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A new phase of the economic crisis is looming for the winner of Tuesday’s presidential election: potentially massive defaults by jobless Americans on consumer loans as the chances for more federal relief this year diminish, Politico reported. Both President Donald Trump and Democrat Joe Biden have called for robust new rescue packages for an economy still suffering from the pandemic, but Congress's inability to agree on key issues such as the size of unemployment benefits has kept the talks at an impasse for months. Now, millions of Americans are running out of money and will face hard choices between food purchases and payments on rent, credit cards and student loans. Generous unemployment benefits and stimulus checks given out earlier this year helped many people weather the early months of the crisis — with some even managing to increase their savings. But that support has faded and some of it will run dry by the end of the year. JPMorgan Chase Institute found that in August alone, typical unemployed families spent two-thirds of the additional rainy day funds that they’d built up over the previous four months. The “Lost Wages Assistance” aid program that Trump ordered after the expiration of more generous federal benefits — including a $600-a-week boost in jobless payments that ended on July 31 — helped bolster some families in September. But by early this month, much of that small pot of money had already been depleted. As a result, the largest U.S. banks warned investors this month that they expect credit card delinquencies to start mounting early next year. And with coronavirus cases spiking in places like the Midwest, pressure could increase on already struggling small businesses, pushing jobless numbers back up. In a Census Bureau survey this month, roughly a third of small businesses reported only having enough cash to get them through a month or less.

New bipartisan legislation to expand retirement saving options for workers is one of the few policies that has a chance of moving through Congress no matter who wins next week’s presidential election, Bloomberg News reported. Representatives Richard Neal (D-Mass.) and Kevin Brady (R-Texas), the top Democrat and Republican on the House Ways and Means Committee, introduced legislation yesterday to help workers save more for retirement and encourage employers to offer retirement plans. The bill would automatically enroll employees in their company’s 401(k) retirement plan, increase a tax credit for low-and-middle income individuals who save for retirement, and allow individuals who are at least 60 years old to save more for retirement in tax-favored accounts. Bipartisan support for the proposal means it could pass both chambers and be signed into law even if Democrats and Republicans continue to split control of the White House and Congress next year. The legislation offers new incentives to older savers. It would raise the age at which individuals are required to start drawing on their retirement accounts to 75 from 72. The bill would also make it easier for savers to make charitable donations from funds in their individual retirement accounts. 

Fifteen years ago, Senate Republicans thanked Joe Biden for helping them pass a new bankruptcy law over the objections of consumer advocates and liberal Democrats. But this year, with millions of Americans out of work and buried under mounting home, medical and student loan debt, the former vice president changed his position on the 2005 bankruptcy law, saying that he supports many of the protections he rejected then, the Washington Post reported. As president, Biden says, he will push for letting people who enter bankruptcy discharge their student debts and protect the equity they have built in cars and homes. He embraced a plan put forth by Sen. Elizabeth Warren (D-Mass.) that would also make more people eligible to file for bankruptcy and allow them to file without paying exorbitant legal fees. Those commitments may carry greater significance as experts are predicting a wave of bankruptcy filings from individuals and business owners who are burning through their savings and federal stimulus benefits, leaving them unable to pay their bills and make loan payments.

The three months of negotiations over a new round of virus relief moved no closer to a resolution over the weekend, all but extinguishing the prospects of a stimulus bill being written, voted on, and signed into law by President Donald Trump before the election, Bloomberg News reported. House Speaker Nancy Pelosi said she’s waiting for another counteroffer Monday from Treasury Secretary Steven Mnuchin, as she and White House Chief of Staff Mark Meadows accused each other of “moving the goalposts” in negotiations. Much of the weekend was devoted to work by congressional committees with the goal of writing legislation, but aides in both parties said little progress was made despite the pledges from both sides that they want to quickly deliver $1,200 stimulus payments to most Americans along with aid to struggling businesses. The Senate is set to leave Washington, D.C., on Monday after voting on the confirmation of Supreme Court nominee Amy Coney Barrett, and the House is already out. Both chambers could be called back for a vote with 24 hours notice, though that scenario is unlikely in the last week of campaigning before the national election.

House Speaker Nancy Pelosi (D-Calif.) was noncommittal yesterday about bringing a stimulus measure to the House floor for a vote before the Nov. 3, noting that even though a deal with the Trump administration appeared to be coming together, “it takes time” to transform it into legislation, the New York Times reported. At her weekly news conference, Pelosi said that she believed she and Steven Mnuchin, the Treasury secretary, were “just about there” in their negotiations to reach a compromise, although she said they had yet to agree on the two biggest sticking points. The White House is resisting Democrats’ push for $500 billion for state and local governments, while Democrats have balked at Republicans’ demands for liability protections for schools, hospitals and businesses open during the pandemic. Even if the pair were to reach agreement on those issues, Pelosi said there was no guarantee it could be passed before Election Day. “It’s not just a question of us agreeing in a room,” Ms. Pelosi said, noting that the process of writing any deal into legislative language and having the Congressional Budget Office go through it to determine an official cost could be lengthy. “It takes time.” But she continued to maintain public optimism that an agreement could be reached and signed into law. She brushed aside public warnings from Republican senators, who have said they are unlikely to support a bill anywhere near as costly as the emerging compromise, and have suggested that there aren’t even the minimal 13 Republican votes needed to join all Democrats to advance the legislation.

White House officials and House Speaker Nancy Pelosi (R-Calif.) opened the door to passing a coronavirus relief package after the election, a signal that time and political will has likely run out to enact legislation before then, the Wall Street Journal reported. Pelosi and Treasury Secretary Steven Mnuchin yesterday reported more progress on a potential $2 trillion aid agreement. But even if they strike a deal before Nov. 3, legislation would face vanishing prospects of quickly becoming law, thanks to both the tight calendar and hardened opposition in the GOP-controlled Senate. Still, in the waning days of an election season in which both the White House and Senate are up for grabs, neither party wanted to give up on months-long discussions over providing relief for households and businesses still struggling during the pandemic. “I’m optimistic that there will be a bill. It’s a question of, is it in time to pay the November rent, which is my goal, or is it going to be shortly thereafter and retroactive?” Pelosi said yesterday. Larry Kudlow, a top White House economic adviser, said on CNBC Wednesday that negotiators were “running out of time, at least between now and the election” and that wrapping up work on a relief package in a lame-duck session, after the election but before the next administration begins, “could be a possibility.”

Prospects for an economic relief package in the next two weeks dimmed markedly on Tuesday after Senate Majority Leader Mitch McConnell (R-Ky.) revealed that he has warned the White House not to strike an agreement with House Speaker Nancy Pelosi before the Nov. 3 election, the Washington Post reported. In remarks at a closed-door Senate GOP lunch, McConnell told his colleagues that Pelosi (D-Calif.) is not negotiating in good faith with Treasury Secretary Steven Mnuchin, and that any deal they reach could disrupt the Senate’s plans to confirm Amy Coney Barrett to the Supreme Court next week. Republicans have voiced concerns that a stimulus deal could splinter the party and exacerbate divisions at a time when they are trying to rally behind the Supreme Court nominee. McConnell’s attempted intervention came as Pelosi and Mnuchin continued negotiating over the roughly $2 trillion economic relief package. Pelosi spokesman Drew Hammill said that the “conversation provided more clarity and common ground as they move closer to an agreement.” But no deal can become law without McConnell’s blessing, and his direct warning to the White House imperils the chances of any bill becoming law in the next two weeks.

U.S. Senate Republicans are preparing to bring up legislation today to replenish a program that helps small businesses slammed by the coronavirus, as House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin discuss a larger stimulus package, Reuters reported. Pelosi and Mnuchin, who have been negotiating intermittently since August on a fresh coronavirus aid plan, plan to speak again on Tuesday after they “continued to narrow their differences” in a nearly hour-long call yesterday, Pelosi’s spokesman, Drew Hammill, wrote on Twitter. Pelosi, the top elected U.S. Democrat, has set the end of the day today as a deadline for agreement with the White House, if a comprehensive coronavirus relief bill is to get through both chambers of Congress before Election Day on Nov. 3. President Donald Trump’s administration has proposed $1.8 trillion, while Pelosi has been pushing for a $2.2 trillion aid and stimulus package. That is in addition to the $3 trillion in coronavirus relief Congress already approved in the spring. While Pelosi said on Sunday she was optimistic a deal could be reached on a fresh package, and a spokeswoman said Monday the White House was also “cautiously optimistic,” optimism was in shorter supply in the Republican-run Senate, where many Republicans oppose passing more coronavirus aid. A senior Senate Republican, John Thune, expressed doubt Monday that there would be enough Senate Republican votes to pass a comprehensive bill as large as the White House bid of $1.8 trillion. Instead, Senate Republicans will propose on Tuesday a new round of funding just for the Paycheck Protection Program, a popular program that was launched earlier in the pandemic with bipartisan support to provide loans to small businesses. The measure is not expected to advance, because Senate Democrats have already given notice they consider such targeted efforts inadequate. McConnell said that the Senate also plans a vote on Wednesday on a $500 billion-plus Republican proposal to include unemployment benefits and aid to schools. It would provide people with $300 in federal weekly unemployment benefits, while the Democrats want to return to the $600 weekly level in a measure approved earlier this year. Democrats blocked a similar Republican proposal last month and the measure on Wednesday is also expected to fail. Read more.

In related news, Congress in March allotted $454 billion to the Treasury Department to support the central bank’s emergency lending programs, including those for struggling businesses and local governments. Of that pot, only $195 billion has been specifically committed to cover any losses the Fed might take, including through loans that companies fail to repay, the Washington Post reported. Seven months into the crisis, the remaining $259 billion still has not been committed to any of the Fed’s specific programs or for any other purpose, and it is unlikely that it will be anytime soon. The fate of this money show the surprising limits of the nearly $3 trillion in emergency aid Congress approved early in the pandemic. Federal Reserve and Treasury Department officials say there are ways the money could be repurposed to more directly reach businesses and workers but say they cannot do so without congressional approval. White House officials tried redirecting the money without congressional approval but were told by administration attorneys that they could not do so legally, according to two people who spoke on the condition of anonymity to describe internal conversations. Read more.