Millions of Americans have now been waiting for their next stimulus check for several months now.
Unfortunately, negotiations in Washington have been stagnant between Republicans and Democrats.
Republicans and officials in the White House have offered to increase their overall price tag to around $1.3 trillion but that is still about $9 trillion short of the $2.2 trillion proposal that Democrats refuse to go under.
Both sides appear to be very adamant about their positions and there is doubt that they will be able to meet in the middle.
Special committees have been put to work to resolve the differences but it doesn’t look like those committees have made much progress.
And now there might be more reason to believe that Democrats will struggle to get a $2.2 trillion package passed.
The Congressional Budget Office released a report Wednesday forecasting a $3.3 trillion deficit for 2020.
That number is triple the amount of 2019 and $2.2 trillion more than the figure that was initially predicted in March.
If this figure holds true, it will account for 16% of the US GDP which would be the largest share since World War II.
As you would expect, the deficit figure is a product of the coronavirus pandemic legislation that has already gone out such as the Cares Act.
Many lawmakers are not on board with increasing the deficit for more pandemic spending.
Sen. Ted Cruz, R-Texas is one of them.
“Sen. Cruz believes existing proposals in Congress will add even more to the debt without taking meaningful steps to spur economic growth and get Americans safely back to work, which will have devastating consequences for future generations,” his spokesperson Maria Jeffrey told The Hill.
However, there are many economists who believe that now is the time to use fiscal power to get the US on track.
Federal Reserve Chair Jerome Powell said, “This is the time to use the great fiscal power of the United States to, to do what we can to support the economy and try to get through this with as little damage to the longer-run productive capacity of the economy as possible.”
It’s interesting that the over estimation of the deficit is exactly the amount of the current stimulus package proposed by democrats ($2.2 trillion).
So now that there is an updated forecast on a historical deficit, Democrats are going to have to work extra hard to justify getting such a large spending measure passed.
The updated unemployment report just showed a large increase in employment which of course is great for the country.
But those new figures could add another level of resistance for many in the GOP party who have been watching those figures very closely when deciding on what type of stimulus bill to support.
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.