onto a Republican-led procedural move to force a vote on a small-business relief bill.
Additionally, there are mounting signs that the economy could stall once more after a brief rebound in the summer. Airlines are threatening to lay off thousands of workers after Oct. 1, when payroll protections included in the Cares Act expire.
The window for action is narrow, however, and it’s unclear how quickly a bipartisan deal might be able to be reached—if at all. Negotiations between Pelosi, Senate Minority Leader Charles Schumer, D-N.Y., White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin collapsed in August and never really resumed. Congress is supposed to adjourn at the end of next week through the election, although lawmakers could be called back to vote on a deal, if there is one.
Mnuchin reiterated in an appearance before the Senate Banking Committee on Thursday that he saw the need for more stimulus and was prepared to resume talks. He mentioned in particular that aid should focus on assistance for small businesses, among other things. He has also said that the White House would support another round of stimulus checks for Americans, something Democrats have also said they want to authorize.
“I do think we need comprehensive relief,” Mnuchin said. “I’m available any time.”
Appearing at the same hearing, Federal Reserve Chairman Jerome Powell agreed that more assistance is needed. If not, Powell said, people may start pulling back on spending and even lose their homes as the money they got in stimulus checks or unemployment aid runs out. The unprecedented $3 trillion in stimulus Congress approved in the spring has been dwindling rapidly and some programs expired.
“We’ll see sooner or later, probably sooner, that the economy has a harder time sustaining the growth that we’ve seen, that’s the risk,” Powell said.
Powell said small businesses and the unemployed were in need of immediate help. The Fed chairman testified on Capitol Hill for three consecutive days this week, delivering a message that Neal said reinforced to Democrats that more needed to be done to help the economy.
Other Fed officials have also sounded the alarm in recent days. The unemployment rate has come down from its highest level in April, but it was still 8.4% in August, up dramatically from the 3.5% threshold in February. If companies stop rehiring workers and new furloughs continue, particularly in local governments and the travel industry, the economy could slip backward. That could lead to a pullback in consumer and business spending and then another round of layoffs, compounding problems further.
New Census Bureau survey data showed that 23 million adults reported that their household didn’t have enough food to eat in the first half of September, and one in four households with a child didn’t have sufficient means to pay the rent.
On Thursday, the Labor Department reported that 860,000 Americans filed jobless claims the prior week, the 27th straight week that was worse than any single seven-day stretch in at least 40 years.
There are still 26 million Americans who receive some form of jobless aid more than six months into the pandemic, and the emergency jobless aid benefits that President Donald Trump authorized more than a month ago are expected to soon run out for millions of Americans. The enhanced jobless aid that Congress and the White House approved in March expired at the end of July.
U.S. officials are also bracing for a wrenching mess in commercial real estate, as large and small firms face difficult decisions about how to pay leases for buildings that aren’t being utilized at full capacity. The NYC Hospitality Alliance, which includes restaurants, bars, and nightclubs, said a survey of its members found that 87% couldn’t pay their full August rent.
Renters are protected by an eviction moratorium through the end of the year, but unless Congress approves rental assistance before then, there could be mass evictions once the moratorium runs out.