Bloomberg Businessweek - USA (2020-07-27)

E C O N O M I C S

26

Edited by

Cristina Lindblad

chief U.S. economist at JPMorgan Chase & Co.

The two parties approach this crossroads from

wildly different starting positions. House Speaker

Nancy Pelosi insists that Congress should appro-

priate even more than the $3.5 trillion Heroes Act

passed by the Democrat-controlled House in May.

“This is about survival of our economy,” she told

reporters on July 16. Republican Senate Majority

Leader Mitch McConnell has dismissed the Heroes

bill as a bloated liberal wish list. Many in the GOP

have raised concerns about adding more to a federal

debt that now exceeds 80% of gross domestic prod-

uct. That said, on July 21, Senate Republicans dis-

cussed a $1 trillion proposal with Treasury Secretary

Steve Mnuchin, with some warning that was the

limit. Earlier, McConnell said “new spikes in large

and economically central states show that we are

nowhere near out of the woods,” adding that the

plan he hoped to unveil within days “would neither

be another multitrillion-dollar bridge loan to make

up for a totally shut-down economy nor an ordinary

stimulus for a nation ready to get back to normal.”

Economists aren’t nearly as divided. A growing

body of research shows the $3 trillion approved by

A crisis can stretch for weeks, months, or even

years, but its arc can be shaped by a few crucial

moments when political leaders choose a course

of action. For a U.S. economy still reeling from the

devastation of the novel coronavirus, one such

moment is approaching.

Economists are warning that the nation is in

danger of careening off a fiscal cliff unless Congress

approves a rescue package to succeed the $2 tril-

lion Coronavirus Aid, Relief, and Economic Security

Act. Key elements of that are set to expire this

month just as a resurgence of the virus in states

that rushed to reopen is making the nascent recov-

ery look decidedly vulnerable. The Trump adminis-

tration is calling on Republicans and Democrats to

get legislation passed before the start of the August

recess. “If Congress fumbles this, it’ll be a pretty

big setback for the economy,” says Michael Feroli,

Beware, Fiscal Cliff Ahead

○ Economists say at least

$1 trillion is needed to sustain a

recovery that is faltering