Schumer: First thing we do is pass that $2000 relief aid

Imagine, if you will, that Mitch McConnell had said this ten days ago. Would Chuck Schumer have been in position to set the Senate agenda today? Donald Trump’s thirteenth-hour attempt to recast the Phase 4 COVID-19 relief bill might have had more to do with his personal animosities, but he also understood the politics of relief/stimulus spending better than his allies in the Senate Republican caucus.

Had McConnell just allowed HR9051 to get a floor vote, perhaps it might have been enough for David Perdue to win his runoff against Jon Ossoff. Alas, we’ll never know … but we’ll get a floor vote on the stimulus expansion anyway, as could be easily predicted:

Democrats vowed Wednesday to rush $2,000 checks to Americans as quickly as possible, as they clinched unified control of Washington with Senate wins in Georgia.

The move would make good on promises President-elect Joe Biden made to Georgia voters in the final days of the runoff race, which ended Tuesday with Democrat Raphael Warnock beating Republican Kelly Loeffler and Democrat Jon Ossoff unseating incumbent Republican David Perdue whose term lapsed Sunday.

Those Democratic victories flipped control of the Senate to the Democrats, giving them a monopoly on power in the nation’s capital for the first time since President Barack Obama’s first term.

“One of the first things that I want to do when our new senators are seated is deliver the $2,000 checks to the American families,” Senate Minority Leader Charles E. Schumer (D-N.Y.) — who will become majority leader — told reporters Wednesday.

At the time, I wrote that McConnell had a choice … and he made it:

Now McConnell is left with a choice over whether he wants to make a belated stand for fiscal discipline immediately after passing the bloated porkfest that was the omnibus spending bill, or wants to be Majority Leader after January 6th.

Now McConnell’s no longer Majority Leader, and he still doesn’t end up with “fiscal discipline.” Play stupid games, win stupid prizes.

Was it worth the cost to stand up to the expanded spending, which will run more than $500 billion? As relief, it might not make as much sense as the more targeted programs that were also part of that Phase 4 bill. But it wasn’t just intended as relief — it was also intended as stimulus, a way to keep our consumer-spending-heavy economy primed during a period of extensive commerce restrictions. And even though it would be better to use a scalpel to means-test this rather than the sledgehammer of 2019 tax return data, it’s still reasonably targeted at below-$100k individual earners (below $200K for married-filing-jointly). That cohort of the population not only could use the boost, they’re more likely to actually use it, and to provide the stimulating effects intended by the cash influx.

At any rate, we can now expect it to pass quickly, even over some Republican objections. After watching what happened to McConnell’s gamble, there won’t be 41 Republicans willing to filibuster this, especially while considering what other baggage the GOP has accumulated over the last day or so.

Also, the news from the employment front hasn’t improved much either. Today’s weekly jobless claims number declined slightly rather than tick up as expected, but that might be explained by holiday reporting too:

In the week ending January 2, the advance figure for seasonally adjusted initial claims was 787,000, a decrease of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 787,000 to 790,000. The 4-week moving average was 818,750, a decrease of 18,750 from the previous week’s revised average. The previous week’s average was revised up by 750 from 836,750 to 837,500. The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending December 26, unchanged from the previous week’s revised rate. The previous week’s rate was revised down by 0.1 from 3.6 to 3.5 percent.

The advance number for seasonally adjusted insured unemployment during the week ending December 26 was 5,072,000, a decrease of 126,000 from the previous week’s revised level. The previous week’s level was revised down by 21,000 from 5,219,000 to 5,198,000. The 4-week moving average was 5,274,750, a decrease of 177,250 from the previous week’s revised average. The previous week’s average was revised down by 5,250 from 5,457,250 to 5,452,000.

The trend lines here aren’t bad, but we are also going through three weeks of reporting with significant holiday interruptions, too. More concerning, at least for the moment, should be the ADP employment report for December. For the first time since the pandemic-induced crash, they are projecting a net loss of private-sector jobs:

All the usual ADP caveats apply; they are not terribly predictive against official BLS data, and they tend toward lagging rather than predictive indicators. Still, it’s based on at least their own hard data, and the trend line looks pretty grim. Tomorrow’s jobs report might well have better news than this, but it’s not going to be spectacularly better. And we know that the increased restrictions on commerce in high-population states will have already put downward pressure on employment, so this is hardly counterintuitive.

On the other hand, CNBC reports that the fourth quarter might still end up looking … well, fantastic:

Even with the decline in hiring, the fourth quarter is expected to show a considerable growth.

The Atlanta Federal Reserve’s GDPNow tracker of activity is pointing to an 8.9% gain for gross domestic product amid increases in consumption and investment.

That’s going to be great, but it might be more reflective of October than December. The key to watch in that report at the end of the month is the direction in which disposable income trended in Q4. It trended sharply downward in Q3, and the job losses in the private sector (primarily in large businesses that might not benefit from the Phase 4 relief bill) make it pretty easy to predict that trend won’t look too rosy in Q4 either.

Regardless, the relief/stimulus expansion is inevitable. As it was ten days ago. Too bad McConnell couldn’t see past his trench to figure that out.