Federal Reserve Chairman Jerome Powell warned about the risks of limited government support to American households, businesses, and the economic recovery as Congress still tries to reach a new stimulus deal and renew relief provisions.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said at a National Association of Business Economics conference on Tuesday. “Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth.”
Powell applauded the government relief effort provided under the CARES Act saying its “by far the largest and most innovative fiscal response to an economic crisis since the Great Depression.” Under the CARES Act, Americans received a one-time stimulus payment as well as an extra $600 of unemployment benefits a week, among other provisions meant to give “vital support” to households.
But many of the key provisions of that relief have expired, and Powell stated that the “recovery will be stronger and move faster if monetary policy and fiscal policy, continue to work side by side to provide support to the economy.”
This comes as House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin recently returned to the negotiating table in hopes of crafting legislation that could pass both the Democratic-controlled House and GOP-controlled Senate. But after a meeting and numerous calls, the two have still yet to reach a deal.
‘Work together and get it done’
The Democrats’ latest $2.2 trillion coronavirus stimulus proposal — which passed the House last week — still has a much higher price tag than the White House proposal, which is around $1.6 trillion. Along with the price tag, there are sticking points like extra unemployment benefits, funding for schools, aid for state and local governments, child care support, funding for increased testing and tracing, and funding for other appropriations.
The president, who has been pushing for a much higher price tag, reiterated his support for a stimulus deal saying the country “wants” and “needs” stimulus, and urging the two parties to “work together and get it done,” in a tweet on Saturday.
OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!
— Donald J. Trump (@realDonaldTrump) October 3, 2020
The push to reach a deal comes less than a month before the election, with many lawmakers returning to their districts and the Senate being closed until Oct. 19 after several GOP lawmakers tested positive for COVID-19.
Even if a deal is reached between the White House and Democrats, questions remain on whether or not it will pass the Republican-controlled Senate.
“Just because the deal was reached between Mnuchin and Pelosi, and McConnell for that matter, doesn't mean it's going to be law,” Mark Harkins, a former congressional staffer and senior fellow at Georgetown’s Government Affairs Institute, told Yahoo Money. “It still has to get 60 votes in the Senate and that means that at least 13 Republicans are going to have to say ‘yes’ to it.”