What's holding up your stimulus check? Here are the barriers

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For months, lawmakers in Washington have been at loggerheads over a fresh round of COVID-19 relief for millions of Americans, including a stimulus check and enhanced unemployment benefits. But what exactly is impeding the talks over emergency assistance for jobless workers, small businesses and others caught up in the crushing economic crisis caused by the coronavirus? 

House Speaker Nancy Pelosi outlined some of the differences she sees between Democrats and Republicans in a letter on Thursday to Treasury Secretary Steven Mnuchin. “Your responses are critical for our negotiations to continue,” Pelosi wrote. “The American people are suffering, and they want us to come to an agreement to save lives, livelihoods and the life of our American Democracy as soon as possible.”

The delay in new stimulus funding comes as financial support from the Coronavirus Aid, Relief, and Economic Security (or CARES) Act, passed in March as the economy cratered, is running out for many people. Unemployment aid for “gig” workers and freelancers will end on December 31, while an extra $600 in weekly federal jobless support that many were receiving expired in July. Many Americans spent their $1,200 stimulus checks in the spring or summer on bills or paying down debt. 

About one in four adults say their family’s financial situation was worse in September than at the start of March, according to recent research from the Urban Institute. That already dire situation could worsen in the coming months if another round of stimulus money isn’t forthcoming, the nonpartisan think tank said. 

“The two sides have still not reached agreement on state and local funding, testing and tracing policy, liability, tax credits, unemployment insurance, and school reopenings,” Heights Security analysts said in a Thursday research note. 

To be sure, the likelihood of a pre-election stimulus deal is all but dead after senators adjourned on Monday until November 9. But hopes for a lame-duck stimulus agreement — struck between the election and inauguration day on January 20 — also appear to be fading, given the issues flagged by Pelosi in her letter to Mnuchin, according to Wall Street and political analysts.

While the White House and Democrats agreed on extending funding for some programs, such as another round of $1,200 stimulus checks, they appear far apart on other issues. Here are the major roadblocks.

State and local government aid

The pandemic could cause a $434 billion federal budget shortfall through 2022 under the most severe scenario, which would include a resurgence in the virus and a lack of more stimulus aid, according to Moody’s Analytics. Already, cash-strapped school districts are laying off teachers and workers, while some states like California are cutting pay for state workers. 

Democrats had sought more than $400 billion in funding for state and local governments through their updated HEROES (or Health and Economic Recovery Omnibus and Emergency Solutions) 
Act, which House lawmakers passed on October 1. But Republicans took issue with that aid, including President Donald Trump, who has objected to what he calls “bailouts” for states helmed by Democrats.

In fact, both Republican- and Democratic-led states are projected to suffer budget shortfalls. Ohio, which is led by Republican Governor Mike DeWine, is facing a $2.4 billion budget gap, for example. 

Unlike the federal government, which can essentially borrow at will to fund itself, all 50 states must balance their annual budgets. Pelosi said in the letter that providing funding for U.S. states will “prevent devastating cuts to services.”

Unemployment aid

The $2.2 trillion CARES Act provided unusually generous help for out-of-work Americans during a pandemic, providing an extra $600 in weekly unemployment benefits as well as a program to help gig workers and freelancers, who otherwise wouldn’t qualify for regular unemployment aid. But that supplementary payment ended in July, and millions of unemployed workers are coming to the end of their other jobless benefits. 

Pelosi said in her letter to Mnuchin that she’s awaiting “a response on whether the White House will prevent 5 million Americans from exhausting their benefits, in addition to addressing other [unemployment insurance] needs of America’s working families.” 

For their part, Republicans have argued that the $600 in extra weekly jobless benefits are too generous and dissuade people from returning to work, despite a lack of economic data that supports the contention. 

Funds for COVID testing and treatment 

Pelosi noted in her letter that Mnuchin had said the White House “would accept Democrats’ testing, tracing and treatment language with only a ‘light touch.'” As of Thursday, Democrats were still waiting on “new compromise language” on this issue, she added. 

The HEROES Act proposed $75 billion for coronavirus testing, contact tracing and other measures designed to halt the spread of the virus. The Democrats also wanted to make sure that all citizens could get free coronavirus treatment. 

Child care and “safe schools”

Democrats have sought to provide more funding for child care, which would allow families to work, as well as more aid for schools to invest in ventilation and sanitation in order to reduce the risk of COVID-19 infections. 

That echoes some of the priorities in the HEROES Act, which sought funding for public and private K-12 schools as well as colleges to provide support for everything from sanitation to online learning tools.

Tax credits, liability concerns

Two other issues flagged by Pelosi are a proposed expansion of tax credits, such as the Earned Income Tax Credit, and liability for businesses. 

Under the HEROES Act, the Democrats sought to expand eligibility and the benefit size of the EITC, which helps low- to moderate-income taxpayers. 

The Democrats had also sought greater oversight of businesses by the Occupational Safety and Health Administration on workplace safety issues and COVID-19. For instance, the HEROES Act would have required business to submit an “infectious disease exposure control plan” for the virus. 

At the same time, Republicans had sought what they call a “liability shield” for businesses that would protect owners against lawsuits if their workers fell ill with COVID-19. 

For now, it’s unclear how long it could take for the Trump administration and Democrats to reach an agreement. 

“The President’s words that ‘after the election, we will get the best stimulus package you have ever seen’ only have meaning if he can get Mitch McConnell to take his hand off the pause button,” Pelosi wrote in the letter, referring to the Senate Majority leader.

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