It is very likely there will be a coronavirus stimulus phase 4, but there is no surety if the relief package would include direct stimulus checks. And, if the recent developments are anything to go by, then the chances of direct payments are now slimmer than ever.
Trump’s infrastructure plan
A recent Bloomberg report, citing people familiar with the matter, noted that the Trump administration is readying a nearly $1 trillion infrastructure plan. The plan would primarily focus on traditional infrastructure, such as roads and bridges, but would also set aside funds for 5G wireless infrastructure and rural broadband.
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This is not the first time Trump has proposed a plan to boost the infrastructure. At the time of the 2016 campaign, Trump advocated infrastructure investment. Then after taking office in 2017, Trump again called for infrastructure initiatives, including $2 trillion of infrastructure investment.
“Since he took office, President Trump has been serious about a bipartisan infrastructure package that rebuilds our crumbling roads and bridges, invests in future industries, and promotes permitting efficiency,” Judd Deere, a White House spokesman, said in a statement, according to Bloomberg.
There are many who argue that new infrastructure spending could do better than the stimulus checks. It would help in the creation of thousands of new jobs. Also, it would benefit the construction and materials companies, which will bid for the government contracts.
The infrastructure spending would also benefit private equity and other infrastructure investment firms. Moreover, it would assist wireless and broadband companies as well.
An existing U.S. infrastructure law is up for renewal by September 30. In 2015, Congress – via the FAST Act – authorized $305 billion for a period of five years to be spent on surface transportation planning and infrastructure. This FAST Act will expire on September 30, 2020. Many believe that Trump’s new infrastructure plan could be tied with this existing plan.
No need for coronavirus stimulus phase 4
This latest report on the infrastructure plan comes at a time when both parties and Trump are facing questions over the timing and scope of the coronavirus stimulus phase 4, which many say is needed to put the economy back on track. However, this latest infrastructure plan does indicate the shifting focus from direct stimulus checks and toward boosting jobs in the economy.
Infrastructure investment is one area in which Democrats and Republicans could agree. The $3 trillion stimulus package, the Heroes Act, passed by the House Democrats includes a provision for infrastructure investment. However, there could be differences in how both would want to spend the infrastructure funds.
Separately, the White House trade advisor Peter Navarro said that the president wants the coronavirus stimulus phase 4 to be at least $2 trillion and that the next relief package would focus on manufacturing jobs.
Now, if the $1 trillion infrastructure plan is another focus of the next bill, then there won’t be much money left for direct stimulus checks.
Interestingly, Treasury Secretary Steven Mnuchin said recently that the Trump administration is “seriously considering” more “direct money.” However, he suggested that direct money would be targeted to encourage people to get back to work.
Moreover, Senate Majority Leader Mitch McConnell has previously mentioned that he expects the next stimulus bill to be about $1 trillion. Apart from the remarks from these high-profile officials, the latest unemployment numbers also provided some hope that things could be improving.
Earlier this month, the Bureau of Labor Statistics reported that the unemployment rate last month dropped by 1.4% to 13.3%. Further, a report from the Labor Department claims that new jobless claims, for the week of June 6, dropped by 355,000 to 1.54 million.
Next stimulus package: when to expect it?
It would be interesting to see how things unfold over the next few weeks, and what gets included in the coronavirus stimulus phase 4. Before deciding on the next relief package, White House and Republican leaders would want to assess the impact of the first stimulus package and other aid for businesses.
On the other hand, democrats want to start the Senate-level discussion on their proposed $3 trillion stimulus bill, the HEROES Act. However, Senate Republicans are not very excited about it. The HEROES Act promises up to $1,200 to each individual and $1,200 for each dependent (up to three dependents).
Recently, Stephen Moore, a White House adviser, said that there is no need of another stimulus at the moment. "We don't need it now. There's no reason to have a major spending bill. The sense of urgent crisis is very greatly dissipated by the report," Moore said, as quoted in The Washington Post.
Talking of the timeline, any decision on the next package is not likely to arrive until late next month. McConnell has already said that the Senate may wait till the end of July to start work on the next bill.
Whenever the Senate, House and White House negotiators start a discussion on the next bill, they would be under pressure to come up with a deal quickly. The additional $600 federal unemployment benefits promised by the CARES Act will expire July 31.