Trump supports another round of stimulus checks, but Republicans are extremely divided

• Trump approves another wave of stimulus controls for Americans, but Republicans in Congress are extremely divided on the issue.
• Many Republican senators strongly oppose the idea, but some have expressed a willingness to target aid to those who suffer the most.
• “I think many Republicans don’t think broad-based stimulus controls are the most economically efficient response to the recession,” conservative economist Brian Riedl told Business Insider. “But they understand that politically, you can’t generate public support without some help to families.”
• Visit the Business Insider home page for more stories.

President Donald Trump reportedly approves another wave of stimulus controls for Americans as part of another economic aid package.

But many Republicans in Congress remain skeptical of sending more cash from the government, creating a division between the president and conservative lawmakers in a move that could provide significant financial relief to those struggling during a national crisis.

The split is a product of the tensions between perceptions of good economics and good politics, said Brian Riedl, an expert in economic policy and a member of the libertarian-leaning Manhattan Institute who is in close contact with numerous offices of the Republican Congress.

“I think many Republicans don’t believe broad-based stimulus controls are the most economically efficient response to the recession,” Riedl told Business Insider. “But they understand that politically, you can’t generate public support without some help to families.”

In March, Congress authorized direct payments of up to $ 1,200 for each US citizen who earns less than $ 75,000 a year under the CARES Act. The checks formed a key component of the package, and more than 150 million people received them through early June, according to the IRS.

Economists say the controls helped shore up people’s finances as unemployment rose to record levels. A study from the Kellogg School of Management at Northwestern University published in early May found that the payments had provided relief to people, particularly those with the fewest dollars in their bank accounts.

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However, the sense of urgency that forced lawmakers to act quickly in the spring has faded. Republicans have since urged a wait-and-see approach to determine whether it deserves additional federal spending, and some are concerned about the impact on the federal deficit.

Douglas Holtz-Eakin, president of the American Action Forum, argued that the economy is not in as dire a situation as it was in March.

“The strategy at CARES was very simple,” Holtz-Eakin, a conservative economist who served in the George W. Bush administration, told Business Insider. “He flooded the economy with money and hid from the virus for two and a half months. That is not where we are, now we are in a very different place.”

No consensus among Republican lawmakers for more stimulus controls

The rift became apparent as more Republican senators stepped in on the possibility of making additional direct payments as part of the aid package to be discussed next month. So far, they have argued that the best way to save the economy is to get people back to work, and some revealed plans to buy bonds.

Among Republicans, there is no clear consensus on whether more stimulus controls need to be sent to give the economy another boost.

Some expressed strong reservations, such as Senator Pat Toomey of Pennsylvania.

“I am skeptical about the idea of ​​doing that,” Toomey, a member of the Senate Finance Committee, told reporters on Tuesday. “That was an emergency measure taken when we were in a total crisis and, frankly, I knew it was very inefficient because all kinds of people received checks whose work was not in jeopardy.”

Senator Mitt Romney, who was one of the first Republican lawmakers to push for direct cash payments as the economy collapsed in March, said he also opposed the idea. Instead, he is in favor of modifying the Paycheck Protection Program to better help small businesses and extend increased unemployment benefits, albeit at a lower amount than the $ 600 weekly increase that unemployed people are currently receiving. .

However, some Republicans noted that they were open to the proposal. Senator Thom Tillis said he would support a similar, less far-reaching measure targeting “the people who suffer the most.”

However, other top GOP lawmakers are tight-lipped. Senator Chuck Grassley of Iowa, chair of the Senate Finance Committee, has not disclosed the priorities for the stimulus legislation with the debate starting to intensify. His office did not respond to requests for comment.

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“Congress should not … rush to pass costly legislation paid for with more debt before understanding better the country’s economic situation,” Grassley said earlier this month.

The division extended from Congress to the White House. Treasury Secretary Steven Mnuchin opened the door to another round of direct payments earlier this month, and pressured them, The Washington Post reported.

Meanwhile, Larry Kudlow, director of the National Economic Council, said the administration could try to reduce checks to people who need them most.

However, Riedl said he believes that with a lot of people enduring significant difficulties in the pandemic, Republicans will be pressured to support a relief measure, such as direct payments, to help keep families afloat.

“The next round of stimulus legislation will include some tax refund or some kind of broad-based tax relief because that is the fat that guarantees public support,” he said. “If lawmakers focus on helping the unemployed, small businesses, and possibly states, many Americans will not endorse the bill because they wonder what is in it for them.”

Next job report will set the tone among Republicans about the scope of a future aid package

House Democrats included another round of $ 1,200 stimulus checks in their financial aid package last month, along with unemployment benefits extended through the end of the year and aid to the states. Senate Republicans, led by Majority Leader Mitch McConnell, quickly declared the $ 3 billion legislation dead on arrival.

The unemployment rate remains historically high at 13.3% after peaking at almost 15% in April. And layoffs continue to rise as another 1.5 million people filed unemployment claims last week, the Labor Department reported Thursday.

Many economists project high unemployment for the rest of 2020. Both the Federal Reserve and the nonpartisan Congressional Budget Office estimate that the unemployment rate will be around 10%.

The next job report will be released on July 2. The latest one released earlier this month surprised economists when it showed that the economy added 2.5 million jobs instead of cutting them at a rapid rate.

Now, the report is expected to show a steady improvement in the job market with 3 million new workers on the payroll, Bloomberg reported.

Holtz-Eakin said the portrait he paints of the nation’s economic recovery will shape Republican prospects as the debate on the next economic aid package intensifies.

“There is no doubt that it will have an impact on how they feel about prospects,” he said.

Riedl echoed that.

“If we have a report of bad jobs, Republicans will become more aggressive in favor of the stimulus,” said Riedl. “I’m not sure a good job report will move the dial very much, but a surprisingly bad job will change the narrative in the minds of Republicans.”

Still, Riedl said, even with the prospect of a better-than-expected job report, many people will find it difficult to secure a job for a long time.

“Even in a good job report, we still have an unemployment rate of over 10%. No legislator should have the illusion that we will soon be leaving the jungle,” he said.

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