What’s the status of a second $1,200 stimulus check?

For months, millions of Americans grappling with the economic fallout of the coronavirus pandemic have been pinning their hopes on Congress delivering another round of financial relief, including direct cash payments like a second round of $1,200 stimulus checks and an extension of enhanced unemployment benefits. But the door for such assistance — slammed shut by President Donald Trump earlier this month only for him to later nudge it ajar — remains open.

Discussions are continuing after House Speaker Nancy Pelosi set a Tuesday deadline on a stimulus package in order to pass a bill before the November 3 election. White House chief of staff Mark Meadows told Fox Business on Wednesday that he is “optimistic.”

“We do share one goal, and that is hopefully to get some kind of deal in the next 48 hours or so,” Meadows said.

A CBSN special looks at the state of the economy as a second round of federal stimulus checks hangs in the balance. Download the CBS News app to stream “A Nation in Need: A Stimulus Check List” on CBSN Wednesday at 8 p.m. ET.

Although lawmakers have yet to break the logjam, Mr. Trump has exhorted Congress to pass a stimulus bill ahead of the presidential election next month. The president told Fox News on Tuesday that he wants a bill “even bigger than the Democrats,” but he acknowledged that “not every Republican agrees with me.”

That’s a reversal from Mr. Trump’s position earlier this month, when he pushed for a more limited series of individual measures: stimulus checks, $25 billion in aid for airlines and $135 billion in fresh loans for small businesses.

Wall Street analysts remain skeptical that Congress will reach agreement on a fresh stimulus round before November 3. Treasury Secretary Steven Mnuchin told CNBC last week that “a deal would be hard to get done before election.”

“We’re going to keep trying,” Mnuchin said. “Don’t want to say not likely but there are significant issues.”

Senate Majority Leader Mitch McConnell announced that the Senate will vote Wednesday, October 21, on a coronavirus relief proposal crafted by Republicans, in addition to a separate vote on additional funding for a program to aid small businesses.

$500 billion? $1.8 trillion? $2.2 trillion?

McConnell said in a statement that the proposal, which carries a price tag of more than $500 billion, would provide funds to expand unemployment benefits, another round of the Paycheck Protection Program, financial aid to schools and funding for testing and tracing. There was no mention of a second round of stimulus checks.

Pelosi had previously rejected a $1.8 trillion proposal by the White House, arguing that it did not do enough on provisions such as testing and tracing and on funding for child care. On Thursday, Mnuchin said the administration’s priority is to use $300 billion left from the Coronavirus Aid, Relief and Economic Security, or CARES, Act to fund the Paycheck Protection Program with $130 billion, as well as to provide aid to the ailing airline industry.

Economists warn that failing to inject another dose of fiscal stimulus could stall the recovery, given the ongoing pandemic and economic headwinds. Job growth around the U.S. is slowing as big businesses continue to lay off workers, with the airline industry cutting tens of thousands of jobs this month.

“Without faster job growth — unlikely at this stage of the recovery — or increased fiscal aid, households, businesses, and state and local governments will be increasingly susceptible to a deterioration of the health situation,” noted Gregory Daco, chief U.S. economist at Oxford Economics.

“Spreading political mess”

Wall Street analysts believe the odds of reaching a compromise on either a broad package or more limited measures, such as a stimulus payment, before the November 3 election may be dwindling.

Replenishing the Paycheck Protection Program, which offers low-cost loans to small businesses, “is unlikely because lawmakers in both parties would likely want to attach additional measures to such a bill,” Goldman Sachs economist Alec Phillips told investors in a report. “A standalone bill to authorize another round of stimulus payments to individuals is even less likely, as neither party has made this a priority.”

After both political allies and opponents of Mr. Trump had voiced their opposition to his decision to shut down the stimulus negotiations, the president’s push for smaller relief bills appears to be “a hasty attempt to clean up a spreading political mess,” according to Height Securities.

“Making this push after gladly taking the blame for killing the larger talks is not a winning strategy, and we expect that Pelosi has little motivation to give Trump wins on the type of standalone aid he is asking for,” Height analysts added.

Struggling to pay the bills

With the pandemic showing few signs of abating and earlier government aid now running out, many businesses and households are facing a financial crunch. One in three U.S. adults struggled to pay for basic expenses like food and rent at the end of September, according to the Center on Budget and Policy Priorities, a liberal-leaning think tank.

The Democrats’ updated HEROES (or Health and Economic Recovery Omnibus Emergency Solutions) Act was designed to offset some of those pressures. The relief bill, which passed the House on October 1, would have supported a wide range of economic programs, from food stamps to restoring $600 in extra weekly jobless benefits.

But Mr. Trump soon tweeted that he was pulling the plug on negotiations over further stimulus. After the virus erupted in the U.S. this spring, the Coronavirus Aid, Relief and Economic Security Act had distributed some 160 million checks to Americans, offering cash payments of $1,200 for individuals and $2,400 for married couples, up to some income limits.

A better economic boost?

A boost of $1,200 per adult would certainly help alleviate financial stress, yet that one-time payment would only go so far — a month’s rent, for instance, or help with groceries and other bills. As with the initial round of checks, they would be distributed to everyone earning less than $75,000 per single taxpayer or $150,000 per married couple, regardless of whether they lost work or income.

Economists say other relief policies have proved more effective at boosting the economy. For instance, an extra $600 in weekly unemployment pay helped bolster households that had suffered job or income losses — until it expired in July. In May alone, the program boosted personal income by $842 billion, according to the Economic Policy Institute.

That money helped support local businesses, keeping the economy from collapsing under the impact of lockdowns. But Mr. Trump didn’t mention renewing the program as a standalone funding effort, nor did Mnuchin on October 15.

Meanwhile, an extra $300 in weekly unemployment aid that Mr. Trump had ordered is already depleted in 19 states, according to UnemploymentPUA.com, which tracks the program. That effort, called Lost Wages Assistance (LWA), was created in August by tapping disaster-relief funds, but it only provides six weeks in extra jobless benefits.

“We estimate the expiry of the [LWA] program will create a $600 billion (annualized) income cliff leaving household income roughly 3% below its pre-Covid level in October,” Daco wrote. “With over 20 million individuals still claiming unemployment benefits such a shortfall could have even deeper local consequences.”