The Democrats' scaled-down stimulus plan unveiled on Monday trims payments for dependents — among other reductions from its original version — in an effort to revive negotiations with the White House before the election.
The updated HEROES Act costs $2.2 trillion, down from the initial $3.4 trillion proposal they released in the spring. It includes $436 billion for state and local governments, $282 billion for education and child care, a second round of $1,200 stimulus checks, extra $600 of unemployment benefits through January, among other provisions.
What's changed is the extra $500 for dependents, down from $1,200 in the first iteration, along with reduced amounts for state and local government aid, education, child care and other provisions. The price tag for a new stimulus package has been a sticking point between the Democrats and Republicans, resulting in a months-long stalemate on talks.
“Democrats are making good on our promise to compromise with this updated bill, which is necessary to address the immediate health and economic crisis facing America's working families right now,” Speaker Nancy Pelosi (D-CA) said in a statement on Monday. “We have been able to make critical additions and reduce the cost of the bill by shortening the time covered for now.”
‘The other team wants a gigantic package’
The package will likely face opposition in the Senate as disagreements about the price tag of the bill and key provisions such as aid for state and local government remain. The $2.2 trillion price tag is still much higher than the latest Republican proposal, which was worth around $300 billion and was rejected in the Senate.
“They have a new offer on the table. We don’t think the numbers are right — $2.2 trillion — which is a very big number,” White House Economic Adviser Larry Kudlow told CNBC on Tuesday when asked about the Democratic proposal. “The other team wants a gigantic package and we don't think we need that.”
Pelosi and Treasury Secretary Steven Mnuchin — both of whom have been leading negotiations for their respective sides — have spoken several times in the last few days and are expected to talk again on Wednesday after they agreed to resume negotiations.
The White House expressed support for a $1.5 trillion middle-ground stimulus proposal unveiled by a bipartisan group of House members, dubbed the Problem Solvers Caucus, and urged Republicans to increase the price tag of their $300 billion proposal, with the president tweeting: “go for the much higher numbers.”
“The issue here isn’t whether the two parties can agree on particular provisions; the issue is whether both parties want a deal before the election,” Sarah Binder, a professor of political science at George Washington University and senior fellow at the Brookings Institute, told Yahoo Money.
“The Senate Republicans’ unwillingness so far to spend even half as much as what Secretary Mnuchin suggested leaves negotiations at a stalemate,” she said, “and unless the White House can coalesce behind a package and get the Senate GOP on board, the deadlock will continue.”