Republicans table additional $1 trillion stimulus plan for US economy

Democrats have offered their own $3.5tn stimulus plan and say the Republican proposal isn’t adequate to the country’s needs

Republican senators, from left, Tim Scott, Lindsey Graham and Mitt Romney. Republicans are divided over the size and scope of additional federal spending. Bloomberg

Senate Republicans presented their $1 trillion (Dh3.67tn) plan to bolster the US economy in a series of bills that would trim extra unemployment benefits, send $1,200 cheques to most residents and shield businesses, schools and other organisations from lawsuits stemming from Covid-19 infections.

The package was pulled together after days of negotiations between Senate Republicans and President Donald Trump’s emissaries that did not completely settle differences within the Republican Party over the size and scope of additional federal spending in response to the pandemic.

“We have one foot in the pandemic and one foot in the recovery,” Senate Majority Leader Mitch McConnell said on Monday on the Senate floor, noting the rising death toll and fragile economic recovery.

“The American people need more help, they need it to be comprehensive and they need it to be carefully tailored to this crossroads.”

The bills were just the first step toward negotiating a compromise plan with Democrats, who have offered their own $3.5tn stimulus plan.

House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer began the talks in her office for almost two hours with Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows on Monday evening.

“We will be back tomorrow,” Mr Meadows said. “We had a good meeting. A very productive meeting.”

Ms Pelosi delivered a harsh assessment of the Republican Party plan, calling it a “pathetic” piecemeal approach and saying it was not adequate to the country’s needs.

“Having said that, we are going to see if we can find some common ground,” she said. “But we are not there yet.”

Congress has little time to act: supplemental unemployment insurance is expiring and other elements of the last stimulus legislation are beginning to dry up. Politicians are set to leave for an August break in two weeks and will face a timetable compressed by the November election when they return in September.

Diane Swonk, chief economist at Grant Thornton, said Congress is “chasing a moving target” with stimulus bills.

“I fear Covid[-19] will cast a long shadow on the economy and the aid Congress is offering up is too little, too late,” Ms Swonk said. “The bankruptcies and failures that will mount could leave us a much smaller and fractured base from which to rebuild.”

Continuing dissent among Republicans makes Mr McConnell’s negotiating position more difficult.

“There is significant resistance to yet another trillion dollars,” Republican Senator Ted Cruz of Texas said. “As it stands now I think it’s likely that you’ll see a number of Republicans in opposition to this bill and expressing serious concerns.”

There also was a split between the White House and Senate Republicans. Mr Meadows had suggested that Congress pass a much smaller package of school and unemployment benefits and continue negotiating a larger plan through August.

Mr McConnell’s statement that the bill had to be comprehensive was a rejection of that position.

Mr Schumer called the Republican Party effort to put together a package a “slow-motion train wreck” that has delayed getting legislation through Congress.

“They can’t even put one bill together; they are so divided,” he said.

There are some areas of common ground between Democrats and Republicans. They agree on another round of stimulus payments for individuals, although Democrats want to increase the amount paid to dependents and expand eligibility.

The wages protection programme for small businesses is another measure that the two parties support that is expected to be in the final bill.

Republicans agreed to extend supplemental unemployment benefits but have proposed cutting them from $600 a week to $200 until states are able to create a system that would provide 70 per cent of a laid-off worker’s previous pay up to a state-set cap.

Mr Schumer said tying the payments to actual wages will be “unworkable” for most state unemployment systems, which had trouble distributing the flat $600 payment that was part of the March stimulus bill.

The Republican plan also includes money for virus testing and to help with distribution of an eventual vaccine, as well as aid for schools.

Two of the biggest fights are expected to be over two issues that are crucial for the two sides: Democratic demands for aid to states and a Republican Party measure that provides protection against lawsuits stemming from coronavirus infections when businesses and schools reopen.