Is a Second Stimulus on the Way?

Facing pressure from both the president and the president-elect, Congress reconvened on the morning on the last day of November for a short session with two very important goals: pass a stimulus bill to provide desperately needed relief to the American people, and pass a new funding bill in order to avoid a government shutdown in mid-December.

The gridlock expectedly falls along party lines, with Democrats calling for a revival of the $600/week unemployment benefit from the spring CARES act, along with another $1200 direct payment to many US residents. Republicans, citing the “strong economy,” want to avoid these payments and provide only small-business relief and public health funding (both of which also exist in the Democrat’s version of the bill).

The Republicans also want to shield businesses from lawsuits stemming from COVID exposures among employees. 

The two sides have less than a month to finally work together and provide a solution, with the reconvened session scheduled to end before Christmas. Despite the enormous pressure on them to cooperate, the chances remain slim that the two sides will actually put the good of the nation ahead of their own team rivalry. So what’s going to happen?

Scenario 1: They manage to accomplish nothing

This is a likely scenario, and by far the worst possible outcome. Should Congress fail to both pass a new stimulus bill and prevent government shutdown, it will mean that even more Americans close out 2020 on the unemployment line. Government employees remember the 35-day shutdown championed by Trump during 2018-19, and they could be facing a similar scenario now. That was the longest shutdown in US government history, and the second time during Trump’s disastrous tenure that government workers faced furloughs. This time, the ongoing economic nightmare of COVID would place even more hardship on government workers.

For the rest of us, the lack of additional government support will continue the trend of allowing Americans to fend for themselves during one of the greatest natural disasters in modern history. This year has seen hundreds of thousands of small businesses forced to close up shop, millions of people file for unemployment, and over a quarter-million US residents die from an unchecked virus. To date, the government has given everyone $1200—about $200 shy of the average monthly rental price—to help get us through. 

This is an unmitigated failure to protect the public, and there’s no reason to expect a change now.

Scenario 2: They actually do something

If by some miracle the government can overcome its own dysfunction long enough to help the citizens it’s supposed to serve, it is almost guaranteed to be a too-little-too-late situation. Neither side is proposing mortgage freezes, debt relief, or other big-picture financial maneuvers that could provide some meaningful relief. If the more generous Democrat-led plan is approved, we’re looking at essentially a repeat of this spring’s paltry offerings, except that the $1200 stimulus check will be arriving far too late for the many Americans who have already lost their homes this year. For many more, it will go to paying down credit card debt racked up while unemployed due to the virus. The same goes for any expanded unemployment benefits.

Similarly, any small business relief offered by this bill will be valuable only to the businesses who haven’t already closed this year. 

The silver lining in this scenario is avoiding the government shutdown and its associated strains on our already stressed system. The last shutdown affected the paychecks of around 800,000 government employees; it would be shameful to allow this to happen again, especially when the problem is completely avoidable.Whether or not Congress acts over the next few weeks, it’s important to note that the overall handling of this pandemic by the federal government has been nothing short of atrocious. It is a grotesque combination of callousness and ineptitude that has carried an incredible cost. If you are one of the millions of people who have been affected by COVID-19, please let us help you reevaluate your finances. We know it isn’t easy right now, but we’ll do everything we can to help.