America urgently needs an economic bailout. Businesses, corporations, families and the unemployed await a political agreement that seems impossible before the elections
The economic fabric of the United States needs, for months and urgently, a second public bailout. This is, perhaps, one of the few things that Democrats and Republicans agree on. Technically, the recovery from the spring hit has already begun; But millions of people remain unemployed since March – without health insurance and unable to pay their rent or mortgage – businesses groping and states running into debt. The goal is clear, but how to reach it is the subject of endless ideological fencing.
“Negotiations for the COVID aid package are progressing,” US President Donald Trump tweeted last Friday, three days after announcing that nothing would be discussed until after the elections. The commander-in-chief’s somersault came with a new offer: $ 1.8 trillion in aid. Democrats, however, are not convinced. Neither do the Republicans.
The package “is one step forward and two steps back,” said Democrat Nancy Pelosi, Speaker of the House of Representatives. “At this point, we still have disagreements on many priorities.” The progressives, among other things, consider the quantity insufficient; They demand 2.2 trillion in total and greater attention to the needs of the 50 states, workers and the fight against covid.
The Conservatives, meanwhile, are seeking a smaller package than proposed by the president. Less than a trillion dollars and without the same abundance for families that the Democratic opposition raises. They refuse to reinstate the weekly extra $ 600 unemployment benefit, extend aid to undocumented immigrants, and allow public health insurance to finance abortion. Republicans are also demanding the inclusion of legislation that protects companies from the demands of their workers related to coronavirus infections.
In other measures, the parties coincide: families from the middle or lower class would receive another aid check for $ 1,200. Items would also be earmarked to support airlines, one of the sectors most affected by the steep fall in air traffic; there would be an extra budget for covid-19 testing and a program that protects companies’ ability to continue paying wages.
On Sunday afternoon, the White House presented another proposal: a new plan to urgently help small businesses. “The time has come to come together and immediately vote on legislation that allows us to spend available funds from the small business assistance program while continuing to work together on a larger aid package,” said Mark Meadows, chief of White House cabinet.
Unemployment and bankruptcy
The stimuli approved in March have been running out or expiring; even so, it does not seem that the two parties have approached positions. Senate Majority Leader Mitch McConnell has acknowledged that it is difficult to reach an agreement in such a polarized climate less than a month before the elections. “I would like to see us go further, as we did in March and April, but I think it is unlikely in the next three weeks.”
Meanwhile, some 2.4 million Americans have been unemployed for more than six months; a figure that continues to rise, putting the entire economic recovery at risk. “The more people are unemployed, the more their assets and savings deteriorate, and that really begins to impact consumption and their ability to spend,” Gabriel Chodorow-Reich, a Harvard economics professor.
The most affected sectors are the hotel and leisure industry, which together have lost more than 7 million jobs compared to February. A stark reality that can be seen in cities like New York where, since March, more than 1,000 restaurants have already closed. The progressive lack of refinement has allowed the survivors to fill their patios and terraces, and, since the end of September, also 25% of their interior spaces. But it’s not enough. Almost 90% of businesses were unable to pay their rent in August.
The same is true of the entertainment market. The prestigious Metropolitan Opera will be closed this season and next, at least; the theatres, one of the city’s biggest tourist attractions, don’t plan to open until May. Cinemas and concert halls are still closed and dozens of traditional chains, such as the clothing stores of True Religion, J Crew, Nieman Marcus or JC Penney, the Hertz car rental corporation, the Le Pain Quotidian cafes or the 24 Hour Fitness and Town Sports International gyms have gone out of business in the biggest bankruptcy wave of the last decade.
The recovery is ongoing but is slowing down. At the beginning of the pandemic, more than 20 million jobs were destroyed in just one month. Unemployment, which was at 3.5%, rose to 14.7% in April. In May it fell to 13.3%, in June to 11.1% and has continued to do so in smaller and smaller fractions to the current 7.9%. Given that the most punishing jobs are also the lowest paid, and these tend to be held in a higher proportion by ethical minorities, unemployment among African Americans is higher: 12.1% and 10.3% among Hispanics.
The debacle is noticeable from households, large corporations and battered public accounts of the central government and the 50 states. The federal debt is about to reach the size of US GDP, proportions not seen since World War II. Still, some estimates, such as those from Goldman Sachs bank, say that the damage from the pandemic could have been much worse and the rapid recovery in employment and GDP, which could expand by more than 20% in the second quarter, reflects hope.
Infrastructures, as always
The candidates for the White House, Donald Trump and Joe Biden have two economic plans to get the country out of this pothole, and some other point in common: the two candidates want to approve a massive investment plan in infrastructure. In the case of the Republican, it was already a promise he made in 2016 and that would have been pending. Trump has tried to mix this plan with stimuli in times of pandemic, although without providing too many details.
On the Democratic side, Biden proposes a project of 1.3 trillion dollars in which economic reconstruction would be based on the renewal of infrastructure following ecological criteria: all in one. The plan wants to increase the use of solar energy, cancel subsidies for fossil fuels, adapt ports and roads to the effects of climate change, invest in the development of renewable energy, modernize schools and make 40% of the benefits of the plan are concentrated in humble areas of the country.
The pandemic has created a hole in the country’s accounts and with it the opportunity to rebuild it. Two visions that collide in the chambers of the Washington Capitol, and whose potholes can only be overcome after the November 3 elections.