Stimulus, Unemployment and government spending

Congress will be out of town next week to celebrate Thanksgiving and returning on November 30th. The US Government is looking at two big deadlines: the expiration of the Continuing Resolution (CR) that funds the government until December 11, and the end of extended unemployment insurance (UI) on December 31.

There appears to be some discussions between the bipartisan Congressional leadership on how to deal with the two critical dates; and a growing view that the economy will need some action on coronavirus relief before year-end. In March, the massive CARES Act unemployment insurance was extended from 26 to 39 weeks, but this provision is set to expire on December 31 leaving 10 to 12 million unemployed without benefits.

There is also bipartisan support to replenish the small business PPP loan program. Congress may add these provisions to the year-end government funding bill, and then deal with one more relief package with the new Congress and new President in the first two months of 2021. But a larger package could be added to the funding bill if President Trump fully engages. Last Saturday the President did Tweet in support of a bill saying: “Needs Democrats support. Make it big and focused. Get it done!” If he can move past recount, fighting for a big relief bill could be part of his lasting legacy as vaccines get approved.

Judy Shelton for FRB

In a rare setback Republicans were unable to get a majority vote for the President’s controversial Federal Reserve Board nominee, Judy Shelton, a sometime supporter of the gold standard. With three Republicans publicly opposed, and two Republicans in COVID-19 quarantine, the vote was 48 Y and 49 N. A revote is unlikely as the Republicans will lose one vote on November 30 when Democrat Mark Kelly replaces appointed Arizona Senator Martha McSally and hence assure 51 N votes.

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