If you read last week's newsletter, you'll get the reference. The White House version of the Covid relief bill last week included $600 stimulus checks, but Congress now appears to be moving forward without them.
Here's where we are as of Tuesday morning: the original $908 billion package is being split into two. The new "skinny" bill, at $748 billion, is a little fatter than what Leader McConnell first proposed last week, but still leaves out state and local aid (Democratic priority) and Covid liability relief for businesses (Republican priority). Those two provisions are now in a separate, $160 billion bill.
What's in the new skinny bill? Most importantly, $300 billion for the Paycheck Protection Program. Also the extra $300 weekly jobless benefits payment, which the White House wanted to scrap in favor of stimulus checks. Congress is sticking with this version, and no stimulus checks, for the moment. We'll see how Senators Hawley and Sanders--who have said they'll only vote for a package that includes the checks--respond.
This bill would also extend the eviction moratorium for a month, until Jan. 31, and offer $25 billion of rental assistance. Also, $82 billion for schools, and student loan forbearance would get extended through April. Stocks are up this morning, evidently on this progress. But no one watching Congress seems to be saying this is a sure thing. "The odds of failure may be higher than Wall Street realizes," wrote James Pethokoukis of AEI.
Stefanie Miller of Fiscal Note thinks the most likely scenario is that the "skinny" bill passes by Friday night. The second most likely? That a re-combined combo bill moves forward...next week. But isn't the deadline this Friday? Oh, but this is Congress. Turns out the President's threatened veto of the defense bill because it won't include a repeal of Section 230 (which protects social media content) could now force Congress to stay in session through next week.
"If Members know they may need to be in town through mid-next-week, why not continue negotiating?" Miller wrote this morning. In which case, December 23rd looks more like the real deadline for the stimulus bill. But either way, she says, we "continue to think it's unlikely they'll leave Washington without passing something." And most investors seem to agree.
Then you have to hope the $300 billion in fresh PPP funds goes where it's most needed. It's restaurant owners in particular I'm thinking of here. They don't appear to be getting the $120 billion in direct aid from the "Restaurants" Act, which stalled in the Senate a few months back. We've already seen upwards of 100,000 restaurants close "long-term" or for good.
And now it's winter. Outdoor dining just isn't as appealing in the colder states. New York City just shut down indoor dining altogether--and to add insult to injury, now a lot of restaurants who at least still offered outdoor setups have to dismantle them, because there's a Nor'easter coming tomorrow and they'll block the snow plows. And at the same time, Mayor De Blasio is warning people to be "ready now for a full shutdown," based on rising Covid case numbers.
Warren Buffett pleaded for help for small businesses, and restaurants especially, on CNBC this morning. "We've shut down a lot of people in this particular induced recession, and others are prospering," he said. He compared the situation to eminent domain; when the government takes your property, they have to compensate you. If they close your business, Buffett said, they should also compensate you.
It's a difficult process that, yes, can involve a lot of waste and fraud. But if business owners at least know that help is coming, they can try to keep holding out until it finally arrives.
See you at 1 p.m!
Kelly