House Passes $900 Billion Covid-19 Stimulus Relief Package

The House passed a giant year-end spending bill combining $900 billion in Covid-19 relief aid with $1.4 trillion in regular government funding and a bevy of tax breaks for businesses.

The House passed the combined bill on two votes, with the defense and homeland spending part getting a 327 to 85 vote and the rest of the measure having a 359 to 53 vote. The Senate is expected to vote later Monday and the White House has said President Donald Trump will sign it.

The bill, worth more than $2.3 trillion, contains the second-largest economic relief measure in U.S. history — after the $1.8 trillion Cares Act passed in March as the pandemic throttled the world’s biggest economy. Economists say the aid should be enough to avert a double-dip recession next year, though risks remain.

Congress failed to approve 12 appropriations bills at the start of the fiscal year in October, and without passage of Monday’s bill the federal government faces a shutdown after midnight. Lawmakers on Sunday cleared a one-day stopgap bill to get the mammoth spending deal into legislation and voted on.

Passage caps nine months of partisan warfare in Congress over pandemic relief. House Democrats backed a $3.4 trillion proposal in May, then reduced their demand to $2.4 trillion by October.

Senate Republicans, after calling for a pause to assess the recovery, put forth a $500 billion measure. The White House at one point offered House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer a $1.8 trillion bill that included $1,200 stimulus checks, but Democrats rejected that due to a lack of Covid-19 health care measures, in the run-up to the election.

In the six weeks after Election Day, talks bogged down over whether to include lawsuit liability relief for employers — a top demand of Senate Majority Leader Mitch McConnell — and aid to state and local governments. A bipartisan group of senators and moderate House members led the way to breaking the impasse two weeks ago by proposing a $748 billion bill without those two contentious issues.

Leaders embraced the outline of the plan while adding in direct stimulus payments back into the mix. A final major holdup was resolved over the weekend when language ending Federal Reserve Cares act lending programs was narrowed with the aim of avoiding any rollback in pre-pandemic Fed powers.

While the bill is smaller than many economists had anticipated months ago, it could be enough to ward off another contraction in gross domestic product.

“Based on simulations of our model of the U.S. and global economies, this latest fiscal rescue package will add approximately 1.5 percentage points to annualized real GDP growth in the first quarter of 2021 and close to 2.5 percentage points to calendar-year 2021 growth,” said Mark Zandi, of Moody’s Analytics. “If lawmakers had not come through, the economy probably would have suffered a double-dip recession in early 2021.”

Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., said on Bloomberg Television that the relief package “should be very helpful for the economy,” and estimated that it could boost GDP by as much as 3% over time.
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