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Senate Majority Leader Mitch McConnell (R-Ky.) appeared to open the door yesterday to including some direct payments to Americans in a future coronavirus relief bill, The Hill reported. Asked if funding for individuals like the stimulus checks included in a March package would be in the next piece of legislation, which would be the fifth in response to COVID-19, McConnell said they "could well" be. "I think the people that have been hit the hardest are people who make about $40,000 or less. Many of them work in the hospitality industry. .... That could well be a part of it," McConnell said. Congress included a $1,200 one-time payment for individuals making up to $75,000 per year in the $2.2 trillion March coronavirus stimulus package. The amount a person could receive then decreased until it hit a salary ceiling of $99,000 per year, where the direct payment was phased out altogether. The Trump administration has pushed for a second round of the direct payments to be included in the next coronavirus relief package taken up by Congress. House Democrats passed a nearly $3 trillion bill in May that included a $1,200 check for individuals, similar to the March bill, but that legislation is not expected to be taken up by the GOP-controlled Senate. President Trump said late last month that he supports another round of stimulus checks. But GOP lawmakers have been wary, believing that the payments don't directly stimulate the economy and went to individuals who have not been impacted financially by the spread of the coronavirus. Read more. 

In related news, direct cash payments can improve financial security, boost consumer spending and may speed up the recovery, according to a letter from a group of economists calling on U.S. policymakers to keep providing direct cash payments to Americans until the economy is stronger, Reuters reported. The stimulus payments should be issued automatically, based on certain economic indicators such as the unemployment rate, until there is enough evidence that the economy is recovering, the group of mostly left-leaning economists said in an open letter organized by the Economic Security Project and The Justice Collaborative. “The first round of economic impact payments were a lifeline that helped some get by for a few weeks,” the economists wrote. “Even after businesses start to re-open and jobs begin to come back, there will be significant economic fallout, and demand will continue to lag if people don’t have money to spend.” The stimulus payments issued in April under the $2.3 trillion CARES Act helped lift spending for lower income households faster than higher income households, with much of the cash going to essentials, according to an analysis by Harvard University’s Opportunity Insights. The $600 supplement Congress added to weekly unemployment benefits are set to expire at the end of the month, leaving jobless Americans at risk of facing a cash cliff while jobs are still scarce. Read more. 

President Trump signed legislation on Saturday extending the deadline for small businesses to apply for the Paycheck Protection Program, enacted in the weeks following the economic shutdown caused by the coronavirus pandemic, NPR.org reported. The original deadline to apply for the PPP was this past Tuesday night. But $130 billion still remained in the fund, out of $660 billion allocated. Both houses of Congress approved the extension unanimously earlier this week. With Trump's signature on Saturday, businesses will now have until Aug. 8 to apply for the assistance. The PPP lets businesses get direct government subsidies for payroll, rent and other costs. The subsidies come as federal loans, but those loans can be forgiven if businesses use at least 60 percent of the funds for payroll. The program has so far doled out about $520 billion in loans to almost 5 million small businesses across the country. The loans were meant to let businesses cover about two and a half months of typical costs. The program's sponsors say that they want to repurpose the program to better serve the challenges businesses are facing now, several months into the pandemic. "As the scope of the financial damage done to small businesses by the pandemic and resulting lockdowns has grown, it has become clear that longer-term support is necessary," Florida Sen. Marco Rubio said. Rubio said he wants to see additional support for "our smallest businesses, especially in our underserved communities." The program faced criticism after loans went to multimillion-dollar businesses such as restaurant chain Potbelly, the coal company Hallador Energy and video storage firm Quantum, all of which received $10 million, the most the PPP will give to any one business.

There is a growing recognition across party lines that Congress will need to spend more money, and soon, to continue to prop up the American economy during the coronavirus recession, the New York Times reported. But there is little consensus on what that next aid package will look like and how quickly it will arrive before the end of summer, and there is a sense among Republicans and Democrats that the next bill will spend far less to help people and businesses than the nearly $3 trillion that Congress approved in March in a series of rapid-fire bills. Some economists say that lawmakers are risking further damage to an already fragile recovery by not moving more quickly. The unemployment rate has dropped from its April peak but was still at 11.1 percent in June. Forecasters at the Congressional Budget Office said on Thursday that they expected the economy to shrink by 5.9 percent this year, a contraction that would be more than twice as large as the one the U.S. experienced during the Great Recession in 2009. Federal Reserve officials are worried that a possible “second wave” of the pandemic would further depress economic growth in a way that would be “more severe and protracted” than the current forecast, according to minutes from their most recent meeting published on Wednesday. Real-time indicators of shopping patterns and business openings suggest that a once-brisk economic rebound stalled in June as the virus began spreading more rapidly in Texas, Florida and other states.

U.S. President Donald Trump said yesterday that he supports another coronavirus stimulus bill but wants it to include incentives for Americans to go back to work, setting up a clash with Democrats in Congress over jobless benefits, Reuters reported. Trump said he supports direct payments to individuals as part of the so-called Phase 4 stimulus package. “We want to create a very great incentive to work. So, we’re working on that and I’m sure we’ll all come together.”  The remarks indicate the Trump administration will oppose an effort by Democrats in Congress to renew a $600 supplement to weekly jobless benefits set to expire at the end of July that was contained in earlier coronavirus relief legislation. Many Republicans have argued that the supplemental benefit encourages workers to remain unemployed and they would prefer to provide a benefit for workers returning to the job. Trump said that the structure of the last round of financial aid to struggling Americans created a disincentive for people to return to work. Administration officials have said they will calibrate their response in terms of further stimulus based on economic data set to roll in over the next couple of weeks. Negotiations over another relief bill are not expected to pick up until Congress returns from a break for the July 4 Independence Day holiday.

The top Republican in the U.S. House of Representatives said yesterday that it would not be productive to extend extra unemployment benefits that were included in coronavirus relief legislation earlier this year but that expire on July 31, Reuters reported. “I don’t think it’s productive to extend the added money from the federal government. We’re finding numerous people... that it’s becoming a hardship for individuals to go back to work,” said House Minority Leader Kevin McCarthy (R-Calif.). Republicans and Democrats have been debating over what else needs to be done to help the country recover from the economic effects of the novel coronavirus, which led to business closures that left millions of Americans out of work. McCarthy was referring to statistics showing many Americans are paid more thanks to the extended unemployment benefits than they earned when they were at work. Instead, he said, the focus should be on getting people back to work. The loss of the safety net of $600 per week looms well before a sustained recovery is likely to take hold from the sudden and deep recession brought by the pandemic.