As my AEI colleague Jim Pethokoukis recently noted on Twitter, a major Wall Street economist thinks Congress’s massive relief legislation (which President Trump has since derided and is yet to sign) may be the last coronavirus-focused stimulus bill:
Goldman Sachs economist Alec Phillips told clients that this “looks like the last major Covid-focused fiscal package,” assuming Biden faces a divided Congress next year.
Much hinges on the outcome of elections for two Senate seats in Georgia in early January. If Democrats win control of the chamber, another ambitious package could be on the table. Otherwise, deadlock is expected to continue.
“We do expect another debate over fiscal support in [the first quarter], ahead of the expiration of the extended unemployment provisions in March,” Phillips said. “However, since Congress left the most difficult issues out of the current package, it seems unlikely that lawmakers will be able to agree on those in subsequent legislation.”
several important policy hints in the legislation’s key unemployment benefit
provisions that also suggest this may be the last stimulus train leaving the
- Providing only a short extension and phaseout of the Pandemic Unemployment Assistance (PUA) program. The legislation includes a relatively brief 11-week extension (through March 13 in most states) of the temporary federal PUA program, which would otherwise expire this week. That is followed by a new and even shorter four-week “phaseout” — the legislation uses that term, as do summaries written by Democratic policymakers — for some benefit recipients, whose checks could be payable through as late as April 10 in most states. Such “soft phaseouts,” which briefly extend benefits for individuals already collecting them, ease the pain of allowing a program to expire.
- Providing only a short extension and phaseout of the Pandemic Emergency Unemployment Compensation (PEUC) program. Same as the above, but for the temporary PEUC program and its recipients.
- Setting program and phaseout expiration dates that make another extension less likely. In the March CARES Act, Congress conspicuously chose expiration dates for key unemployment benefits that were designed to increase the chances they would be extended — scheduling them to expire before the long August recess and the day after Christmas. The new legislation does the opposite by setting a March 13 expiration date for the PUA and PEUC programs as well as revived $300 bonuses added to all state and federal unemployment checks. That is during a two-week congressional recess when Congress will literally be out of town. The same goes for the end of the soft phaseouts of PUA and PEUC benefits on April 10.
- Increasing the availability of state-funded extended benefits. Matching its other extensions of current law, the legislation continues the full federal funding of the normally half-state-funded Extended Benefits (EB) program through March 13. But the legislation also includes a longer-running provision that “Provides a temporary waiver of the mandatory ‘EB freeze period’ for states that trigger back onto the program because of fluctuations in their unemployment rates, beginning November 1, 2020 and ending December 31, 2021.” That makes it more likely that EB program benefits — including those offered after they are no longer fully federal funded starting in mid-March — would be paid in states where elevated unemployment indicates they are merited. That would improve the responsiveness of the EB program, including after it becomes partially state-funded again. That in turn would expect states to fill in some of the gap left by the expiration of the federal PEUC program that similarly assists long-term unemployed individuals.
In the end, whether Congress approves additional coronavirus relief will depend on the state of the economy and coronavirus in the coming months, along with the balance of power in Congress. But policy clues like these — which Republicans on the House Ways and Means Committee summarized as “extending and phasing out” current temporary programs — are additional indicators the latest coronavirus relief legislation might also be the last.